Plans to help countries transition to clean energy must take into account socio-economic conditions and the challenges of unemployment, poverty and inequality, President Cyril Ramaphosa told the summit for a new global financing pact in Paris this week.
South Africa is implementing a just energy transition plan (JETP) to reduce its use of coal, and the UK, US, France, Germany and the EU have backed it with $8.5bn (R159bn) in loans and grants. This has been seen as a blueprint for other coal-dependent nations to lower their emissions.
“It needs to be a flexible kind of journey,” Ramaphosa said. “Ninety percent of our energy is generated out of fossil fuels, and right now the country is going through a major energy challenge because our energy generation is way below the needs of the country.
“So we’ve said that as we transit, as we implement this JETP, we need to take into account that some of our fossil-fuel power stations will need to remain in existence.”
Ramaphosa told delegates of a round table discussion on green growth partnerships at the summit that it was a valuable platform for engagement that needs to complement — but not supersede — discussions in the appropriate multilateral forums, particularly the UN Framework Convention on Climate Change.
He said that since the partnership with the UK, US, France, Germany and the EU was established in 2021, South Africa had “produced a just energy transition investment plan that sets out the scale of financing need at approximately $98bn”.
“This investment plan would support investments in electricity infrastructure, support for communities and workers in coal mining areas, new energy vehicles, green hydrogen and skills development.
SA has produced a just energy transition investment plan that sets out the scale of financing need at approximately $98bn
“We have learnt several lessons during this process. Firstly, it is important that just energy transition partnerships are country-led and owned.
“South Africa is undertaking this transition with a unique set of challenges that include high levels of poverty and an energy deficit.
“We have high levels of unemployment among unskilled workers, which makes potential job losses in the coal value chain more challenging.
“We have a constrained fiscal environment that limits the ability of government to provide social security in the event of job losses.
“Secondly, more emphasis must be placed on the just component of the transition, in both the structuring of the investment plan and the corresponding financing package. Countries going through a just energy transition need to be clear about how they define ‘just’, particularly with respect to social impact.
“Thirdly, given South Africa’s current energy crises, we have come to realise that flexibility is key. Countries must be able to decide on a transition pathway that takes into consideration development objectives such as energy security.”
Just energy transition partnerships must also translate into tangible financial support, Ramaphosa said.
“The scale of financial support needs to consider the level of development of the countries and the magnitude of the required transition. For example, the current commitment of $8.5bn from our partners is less than a tenth of what will be needed in the next five years for a meaningful and just transition.
“Grants need to form a substantial portion of financial support, and any debt-related terms should be more attractive than what the country could secure in capital markets.”
Ramaphosa said it was important that the financing reflected the obligation of developed economies to finance mitigation and adaptation measures in developing economies.
“The financing must be predictable and certain.”
He said a transition process needed to support green industrialisation through the transfer of technology and skills.
“A just energy transition requires long-term partners that will support developing economies as they move towards sustainable and green economic growth and development.”
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