HomeAfrica-NewsSouth Africa is negotiating more green finance deals

South Africa is negotiating more green finance deals

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South Africa, having secured $8.5bn (around R147bn) in climate finance from some of the world’s richest countries, is in talks with other nations to help it reduce reliance on coal, the environment minister said. Environment, Barbara Creecy.

The climate finance, which is being provided by the US, UK, Germany, France and the European Union as part of a Just Energy Transition (JET) Partnership, has been hailed as a blueprint for deals to ward off other coal-dependent developing nations. the dirtiest fossil fuel.

Read: SA secures R10.7bn loan from France and Germany for coal transition

Still, it’s a fraction of the 1.5 trillion rand ($87 billion) the country has estimated it needs for its plan to move away from coal over the next five years.

“We’ve had some bilateral deals where there’s been additional interest shown,” Creecy said in an interview at the COP27 Climate Summit in Egypt, referring to talks with other countries.

President Cyril Ramaphosa indicated to the partners “that now we are going to enlarge the circle and other countries that want to contribute to the JET Investment Plan, we are going to include them as well.”

Eskom to coal

With more than 80% of its electricity coming from a fleet of mainly coal-fired power plants in ruins and rolling blackouts as the state power company, Eskom, cannot keep up with demand, the country is in dire need of investment in its electric sector. .

As the world’s 13th largest source of greenhouse gases, South Africa is an attractive option for wealthy nations seeking to maximize the impact of their investments in reducing carbon emissions.

The age of its power plants means they will have to close in the next few years anyway and the country is amply supplied with solar and wind resources to generate renewable energy.

In addition to electricity, South Africa, as part of its coal transition plan, is trying to boost investment in its fledgling electric vehicle and green hydrogen industries.

Read: Eskom’s three worst-performing plants are responsible for almost half of all breakdowns

Green hydrogen refers to a process in which water is split to make fuel using energy from renewable sources.

The United States and Japan announced a similar deal for Indonesia on November 15 at a cost of $20 billion. On November 16, Bloomberg reported that Vietnam could get up to $14 billion in a process led by the United Kingdom and the European Union, citing people who asked not to be named because a public announcement has not yet been made.

Creecy also reiterated the need to reform multilateral development banks, such as the World Bank and the International Monetary Fund, to make it easier for them to lend to climate finance projects.

Read:
Africa wants climate repairs now and debt relief, says Creecy
World Bank to finance R9.09bn Komati energy transition project
A landmark R151.40bn climate finance deal hangs in the balance

He also said they will need to be recapitalized to allow for the amount of spending that will be needed to transition to a lower carbon future.

“You have to really say how much this transition is going to cost,” Creecy said.

“If we think that the only source of financing that will be available to all of us will be what is in the climate funds, it will not be enough.”

© 2022 Bloomberg

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