Advancing South Africa’s Just Energy Transition Partnership

At COP26 in November 2022, South Africa’s Just Energy Transition Partnership (JET) made significant progress, with Denmark and the Netherlands joining the International Partners Group (IPG) and pledges amounting to $11.6 billion committed to the JET. This includes $9.3 billion from the IPG.

The aim of the partnership is to achieve the most ambitious target possible within South Africa’s Nationally Determined Contribution range, to the extent of the available resources and support. To this end, the South African Government introduced debt relief measures for Eskom, which include a borrowing moratorium on the power utility for 3 years.

Following widespread stakeholder consultations on the Implementation Plan (IP) by the Presidential Climate Commission (PCC) in early 2023, the Project Management Unit (PMU) in the Presidency prepared the IP, which Cabinet approved on 15 November 2023. This summarises the current status of financing and sets out South Africa’s 6 defined portfolios for investment, providing updates on progress, theories of change, collaborative structures, and milestones for monitoring and evaluation.

In addition, the PMU has published the start of a Projects Register, issuing the record of partners’ grants to the JET. The original members of the IPG have increased their grant offer by 57% since COP26, and the overall increase in grant funding (including Netherlands and Denmark and other funders) to $716 million is 132%.

The Government of The Kingdom of the Netherlands has committed €50 million towards a green hydrogen blended finance fund, and other funders are supporting start-ups and providing advice around potential port development. The South African Cabinet approved the Electric Vehicles White Paper in November 2023 and is reviewing incentives for the manufacture and use of new energy vehicles and batteries.

With funding from Canada, Spain, and Switzerland included, the overall support figure for the JET has increased from $8.5 billion to $11.7 billion. Two loans of €300 million each from the German Development Bank (KfW) and French Development Agency (AFD) were disbursed as policy loans in early 2023 after policy conditions around climate reforms were met. In November 2023, Germany signed a second policy loan agreement with National Treasury to extend a further €500 million in concessional financing to South Africa related to ongoing energy sector reforms.

The South African Government is continuing its significant energy reforms. The Electricity Regulation Act Amendment Bill is at committee stage in Parliament, and the amendment of Schedule 2 of the Electricity Regulation Act to remove the licensing threshold for generation facilities has resulted in a 66GW pipeline of renewable energy projects.

Looking ahead, South Africa’s energy challenges could lead to a delay in planned decommissioning of coal-fired power plants, but work will meanwhile focus on the repurposing, repowering and community development at these sites. The and South African government reiterate their commitment to work in partnership to achieve the objectives set out in the Political Declaration of 2021, the Investment Plan of 2022, and the Implementation Plan of 2023.

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