Commitments at COP26 are at an all-time high. Great news, but only if we don’t see a New Year’s Resolution effect – where our resolve weakens in the months that follow.
Will these financial and carbon emission reduction commitments be implemented and hold firm, or will yet to be established T&Cs hold them back?
Let’s look at one commitment that could falter.
The Just Energy Transition Partnership between the US, UK, France, Germany and European Union with South Africa is a first of its kind agreement between a coal-intensive developing country and a group of donor governments.
Signed at COP26 in Glasgow, the signatories aim to work together to fund a path away from coal-fired power generation and meet South Africa’s Nationally Determined Contribution.
South Africa depends on coal for about 87% of its electricity, and the phasing out of this industry will negatively affect whole communities. These communities rely on the coal industry and its extended value chain for jobs while it drives much of the country’s economy. Thus, it is crucial that the transition be just and phased in gradually.
This partnership between the five donor countries intends to support South Africa with $8.5 billion (about R131 billion) over 3-5 years. The funds will take the form of multilateral and bilateral grants, concessional loans, guarantees and private investment, along with technical support.
A solid plan so far until you look at what isn’t mentioned.
Over the next 6-12 months, details of the partnership will be outlined, unpacking how much of the $8.5 billion is existing commitments and how much is new. The essential fine print on where the money will come from, what it can and cannot be used to finance, and the terms of grants and loans have not been finalised.
Will there be a clear win-win for all parties once finer details are determined? It is possible, but for this outcome, all parties must be willing to concede letting go of some power.
Conceding power can take many forms. During COP26, US President Joe Biden hinted at this when he spoke of the public and private funding needed to help the developing world move away from fossil fuels. “By assisting and responding to the needs of developing countries, rather than dictating projects from afar, we can deliver the greatest impact for those who need it the most,” he said.
Meanwhile, the $8.5 billion commitment is nowhere near what is needed. According to Eskom’s group chief executive, Andre de Ruyter, South Africa’s Just Energy Transition will cost an estimated $30-35 billion over 15 years.
Speaking from Glasgow, de Ruyter shared that: “We need to spend a great deal of money over the next 10 to 15 years to replace our coal-fired power stations, which are rapidly reaching the end of their lives, with new, cleaner and greener power-generating capacity.
“This not only includes power generation, but it also includes some 8,000 to 10,000 kilometres of new transmission lines, as well as a total renewal of our distribution network to accommodate renewable energy.”
Mobilising this initial commitment of $8.5 billion is a positive step, as de Ruyter said in a CNN interview: “There is a saying that the Stone Age didn’t end because of a lack of stones. I’m convinced that, given the current technological trends, the coal age won’t end because of a lack of coal.”
South Africa is one of the world’s intensive carbon emitters and must move to a cleaner energy sector. This is not an option. All sectors in the country are looking to reduce carbon emissions, from industrial companies to transportation. This move will affect the power industry, which is yet to make inroads.
Having solid commitments from COP26 actualised will signify the way forward.
Find more news and opinion pieces on this year’s UN Climate Change Conference (COP26) on ESI Africa.
Until next week.