Germany pledges additional R6.2 billion for South Africa’s move away from coal

The German government has committed a further R6.2 billion (€355 million) to South Africa’s just transition toward a greener economy and skills development.

After negotiations last Friday (5 October) in Pretoria, the German delegation said that it would further fund the transition over a 2-year-cycle with a specific focus on climate and energy, sustainable economic development, training, as well as health-related and inclusivity factors. The funding will be in the form of grants and subsidised loans.

South Africa is planning to shift away from a coal-resilient energy supply that falls under the national power utility Eskom. In July president Cyril Ramaphosa announced the Just Transition Framework, which, under his climate commission, sets out policy measures and undertakings by various partners to minimise the economic and social impacts of a long-term switch to renewables – away from fossil fuels.

This, in turn, opened the country up to roughly R140 billion ($8.5 billion) of investment from governments across the globe, including the UK, the US, Germany, France, and the European Union.

According to the global climate summit COP27, South Africa, the 13th biggest source of greenhouse gas, will need to spend over $250 billion between now and 2050 to fund the closing of coal-fired plants.

Ramaphosa said the framework advocates for a massive expansion of renewable energy, green minerals, battery storage, new energy vehicles, and the hydrogen economy.

The new pledge by Germany, as stated by the embassy in South Africa, emphasises the country’s further commitment to the partnership to support the clean and just transition towards climate neutrality at the tip of Africa.

One of the major talking points of a transition to renewables is the risk that many people will lose their jobs as coal-fired plants and mines close. Statistics South Africa (StatsSA) reported at the end of September 2022 that the mining industry alone employed 462,000 people; this does not include those working at power stations or the companies that rely on servicing energy supply infrastructure.

The pledged funds will place emphasis on the importance of the ‘just’ component in the transition – to protect the livelihoods and the economic base of the coal basic in the policy discussions according to the German embassy.

“South Africa and Germany will further strengthen the existing bilateral TVET & Skills Development cooperation and complement these by further initiatives focusing on pathways from learning to earning,” it said.

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