South Africa seeks billions in climate funds as it keeps coal plants open

The new proposal comes after years of crippling power cuts caused by Eskom struggling to meet demand.

South Africa pledged to slash emissions across its fleet of coal-fired power plants in a bid to secure $2.6 billion in climate finance. That’s despite seeking to alter the terms of a 2022 agreement by delaying the outright closure of three of the facilities.

The plan, which involves the reduction of emissions at a number of units at the 14 plants operated by the state utility Eskom, was submitted to the World Bank affiliated Climate Investment Funds on Wednesday, South Africa’s presidency said in a response to queries. The country has now said it will close the Grootvlei, Hendrina and Camden plants at a later stage after initially agreeing to begin shutting them down from as early as next year.

The new proposal comes after years of crippling power cuts caused by Eskom struggling to meet demand. While the utility hasn’t rationed power since March, the government is wary of returning to the outages that hindered economic growth. The submission is a key plank of the $9.3 billion Just Energy Transition Partnership climate finance pact South Africa signed with some of the world’s richest countries in 2021.

ADVERTISEMENT CONTINUE READING BELOW

“Due to energy security considerations, decommissioning of the identified power stations will only take place in 2030,” said Joanne Yawitch, head of the JETP project management unit in the South African presidency, in the response. “Measures to reduce emissions will be instituted across Eskom’s fleet in addition to the eventual decommissioning.”

The new proposal, if accepted, would win $500 million in concessional finance from the US-based CIF. Together with co-financing it would trigger from development finance institutions and private investors, as much as $2.6 billion in energy transition funds could be secured by the country.

The proposal is being considered under the CIF’s Accelerating Coal Transition Investment Program. A decision will likely take between two and four weeks unless the committee assessing it has further questions, the CIF said in an earlier response to questions.

© 2024 Bloomberg

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.