South Africa will receive $8.5bn to help end its reliance on coal in a partnership deal announced at the COP26 climate summit. The partnership involves the governments of South Africa, France, Germany, the UK, the US, and the European Union.
Dubbed the “Just Energy Transition Partnership”, it will form a long-term ambitious plan to support South Africa’s decarbonisation efforts. It will mobilise an initial commitment of $8.5bn for the first phase of financing through various mechanisms, including grants, concessional loans and investments, and risk-sharing instruments, including mobilising the private sector.
Breaking the reliance
South Africa is highly reliant on coal for its energy production. In 2020, 86% of South Africa’s electricity came from coal, compared to the global average of 34%. It is significantly ahead of the next highest G20 member, India, which generates 71% of its electricity from coal.
The partnership aims to accelerate the decarbonisation of South Africa’s economy, focusing specifically on the electricity system. It is expected to prevent up to 1-1.5 gigatonnes of emissions over the next 20 years and support South Africa to move away from coal and accelerate its transition to a low emission, climate-resilient economy.
Commenting on the deal, South Africa’s President Cyril Ramaphosa said: “We look forward to a long-term partnership that can serve as an appropriate model of support for climate action from developed to developing countries, recognising the importance of a just transition to a low carbon, climate-resilient society that promotes employment and livelihoods.”
Impact on the mining industry
South Africa employed more than 90,000 people in coal mines alone in 2020 and had pledged to cut emissions by 2030 in an updated contribution to global efforts.
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The new partnership recognises that delivering on its ambitions will affect mining communities and workers. It stresses the need to lead a “just transition”, which supports affected workers and vulnerable communities, especially coal miners, women and youth, as the South African economy changes.
Subsequently, it will work to identify financing options for innovative technical developments and investments, including electric vehicles and green hydrogen, to help create quality, green jobs.
Commenting on the deal, European Commission President Ursula von der Leyen noted: “This partnership is a global first and could become a template on how to support just transition around the world. By joining forces, we can speed up the phasing out of coal in partner countries while supporting vulnerable communities that depend on it. Ensuring a just transition is a priority for the EU, both at home and abroad.”