Rich nations pitch billions in aid to fund South Africa’s coal exit

Envoys from some of the world’s richest nations have met with South African cabinet ministers to discuss a climate deal that could see billions of dollars put towards ending the country’s dependence on coal.

The delegation is trying to hammer out an agreement that can be announced at the Cop26 climate talks, which start in Glasgow, Scotland on 31 October, two people familiar with the talks said. The discussions with South Africa — the world’s 12th biggest emitter of greenhouse gases — include representatives from the US, UK, Germany, France and the European Union.

While South Africa is under pressure to cut its dependence on coal — which accounts for more than 80% of its power generation — it needs finance to facilitate the transition to cleaner energy. Developed nations may also need to find a way to address the challenges faced by Eskom, which is burdened by R400-billion of debt.

The envoys met on Tuesday with South African ministers including Pravin Gordhan, the public enterprises minister whose portfolio includes oversight of Eskom, Barbara Creecy, the environment minister, and Ebrahim Patel, the trade & industry minister, the people said, asking not to be identified as a public announcement has yet to be made. Talks were due to be held on Wednesday with trade unions, business leaders and the Presidential Climate Change Coordinating Commission, three people familiar with the arrangements said.

The ministers pressed for details on what finance was available, but the envoys favour an incremental approach and more commitments from South Africa, the people said. While Gordhan urged support for Eskom, other options such as transitioning South Africa and its car industry toward electric vehicles were also discussed, they said.

No comment

Albi Modise, a spokesman for the environment ministry, confirmed that a group of ministers met with the envoys but declined to comment further, saying a statement will be issued later. Richard Mantu, spokesman for public enterprises, referred queries to Modise, and Tyrone Seale, acting spokesman for the South African presidency, said he couldn’t comment immediately. National treasury didn’t immediately respond to a request for comment.

Some senior members of South Africa’s government are pushing hard for climate mitigation measures. President Cyril Ramaphosa chairs the climate commission he created last year and its more ambitious emissions reduction target was adopted by cabinet this month. Creecy has said developed countries need to boost energy-transition and climate-adaptation funding to developing nations.

South Africa is well positioned to obtain concessional finance both for the country-wide climate transition and the electricity transition in particular

“South Africa is well positioned to obtain concessional finance both for the country-wide climate transition and the electricity transition in particular,” Gordhan said in a response to queries before the meeting.

Still, the pivot from coal faces opposition within South Africa. Gwede Mantashe, the energy minister, has advocated for the construction of new coal-fired power stations. Mantashe, the former head of the National Union of Mineworkers, is the politically influential chairman of the ANC.

The move to reduce South Africa’s reliance on coal comes as Chinese demand pushes prices towards record highs. The dirtiest fossil fuel, which was struggling against cleaner energy sources, is now seeing its biggest comeback ever, complicating international climate talks set to begin in just a few weeks.  — (c) 2021 Bloomberg LP