South Africa still required roughly $98 billion (roughly R2 trillion) in further financing for the transition to clean energy, President Cyril Ramaphosa said yesterday, speaking at the New Global Financing Pact summit held in Paris, France.
The summit, which is being attended by more than 40 leaders as well as the International Monetary Fund (IMF) and World Bank officials, aims to develop a new global financial system so the most vulnerable countries will be better equipped to combat both poverty and climate change.
On the table yesterday was $100bn in funds that rich countries have pledged to battle climate change and poverty in developing countries, which was announced by the head of the IMF, Kristalina Georgieva.
But yesterday, he told the meeting, “We found that we’re going to need much more up to $98bn, which is far much more than what has been on offer. Funding has to increase on the grant size and also the concessional loans need to be considerable,” Ramaphosa said.
In November 2021, four Western governments and the European Union (EU) announced at the COP26 meeting in Glasgow that $8.5bn would be made available to accelerate South Africa’s energy transition.
The UK, US, French, and German governments, and the EU formed the Just Energy Transition Partnership (JETP) after a lightning visit of climate envoys shortly before the COP26 meeting.
He said South Africa found a great understanding from its partners about the situation.
“Just yesterday (Wednesday), I had the Prime Minister of Denmark and the Netherlands, visiting our country at the same time, and some commitments, are very much alive to all the circumstances that we face. So we are encouraged by that. This journey requires partnership.. It must be a partnership that takes into account where we are,” he said.
On Wednesday Ramaphosa, Netherlands Prime Minister Mark Rutte, and Denmark Prime Minister Mette Frederiksen concluded a Heads of Agreement to launch a new SA-H2 Fund, which aims to secure $1 billion (R18bn) in funding for green hydrogen.
Ramaphosa said there were some lessons that the country learnt from the JETP deal.
Firstly, he said, the plan had to take into account each individual country’s circumstance, without imposing other nation’s challenges and experiences.
“In our case, we've had to take into account our own experience as a nation and as a country, where we are dealing with challenges such as unemployment and poverty, and also a history of racial division,” Ramaphosa said.
Secondly, Ramaphosa said this should be a “just transition”.
“We must take into account the existential situation of various communities, particularly workers who work in fossil fuel establishments. What happens to them when we transit, their job situations, communities who live in those areas?,” Ramaphosa said.
He said countries must define what a just transition was going to be and what it was going to look like. “Whatever is done should not leave anyone behind.”
The third lesson, he said was that one needed to be flexible and take into account a country’s current challenges.
“Our current challenges are borne out of the history of our own country, but also they have to deal with our energy shortage right now,” he said, adding that 90% of South Africa’s energy was generated out of fossil fuels and the energy generation in the country currently failed to meet demand.
“We’ve said that as we transit, as we implement this JETP, we need to take this into account. Some of the fossil fuels power stations need to remain in existence as we traverse this journey,” he said.
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