Linking Divestment with Clean Energy

South Africa is the largest coal producer and consumer in Africa. Coal contributes more than 70% of the country's energy supply and accounts for 86% of its electricity generation. However, during the UN climate talks in Glasgow in 2021, the South African government took a major step towards divesting from coal by announcing the Just Energy Transition Partnership, or “South Africa Deal”, in conjunction with the EU and the governments of France, Germany, the United Kingdom and the United States.

The partnership aims to support decarbonisation efforts in South Africa by providing USD 8.5 billion in financing through grants and loans over a five-year period. The three stated goals are to retire current coal plants, aid clean energy sources and provide transition support to coal-dependent regions of the country. The partnership will also assist the national power utility, Eskom, in transitioning from coal to renewables, a shift that is anticipated to require USD 27 billion in investment.

The Just Energy Transition Partnership will support South Africa's efforts to speed decarbonisation while preventing up to 1.0 to 1.5 Gt of emissions over the next two decades. The partnership will help the country build a climate-resilient economy while supporting vulnerable communities and promoting employment. As a pilot project, it will likely spark interest among other countries – such as India, Indonesia and the Philippines – that are seeking external climate finance to reduce their coal reliance.

Source: See endnote 95 in chapter 05.

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