Funding a greener future – Ramaphosa outlines South Africa’s R1.5 trillion three-step energy transition plan
The government has released its just energy transition investment plan, ahead of COP27 climate negotiations taking place from 6 to 18 November. The plan focuses on three key areas, and will pursue more attractive funding to bring it to life.
South Africa will need R1.5-trillion in investment to support its just transition over the next five years, President Cyril Ramaphosa said on Friday, 4 November in a virtual special briefing ahead of the COP27 global climate talks in Egypt.
The country’s Just Energy Transition Partnership (JETP) was established at last year’s climate talks COP26 in Glasgow, Scotland, with countries including France, Germany, the UK and the US pledging a commitment to support South Africa’s plan to move away from fossil fuel dependence. The mixed funding was placed at $8.5-billion.
Read in Daily Maverick: SA to unveil multibillion-dollar climate investment plan at COP27 in Egypt
A year later, two days before COP27 in Sharm El-Sheikh, Egypt, South Africa has finally put together its long-awaited Just Energy Transition Investment Plan (JET IP), with rollout targeted between 2023 and 2027. The president said the plan was adopted by Cabinet in August and is being released to the public for further discussion, adding that he was expecting suggestions and recommendations.
“This plan outlines the scale of need and the investments that will be required to achieve our decarbonisation commitments. And to do so while promoting sustainable development and ensuring a just transition for our country, and in particular for our people; as in workers, communities and vulnerable people who are going to be directly impacted as we execute this plan,” said Ramaphosa.
Initially, South Africa had been promised mixed funding for its just transition to the amount of $8.5-billion. The JET IP however is not written with the initial investment amount, but has rather been broadened to encompass the country’s decarbonisation needs.
Three priority sectors have been identified including electricity, new-energy vehicles and green hydrogen, with the goal of decarbonising the country’s economy within the Nationally Determined Contributions target range of 350-420 Mt CO2-eq (million tonnes of CO2 equivalent) by 2030.
Foremost among the electricity sector is decommissioning plants; Eskom’s Komati Power Station has already been earmarked for this, with plans to repurpose the plant to a renewable energy training facility. Expanding and strengthening transmission grid and distribution, and adding new renewable energy projects are also part of the plan to decarbonise South Africa’s approximately 80% coal dependence for power.
R1.3-billion over five years is expected to address just transition infrastructure needs, meet Mpumalanga’s just transition measures in supporting workers, training, placements, etc, and municipal electricity support as far as investment in distribution, remodelling and maintenance, among others.
“What is very import to highlight is that the ‘just’ component is very central to the transition of the energy sector and that just investments are embedded alongside the technical ones to ensure that workers and communities are not left behind,” said Daniel Mminele, head of the presidential climate finance task team during the presentation of the JET IP.
He added: “Between next year and 2024, South Africa needs to prioritise strengthening the grid, accelerating renewable energy investments and preparing communities and local government for the phasing-down effects of decarbonisation, in the form of either mine and plant closure or repurposing.”
Decarbonising and green hydrogen
As far as new electric vehicles are concerned, investment in this sector would be focused on decarbonising the industry – the second biggest contributor to carbon emissions after electricity – and to supporting a supply chain transition to sustainable manufacturing. The transition is expected to cost R128.1-billion over five years, and to also focus on stabilising the industry and turning its attention to supporting communities that will have to adjust to manufacturing electric-vehicle parts and vehicles.
Green hydrogen has been touted as a cleaner alternative that could not only assist South Africa in decarbonising, but also bring in revenue while doing so. According to the JET IP, the industry needs R319-billion to position South Africa as a lead exporter of the fuel, and to be used domestically for port infrastructure.
Read in Daily Maverick: Green hydrogen – how South Africa can capitalise on it, and why we need to do it fast
Gaping funding gap
The JET IP and its ambitious required total is currently facing a R700-billion funding gap, 44% of the total amount stipulated. The initial JET partnerships provides about 12% of the five-year plan. Ramaphosa said in the briefing that the scale of funding required is significantly higher than what has been offered, adding that they were working with international partners to increase funding and to find alternatives.
“While the initial funding committed by partner countries will play an important catalytic role, it is not sufficient to meet the scale of our ambition. And in going to COP27, that’s precisely the message that we will be taking forward; supporting a just transition requires adequate financial support that must include a significantly larger grant funding component to ensure the implementation of active labour market policies, reskilling and upskilling, as well as the creation of new industries on a considerable scale,” said the president. DM/OBP