South African President, Cyril Ramaphosa has revealed that the country has since produced a Just Energy Transition Investment Plan that sets out the scale of financing need at approximately $98 billion.
Ramaphosa disclosed this at the Roundtable Discussion on Green Growth Partnership, Summit for New Global Financing Pact in France on Thursday, June 21, 2023.
He said further that the 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.
Ramaphosa recalled in November 2021, that South Africa announced a historic Just Energy Transition Partnership with the governments of France, Germany, United Kingdom and the United States, as well as the European Union.
“This partnership which was established to support South Africa’s just transition to a low-carbon economy and a climate-resilient society. The partners agreed to an initial commitment of $8.5 billion towards this goal”, the President added.
He stressed that the country have have learnt several lessons during the process of the transition. “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 job losses.
“Secondly, more emphasis must be placed on the just component of the transition, in both the structuring of investment plan and 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 S’Africa’s current energy crises, we’ve come to realise that flexibility is key. Countries must be able to decide on a transition pathway that take into consideration development objectives such as energy security”, he said.
Ramaphosa noted that just energy transition partnerships must translate into tangible financial support. “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 $8.5 billion from our partners is less than a tenth of what will be needed in the next 5 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.
“It is important that the financing reflects obligation of developed economies to finance mitigation and adaptation measures in developing economies.
The President who said the financing must be predictable and certain, added that the energy transition process needs to support green industrialisation through the transfer of technology and skills.
While concluded that a just energy transition requires the long-term partners that will support developing economies as they move towards sustainable and green economic growth and development.