Prime Ministers Office 10 Downing Street
At COP26 in November 2021, the governments of South Africa, France, Germany, the United Kingdom and the United States of America, along with the European Union, issued a Political Declaration announcing a new ambitious, long-term Just Energy Transition Partnership (JETP).
The Partnership aims to accelerate the decarbonisation of South Africas economy to help it achieve the ambitious goals set out in South Africas updated Nationally Determined Contribution emissions goals.
During the World Leaders Summit at COP27 on 7 November, President Cyril Ramaphosa of the Republic of South Africa met with IPG leaders to discuss the new JET Investment Plan prepared by the South African government as envisaged in the Political Declaration. The Plan covers 3 priority sectors the energy sector as well as electric vehicles and green hydrogen for finance.
A Just approach underpins the Plan, aiming to ensure that those most directly affected by a transition from coal workers and communities including women and girls are not left behind. It identifies $98 billion in financial requirements over 5 years to begin South Africas 20 year energy transition. Investment will be required from both public and private sectors.
The IPG is mobilising an initial $8.5 billion to catalyse the first phase of the programme.
The funding package will be disbursed through various mechanisms over the 5-year period including grants, concessional loans and investments and risk sharing instruments. The IPGs funding will align to the Investment Plan and be geared towards: coal plant de-commissioning; funding alternative employment in coal mining areas; investments which will facilitate accelerated deployment of renewable energy and investments in new sectors of the green economy.
The Chair of the International Partners Group, the United Kingdoms Prime Minister Rishi Sunak, said:
I congratulate President Ramaphosa for the great progress that has been made on the South Africa Just Energy Transition Partnership. In 1 year since COP, South Africa, along with the UK and our friends in the International Partners Group, have shown how serious we are about making the changes we need to halt climate change. South Africas JET Investment Plan paves the way for a sustainable and fair transition away from coal and towards cleaner forms of energy, building the foundations for a strong green economy.
The President of the United States of America, Joseph R. Biden, said:
The United States is proud to partner with the Government of South Africa and the members of the International Partners Group to support South Africas just transition to a cleaner energy future. Wewelcome the comprehensive JET Investment Plan, and fully support South Africas economy-wide energy transformation. Our support for South Africas clean energy and infrastructure priorities, which include efforts to provide coalminers and affected communities the assistance that they need in this transition, will help South Africas clean energy economy thrive.
The President of the Republic of France, Emmanuel Macron, said:
France is proud to work with South Africa on the implementation of this Just Energy Transition Partnership, which will help to strengthen the countrys energy security, green its electricity mix and set a benchmark for other countries around the world, while keeping at its core the just element of this transition in order to leave no one behind. I welcome the ambitious Just Energy Transition Investment Plan presented by South Africa and I am happy to confirm that France has just unlocked a concessional policy support of 300M to South Africa, as a first step towards the fulfilment of our $1 billion commitment to support South Africas decarbonisation.
The Chancellor of the Federal Republic of Germany, Olaf Scholz, said:
Climate protection and economic prospects must go hand in hand. The adoption of the investment plan is a milestone on the path to a climate-neutral and at the same time socially just economy in South Africa. Germany is contributing 1 billion USD, including a substantial part through grants, to a support package from the international donor community worth 8.5 billion USD. This is an ambitious start. More needs to follow, particularly in collaboration with the private sector.
European Commission President, Ursula von der Leyen, said:
For the EU, the climate transition needs to be just. This partnership, with new investments, is how we help ensure that nobody is left behind.ThereforeI welcome the endorsement of this Investment Plan. It will now kick-start the Just Energy Transition Partnership with South Africa, a first of its kind global initiative for accelerating a just energy transition in countries that commit to phase out coal. It is a flagship of EU-supported multilateral cooperation to limit global warming to 1.5C.
A joint 12-month update to leaders by South Africa and the IPG summarises key technical progress that has contributed to the development of the JETP Investment Plan. It, and the preceding 6 month update to leaders also outline measures undertaken by the government of South Africa to strengthen the enabling environment for South Africas long-term energy transition.
The IPGs initial $8.5 billion funding package includes [note 1]:
- $2.6 billion through the Climate Investment Funds Accelerating Coal Transition Investment Plan [note 2] (CIF ACT)
- $1 billion from France [note 3]
- $1 billion from Germany [note 4]
- $1.8 billion from the UK [note 5]
- $1 billion from the US [note 6]
- $1 billion from the EU [note 7]
Some of this funding is already programmed while other parts of it have still to be finalised and programmed in line with the final Investment Plan. Work to programme the full $8.5 billion will continue in coming months.
In addition to the $8.5 billion, the World Bank Board has recently approved the Eskom Just Energy Transition project which is providing $0.5 billion of financing in support of South Africas Just Energy Transition.
International Partners Group financial support
The IPG has supported South Africas Just Energy Transition in a variety of ways both directly and indirectly. A fuller description of support is provided below.
Early progress in deploying the $8.5 billion support of Investment Plan
The Climate Investment Fund Accelerating Coal Transition (CIF ACT) Investment Plan will provide $2.6 billion in total including $500 million of highly concessional Accelerating Coal Transition funding provided by the CIF. IPG members (Germany, the UK and the US) provide approximately 65% of funding for the overall CIF ACT programme. The CIF ACT Investment Plan will support the decommissioning and repurposing of 3 coal power stations, community development and energy efficiency projects in Mpumalanga. The World Banks Eskom Just Energy Transition project will provide finance for decommissioning and repurposing a further coal power station.
France and Germany are providing $600 million ($300 million each) for a concessional policy loan to South Africa to support the JETP. The loan will be formally signed during COP27.
A number of IPG grant funded activities contributed to the development of the Investment Plan and will contribute to ongoing analytical and policy work as South Africa moves towards implementation. These include:
- the UK has funded work with municipalities and affected communities in the 2 most coal-dependant municipalities in Mpumalanga (eMalahleni & Steve Tshwete Local Municipality) to co-develop a coherent and inclusive just transition plan for each municipality
- Germany has funded the integration of renewable energy (particularly solar energy) into the existing energy grid. Measures to increase energy efficiency are being developed in cooperation