The African Development Bank has suggested a plan to South Africa that will help the nation use the $8.5 billion in climate financing pledged by some of the world\u2019s richest nations to raise even more funds.<\/p>\n
The AfDB has recommended that South Africa park the funds in a special purpose vehicle, bank President Akinwumi Adesina. The SPV, which can seek a credit rating, can sell zero-coupon bonds to raise as much as $41 billion, Adesina said in an interview Thursday in Bloomberg\u2019s New York office.<\/p>\n
The US, UK, Germany, France and European Union plan to provide $8.5 billion to South Africa to help the country cut its use of coal, which is used to generate more than 80% of its electricity.<\/p>\n
The world\u2019s 13th-biggest producer of greenhouse gases will need to spend $250 billion over the next three decades to fund the closing down of coal-fired power plants, develop green energy sources and an expanded electricity grid, according to a study released in May.<\/p>\n
South Africa is working on a plan to access the funds, which will be a combination of grants, concessional financing and potentially guarantees. The structure of the funding arrangements, which may be on a project-by-project basis, could make it impossible to use an SPV structure.<\/p>\n
AfDB\u2019s proposal has got little support from South Africa or the funding partners, according to people with knowledge of the matter.<\/p>\n
The funding pledge, which will be made available over three to five years, was announced at the COP26 climate talks in Glasgow in November.<\/p>\n