South Africa wants to shift the R8.4 billion goalposts

Billions of rands in climate financing hang in the balance as the South African government seeks to renegotiate terms following a recent decision to postpone the decommissioning of several of Eskom’s coal-fired plants.

Members of President Cyril Ramaphosa’s administration are currently in talks to revise an agreement with the Climate Investment Funds (CIF) to extend deadlines for the decommissioning of three coal-fired power stations, as reported by Bloomberg.

If negotiations prove unsuccessful with the group associated with the World Bank, this could impact the first round of approved funding by the CIF, which according to its website amounts to R8.4 billion ($462.42 million).

This money is for boosting its renewables, including developing 100 megawatts (MW) of wind, 100 MW of concentrated solar power (CSP) generation capacity, and 200 MW of battery storage.

However, this money is just a drop in the ocean for the climate investment pledges made to South Africa.

Its broader pool of funding amounts to R48 billion ($2.6 billion) from various multilateral development banks and other sources.

Particularly in Ramaphosa’s administration, South Africa has indicated its desire for moving towards renewables, which sparked much of these large funding pledges.

At COP26 in 2021, South Africa, alongside the United Kingdom, the United States, France, Germany, and the European Union introduced the Just Energy Transition Partnership (JETP), which initially pledged $8.5 billion (which has grown to nearly $9.3 billion) to facilitate South Africa’s transition from coal to a low-carbon economy.

The pledge outlines that the country will receive the assistance on condition that it cuts its dependence on coal, which accounts for four-fifths of the nation’s electricity output.

Most recently, at COP28 in December 2023, South Africa reaffirmed its commitment to reduce global greenhouse gas emissions significantly by 2030 through the increase of renewable energy sources.

South Africa’s commitment sees it reducing emissions to a target range of 350-million tonnes to 420-million tonnes of carbon dioxide equivalent emissions — a reduction of about 20%-33% from current levels.

To do this requires substantial funding, with pledges forming part of a broader financing strategy being pursued by the country.

“South Africa requires approximately R1.5 trillion in initial funding to transition to a low-carbon and climate-resilient society for the period 2023–2027,” stated Presidential Climate Commission (PCC) Commissioner Joanne Yawitch.

However, these investment pledges come with conditions that are challenging for a country like South Africa to meet, which is heavily reliant on coal for its electricity and has been battling energy security.

As a result, earlier this year, the Eskom board approved delaying the decommissioning of Camden, Hendrina, and Grootvlei power stations until 2030, which were originally planned for closure in 2025 and 2026.

Bheki Nxumalo, Eskom’s head of generation, defended the extension at the time, citing recent refurbishments that have made these plants among the “least emitting” in the coal fleet.

According to Dr Crispian Olver, executive director of the Presidential Climate Commission (PCC), which advises the government on the just transition, they agreed it was “impossible to shut down coal power stations in the middle of a power crisis”.

He said that the delay will “not collapse” South Africa’s climate change commitments.

The country has expressed the ambition of reducing emissions to a target range of 350-million tonnes to 420-million tonnes of CO₂ equivalent emissions — a reduction of about 20%-33% from current levels.

“We are still committed to [achieving SA’s carbon emissions reduction target of 2030], but we can’t look at small stations. We must look fleet-wide because there is a lot that we can implement across the fleet to get [to that target],” said Nxumalo.

However, extending the lifespan of coal-fired power stations has raised concerns about investor’s perceptions about South Africa’s commitment to their just energy transition (JET).

Insiders informed Bloomberg that the South African government is now seeking an “adjusted approach to the program with the decommissioning date” pushed back to the end of March 2030.

Former environment minister Barbara Creecy assured Parliament last year that South Africa can still achieve its nationally determined contributions goals for reducing greenhouse gas emissions by 2030 while delaying the decommissioning of Eskom’s coal-powered stations.

“The process of re-examining our time frames [for decommissioning] is not a reversal of our position on the just energy transition. Any decision on decommissioning [is] informed by a detailed technical assessment of the feasibility of continuing to operate older plants,” Creecy said.

The CIF expects the government to provide an update on its decommissioning plan “by the fall,” clean energy lead at CIF Daniel Morris told Bloomberg.

Read: South Africa’s Climate Change Bill heads to Ramaphosa to be signed into law