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South Africa needs $250bn for coal

to clean energy transition, study

SOUTH AFRICA SOUTH Africa will need to spend $250bn over Public Investment Corp., which oversees 2.34trn
the next 30 years to switch from coal-fired elec- rand ($149bn) of mainly government worker
tricity generating plants to cleaner energies, pensions, the Development Bank of Southern
according to a new study. Africa Ltd. and the Industrial Development
Released on Thursday (May 26) on the side- Corp., should play a role, Bloomberg cites the
lines of the World Economic Forum in Davos, researchers as saying.
Switzerland, the report by London-headquar- “The majority of the $250bn needed for South
tered The Blended Finance Taskforce and the Africa’s Just Energy Transition can be funded by
Centre for Sustainability Transitions at Stel- private finance investing into scaling renewables
lenbosch University of South Africa, says apart and other enabling infrastructure,” the research-
from mothballing coal plants, some of the ers said. “About a third of the funding will be
money would have to be spent on compensating needed from capital providers with a mandate
communities who rely on the fossil fuel. that is not entirely commercial” to support the
“It will take at least $250bn spent over the social costs of the transition.
next three decades to transition to a low-carbon, Africa’s most industrialised country is nego-
more equitable energy system in South Africa tiating $8.5bn in climate grants and concessional
under an ambitious decarbonisation scenario loans with the US, UK, France, Germany and the
(coal off by 2040),” the authors said, according to European Union. The potential deal, announced
Reuters on Thursday. at COP26 climate summit in Glasgow, Scotland
Coal produces about 80% of South Africa’s in November 2021, envisages South Africa retir-
energy. The country is the world’s 12th biggest ing some of its coal-fired power plants, Bloomb-
emitter of climate warming gases and the big- erg said.
gest in Africa, Reuters says. Around half of the “The $8.5bn pledge can be a catalyst to unlock
total investment, $125bn, is needed to ramp up this $250bn,” researchers said in the study. “It
wind and solar power projects. Some of it will should offer the global blueprint for transition
fund gas plants and energy flexibility, new trans- finance.”
mission lines as well ensuring that thousands of Coal contributes about 5% of the country’s
coal workers whose jobs are threatened will be gross domestic product and employs 125,000
reskilled. people. The coal-reliant population is far higher
“Aligning the right type of capital with the as each of the 125,000 has between three and 10
right investments and costs is key to meeting dependents, reports say
South Africa’s just energy transition objectives,” Under the plan presented in the study, the
the report said, adding that the definition of country would need to install 5 gigawatts of
“just” should extend beyond workers to address renewable energy capacity annually until 2050.
the challenges of communities in coal-depend- That would create 5,000 jobs a year over the next
ent areas. decade in construction, operation and mainte-
Most of the funding, the study says, will have nance of the plants, Bloomberg said citing the
to come from the private sector. report.™
Government-linked institutions such as the

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