South Africa to Get $8.5 billion to Shift From Coal to Renewables

Developing nations have long said they need aid from wealthy countries to shift to renewable energy. South Africa may show how that would work in practice.

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South Africa secured $8.5 billion to transition away from coal. It’ll be a test case.

The coal-fired Kusile Power Station in Mpumalanga Province, South Africa, in 2019.Credit…Joao Silva/The New York Times

Nov. 3, 2021Updated 4:32 a.m. ET

For years at global climate talks, developing countries have said that they need more financial help from wealthy nations to speed up their shift away from fossil fuels.

Now the world is about to get a major test of how that might work in practice.

At the Glasgow climate summit on Tuesday, South Africa announced that it had secured commitments for $8.5 billion in financing over the next five years from Britain, France, Germany, the United States and European Union to help install more clean energy, accelerate the country’s transition away from coal power and cushion the blow for workers who may be affected by the shift.

“This is a big deal,” said Jesse Burton, an energy policy researcher and senior associate at the University of Cape Town and E3G, a research group that focuses on climate change. “It’s a major test of whether wealthy nations can help developing countries embark on a just transition away from coal.”

South Africa, the world’s 15th-largest emitter, relies overwhelmingly on coal, which supplies 87 percent of the nation’s electricity. While the country has pledged to reduce its overall carbon dioxide emissions between now and 2030 as part of global efforts to tackle climate change, it faces enormous obstacles in doing so.

South Africa’s state-owned utility, Eskom, is drowning in more than $27 billion in debt, in part because of investments in coal plants, and the utility has struggled to supply reliable power, often resorting to rolling blackouts to meet demand.

For South Africa to meet its most ambitious climate goals by 2030, analysts have said, the country will most likely need to speed up the retirement of existing coal plants while building large amounts of renewable energy generation and transmission lines to meet growing demand.

Making the task even tougher, the country’s fragile economy remains dependent on coal jobs, with more than 120,000 people working at power plants and mines. Past discussions over when and how to shift away from coal have been politically contentious.

President Cyril Ramaphosa of South Africa said on Tuesday that the $8.5 billion in loans and grants pledged by wealthy countries could help the country finesse that transition by accelerating investment in renewable energy while ensuring that Eskom can access resources to repurpose old coal stations slated for retirement over the next 15 years.

The country would also explore initiatives to create new jobs for former coal miners.

“It is proof that we can take ambitious climate action while increasing our energy security, creating jobs and harnessing new opportunities for investment, with support from developed economies,” Mr. Ramaphosa said.

Still, plenty of questions remain about how the partnership will work in practice. Details are still forthcoming about how much new clean energy will be built, and how much coal will be phased out.

There are also questions, analysts said, about whether donor countries will follow through on their commitments, whether there will be transparency in how the funds are used and whether they will benefit local communities.

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