Some solid, albeit slow, progress is being made to convert the $8.5-billion offer of concessional climate finance to accelerate South Africa’s transition from coal to renewables and to support workers and communities currently reliant on the coal value chain into project transactions.
It has been confirmed that the Just Energy Transition Partnership Investment Plan (JETP-IP), which will identify these projects, will be finalised by October for sign-off during the COP27 climate talks in Egypt in November.
The JETP-IP is the crucial next step in the eventual implementation, over the coming three to five years, of the high-profile Political Declaration signed at the COP26 climate talks in Glasgow, Scotland, last year between South Africa and the so-called International Partners Group (IPG) of France, Germany, the UK, the US and the European Union.
Crucially, the JETP-IP is being developed by South Africa and not the international partners, which is key to its domestic credibility.
While no details have yet been provided as to what projects will be included, both Eskom and the head of the Presidential Climate Finance Task Team, Daniel Mminele, have indicated that the load-shedding-prone and carbon-heavy electricity sector will be prioritised.
Eskom has proposed that repowering and repurposing initiatives at its decommissioned coal plants be included, along with the grid investments needed to unlock more renewables.
Flagship projects have been earmarked for the Komati power station, in Mpumalanga, which will be fully decommissioned this year and it has been revealed that some of these projects will be presented to the World Bank board for approval before COP27.
Although some of these initiatives predate or have been running in parallel to the Just Energy Transition Partnership, they are nevertheless likely to be absorbed under its banner, along with other initiatives and funding that may be catalysed over and above the initial $8.5-billion.
Apart from electricity, the balance of the funding will be directed towards supporting the development of local electric vehicle and green hydrogen industries, which feature as two of the five working groups being established to drive implementation. The other three focus on electricity and the cross-cutting issues of finance and implementation.
Besides the JETP-IP, the financing architecture is a critical component, particularly in how it will address the noncommercial ‘just’ components of the multidecade programme, which will be supported by trade unions and communities only if it offers genuine prospects of new decent jobs and improved living conditions.
The Presidential Climate Finance Task Team and the National Treasury are currently analysing the finance instruments that have been proposed by the IPG with a view to ensuring that they meet South Africa’s investment needs and fiscal realities.
These instruments are said to take account of the total financing needs for the full period of transition and consider all forms of finance, including grants, concessional and nonconcessional public and private finance.
In the end, however, seeing is believing and it is, thus, crucial that there is visible project progress either ahead of or directly after COP27.
Edited by: Terence Creamer
Creamer Media Editor
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