At COP26 in Glasgow, South Africa secured a concessional finance commitment of $8.5-billion (roughly R131-billion at the time) from a subset of Group of Seven (G7) countries to help the country finance its goals of rapidly moving away from its legacy fleet of coal-burning power plants.

Two years later, as COP28 is well underway and despite more pledges of support, a recent study says that for South Africa to meet its most ambitious emission reduction targets, it would need three times the amount pledged in Glasgow — every year.   

Despite “policy commitments and increases in climate finance in recent years, financial flows still fall far short of estimated needs”, reads a portion of the executive summary of the recent study by the Presidential Climate Commission (PCC) titled The South African Climate Finance Landscape 2023 report.

The study reveals that the country needs to more than double its climate financing to achieve its emissions reduction targets. The current annual average funding of R131-billion needs to be boosted to R334-billion for the country to meet its net zero goal by 2050.

Specifically, the report explains, “tracked annual climate finance reached R131-billion p/a on average in 2019 – 2021, an all-time high, but still far from the average annual estimated needs of R334 – R535-billion p/a”. 

The report continues in its “key insights” section that “climate finance in South Africa needs to increase by at least three to fivefold from the current annual average of R131-billion. Estimates suggest that South Africa requires on average R334-billion per year to meet its net zero goal by 2050, and R535-billion per year to meet its NDC target by 2030. Domestic sources accounted for 91% of tracked climate finance, while international sources accounted for 9%.” 

The report adds greater detail noting that “private actors accounted for 86% (R113-billion p/a) of annual investments tracked. Commercial sources made up 92% (R103-billion p/a) of private flows, with the remaining 8% (R9-billion p/a) under the “other” category, comprising corporates, philanthropists/donors, NGOs, and households. Almost all of the private finance (98%) was sourced from domestic actors.” 

According to the PCC report, “there are currently five low-carbon sectors which are attracting the majority of climate finance investment in South Africa. As per the South African Green Finance Taxonomy, they are clean energy, low-carbon transport, smart water (supply and demand), circular economy and sustainable agriculture.”

Daily Maverick has previously reported that the partnership between South Africa and the US, UK, France, and Germany and the European Union (EU) — which later came to be known as the International Partner Group (IPG) — seeks to accelerate the move from coal while the pledged funding was also poised to ensure coal communities and workers are supported as the country weans itself off of high-emissions energy sources.

Renewable energy shortfall

A year later at COP27 in Sharm El-Sheikh, South Africa took its Just Energy Transition Investment Plan (JET-IP) to the IPG. That plan envisions the country investing heavily in renewable energy infrastructure, green hydrogen and electric mobility. Speaking to his counterparts in the IPG at COP27 last year, President Cyril Ramaphosa said that “according to the plan, South Africa will need approximately $98-billion over the next five years to enable a just transition and achieve the ambitious targets we have set out in our Nationally Determined Contribution.”

This means that the IPG offer of $8.5-billion — at least €600-million of which has already been sent to South Africa — covers roughly only 12% of South Africa’s JET IP funding needs for an initial five-year period. The plan itself, however, notes that “the overall indicative funding gap is ~ZAR 700 billion (44%).”

Read more in Daily Maverick: SA formally hands over R1.5-trillion clean energy investment plan to International Partners Group in Egypt

In the time since the publication of the plan, the funding pool has increased and the South African government has been working to create an accompanying “Implementation Plan” to go along with the Investment Plan. Daily Maverick reported in October that Rudi Dicks, head of the Presidency’s project management office, announced that Denmark, the Netherlands and Spain have officially pledged their commitment to the Just Energy Transition Partnership, expanding the prospective funding pool to $11.8-billion — or roughly R220-billion. While a broadly welcomed increase, it still falls significantly short of South Africa’s most preeminent plan to transform its economy and reduce its emissions.

Understood in conjunction with the recent PCC report, South Africa would need double or more of the initial offer made by the IPG — annually. Whether the country will see the levels of climate finance commitments increase is to be seen, though that is one of the objectives of team South Africa at COP28 currently underway in Dubai.  

Read more in Daily Maverick: What South Africa will tell the world at COP28 

Daily Maverick previously reported that, in a briefing to Parliament’s Portfolio Committee on Forestry, Fisheries and the Environment in late November, Maesela Kekana, the Deputy Director-General of Climate Change and Air Quality Management and a lead negotiator for South Africa at COP28, said that a “central concern” of developing countries was to secure adequate, predictable, at-scale and appropriate means of implementation support for their climate actions and just transitions and a “recognition of their right to development and to development space”.  

Kekana explained at the time that as it related to climate finance, they would be receiving a report on the $100-billion a year that was supposed to be flowing by 2020.

“There are other indications that this has been matched but we are not certain until we get that particular report. The $100-billion is important to rebuild trust. We all understand that $100-billion is not adequate and it’s not built on our needs and therefore a lot of our focus has been on the new finance goal that needs to be based on our needs as opposed to the $100-billion. So we will be pushing for progress around that and maybe the GST (global stocktake) can also give some signals around that particular issue.”

As negotiations continue in the side rooms of Expo City Dubai, South Africa will seek to continue the momentum of global economic reforms, including those of multilateral development banks and significant debt restructuring for developing countries, while also advocating for a specific, substantially scaled-up, long-term financial goal for developing countries, negotiated collectively and tied to an implementation roadmap. DM