South Africa’s Just Energy Transition is progressing

7 December 2023

Source: Gov.uk

The International Partners Group remains committed to supporting South Africa to meet its ambitions for a Just Energy Transition.

Two years ago, a ground-breaking partnership was announced by South Africa and the International Partners Group (IPG) in the margins of the international climate negotiations, COP26 in Glasgow. This partnership is meant to accelerate the decarbonisation of South Africa’s economy and move towards clean energy sources, as a means of achieving the country’s highest carbon emission reduction targets.

South Africa’s transition to renewable energy and focus on a just transition will shift the dial on the global energy transformation. It will attract investment, create jobs and help grow South Africa’s economy. IPG partners remain committed to reduce inequality and ensure the energy transition leaves no-one behind.

The IPG remains steadfast in its commitment to this multi-year partnership, with positive progress to show in the run up to COP28. The IPG welcomes the work on the Just Energy Transition (JET) Implementation Plan by South Africa.

South Africa’s introduction of vital energy policy reforms has led to rapid private sector development of electricity generation from renewable sources, which will both enhance energy security and reduce emissions - over 66 gigawatts (GW) of private renewable projects are already in development. Most of these projects will take significant time to be connected to the grid but, they will help South Africa address its energy security needs and meet its climate commitments.

For context, approximately 70GW of renewables is required to be connected to the grid by 2030 to achieve the carbon reductions set by South Africa in 2021, known as the Nationally Determined Contribution (NDC). The IPG is providing key technical assistance and grants to Eskom to help with renewable energy planning and green grid management.

Recently, there have also been promising policy announcements by the South African government in the New Energy Vehicles (NEV) sector and in the broader transport sector including plans for collaborations with the private sector. A modernised transport sector is vital for jobs and exports, increasing productivity as well as reducing emissions.

On 18 October 2023 the South African Cabinet announced that Denmark and the Netherlands had joined the IPG and thus the JETP - Just Energy Transition Partnership. The founding IPG members (France, Germany, UK, US and the EU) are delighted that the South African Cabinet has welcomed Denmark and the Netherlands to the IPG. As the founding members have also increased their financial pledges, the overall IPG commitment is now $9.3 billion.

Grant financing from the expanded group has increased to $713 million, representing a 116% increase from the amount committed at COP26. Grants are essential for ensuring that the transition to renewable energy is just for those who rely directly or indirectly on fossil fuel-related income for their livelihoods. A ‘just’ approach underpins South Africa’s energy transition planning.

The IPG recognises the importance of engaging with municipalities and communities, working with them to deliver projects on the ground in a timely manner. The IPG is undertaking extensive work at the municipality/distribution level to improve municipal capacity to invest in and plan for renewable energy power projects and increase electricity access, in particular for the most vulnerable, while also working on demand side management initiatives, and considering options for social ownership models.

Approximately half of the pledged grant funding has now been committed, with a further 35% in the planning stages. A significant proportion of these funds are being spent on economic diversification, training and reskilling projects in the Mpumalanga province, where over 85% of coal-related jobs are currently based. Research is also focussed on the JET’s impact on the most vulnerable and on inequality.

IPG grants have supported sustainable agriculture projects around the Grootvlei Power Plant, and skills training for women on renewable energy design, installation and maintenance at Mpumalanga’s technical and vocational colleges. The Green Cluster Agency has been supported by the IPG to facilitate sustainable start-up projects in Mpumalanga.

The IPG is also financing project preparation for larger scale economic development projects such as those in tourism, industry and infrastructure. The IPG has funded local civil society organisations, ensuring that women and youth in particular can have a say in their local development. Both Denmark and Germany’s labour unions have exchanged experiences and trips have been organised to coal transition areas in Europe.

South Africa has ambitious plans to expand the transmission network to link up renewable energy sources to communities and industrial centres. The IPG stands ready to support grid upgrades and expansion, via both sovereign concessional loans and financing private sector solutions. The IPG is also working closely with municipalities, universities (campus/sites) and remote communities and townships on local energy solutions, including support for local grids.

Financing is available to reduce emissions through a road-to-rail transition and the IPG funding is already working to leverage private sector finance for early-stage companies via the Netherlands’ Euro 50m first loss investment in the green hydrogen space and for the European Investment Bank’s Euro 200m loan for renewable energy.