SA seeks to renegotiate coal pact

Government is pushing to renegotiate a deal with Climate Investment Funds (CIF), a group tied to the World Bank, so that it won’t be required to close three coal-fired power plants in the coming years. Fin24 reports that the plants, owned and operated by Eskom, are among SA’s biggest polluters, according to government advisers. Pretoria is seeking an ‘adjusted approach’ to the programme, with the decommissioning date for three power stations moved to the end of March 2030. The development has the potential to affect a total of roughly $2.6bn in financing from multilateral development banks and other sources, the first tranche of which would be a $500m disbursement from CIF’s Accelerating Coal Transition programme. The funds, which are tied to the country’s commitment to weaning itself off the world’s dirtiest fossil fuel, are part of a larger $9.3bn climate pact. The failure of a G20 nation to live up to its commitments around coal power would represent a blow to a $40bn programme known as the Just Energy Transition Partnership, under which SA’s agreement was struck. As the first JETP nation, SA’s retreat from the original terms of its agreement would raise questions around the programme’s credibility. Daniel Morris, clean energy lead at CIF, confirmed that SA is currently ‘updating its investment plan.’ CIF expects the government to provide an update ‘by the fall,’ he said.

Fin24 notes that the development underscores just how hard it is for developing nations such as SA, which relies on coal for about 80% of its electricity, to switch to cleaner energy sources. While President Cyril Ramaphosa had backed the original terms of the programme, the country’s Energy and Electricity Ministers criticised it as representing a threat to the stable supply of power to a nation plagued by constant outages. SA’s JETP investment partners – the US, UK, Germany, France, the Netherlands, Denmark and the EU – remain broadly supportive, according to responses to Bloomberg. But they also voiced concerns about the ramifications of delays in closing coal plants. An official at the US Treasury Department said the expectation remains that SA can achieve its most ambitious emissions-reduction targets.

Full Fin24 report