South Africa tells Western envoys it needs funds to switch from coal

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JOHANNESBURG – South Africa has told climate envoys from the United States, Britain, Germany and France that it needs major financial support to move away from coal, said Wednesday the Ministry of the Environment.

South Africa is the 12th largest carbon emitter in the world, according to the Global Carbon Atlas, emitting 479 million tonnes of carbon dioxide equivalent (Mt CO2e) in 2019. It is also by far the largest emitter from Africa.

This month, the government adopted a more ambitious emission reduction target of 350-420 Mt CO2e per year by 2030, weeks before the UN climate summit COP26, where it hopes to wrestle money to rich countries for a faster transition to renewable energies.

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“As South Africa has embarked on a just transition (to cleaner energy sources), we need the certainty of… funding… to accelerate this transition. We need an irrevocable agreement that we can sign at COP26, ”said the Ministry of the Environment.

South Africa’s electric utility, which produces most of its electricity by burning coal – more than 80% of the country’s electricity is produced this way – wants billions of dollars to replace its power plants very polluting coal by cleaner alternatives.

The South African delegation made up of environment, trade and public enterprise ministers and deputy finance and foreign ministers told Western climate envoys on Tuesday that financial support should include concessional finance and grants that take into account current budgetary constraints.

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The Environment Ministry cited as goals the reallocation of retired coal-fired power plants, investment in low-carbon power generation and grid infrastructure, and the manufacture of electric vehicles.

This week, consultancy firm Meridian Economics came up with a new financing model for abandoning coal that it said could unlock billions of dollars in cheap financing.

This would involve the government taking on long-term debt, with the actual cost of borrowing reduced either by rich countries guaranteeing the debt or by South Africa receiving cash incentives for its emission reductions.

Some of the money raised would go to a fund to support thousands of workers who lose their jobs in coal-fired power plants – a political headache for a government that needs the support of the unions.

(Additional reporting by Wendell Roelf in Cape Town edited by Tim Cocks, William Maclean and Angus MacSwan)

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In-depth reporting on The Logic’s innovation economy, presented in partnership with the Financial Post.

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