South Africa has secured an impressive $676 million in grants from wealthier nations to support its transition towards green energy. This achievement represents more than double the originally pledged amount but remains only a fraction of the total funding package, a substantial portion of which the country will need to repay with interest.
Rudi Dicks, the head of project management in the presidency, shared with Reuters that South Africa had been actively advocating for a larger share of the $12 billion currently being offered by Western nations to be provided as grants rather than loans. The initial grant figure had been set at $329.7 million, underlining the country's commitment to securing financial support for its green energy endeavors.
Dicks emphasized, “The president has made it very clear that he wants to see an increase in the grant component.” He further noted that the possibility of additional grants could materialize as South Africa prepares to participate in the COP28 climate talks in Dubai next month.
Two years ago, during climate talks, the United Kingdom, France, Germany, the European Union, and the United States pledged a total of $8.5 billion. This figure has since increased, with the Netherlands, Denmark, Canada, Spain, and Switzerland joining the initiative this week.
Despite this substantial international support, South African authorities estimate the total cost of transitioning the country away from carbon-intensive coal, which currently generates 80% of its power and contributes to a third of its liquid fuel production, to be a staggering 1.5 trillion rand (equivalent to $78.44 billion).
Dicks further revealed that South Africa is currently in negotiations to potentially enhance both the total funding package and the proportion dedicated to grants at the upcoming climate talks. During these discussions, South Africa will present detailed plans outlining how the financial support will be utilized.
South Africa's plan is multifaceted, involving the development of expertise in key sectors such as solar energy generation, electric vehicles, and green hydrogen production. The country aims to support coal miners who may lose their jobs during this transition and attract private sector investment for projects that may offer lower returns but contribute to sustainable energy goals.
The overarching goals of South Africa's green energy transition include retiring coal power plants, increasing renewable energy capacity, and establishing a green hydrogen export hub. Dicks noted that “the implementation plan will go for cabinet's approval by the end of October and will be presented at COP28.”
