Despite wealthy nations’ pledged $R8.5-billion (approximately R150-billion) and further pledges and investments, South Africa faces a R660-billion financing shortfall for the just energy transition, expected to cost R1.5-trillion over five years.

This was revealed by Forestry, Fisheries and the Environment Minister Barbara Creecy in a response to a parliamentary question.

Democratic Alliance (DA) MP David Bryant asked whether she was actively exploring additional funding mechanisms for the implementation of the Just Transition to a Decarbonised Economy for South Africa to supplement the initial $8.5-billion commitment.

The $8.5-billion package, revealed at COP26 in 2021, comprises $1-billion from France, Germany, the US and the EU.

The UK has pledged $1.8-billion, and $2.6-billion of the funds will be accessed from the Climate Investment Funds Accelerating Coal Transition (CIF ACT) Investment Plan.

The CIF ACT monies include $500-million or R9-billion to accelerate the decommissioning of coal-fired power stations.

Germany, the UK and the US provide about 65% of the funds for the CIF ACT programme, which will support the decommissioning and repurposing of coal power stations, community development and energy efficiency projects in Mpumalanga.

In her response, Creecy said: “The total financing required for the Just Energy Transition Investment Plan (JET IP) is estimated at R1.5-trillion over the next five years. This will need to be mobilised from various public and private sources, such as multilateral development banks, international partner countries, private investors, philanthropies and the fiscus.

The $8.5-billion (approximately R150-billion) by the International Partnership Group provides an initial contribution, but still leaves a substantial shortfall.

She said that “ongoing efforts” to find financing have yielded the following results:

New pledges from Denmark, the Netherlands and Spain, totalling $3.5-billion (around R60-billion);

Indicative investment by the domestic private sector, mostly in new generation, of between R500-billion and R700-billion;

Estimated financing from multilateral development banks and local and international development financing funds of between R170-billion and R200-billion, which may increase if these institutions reform their policies to include climate change mitigation.

Grant funding by international partner countries have increased from R5.7-billion to R9.3-billion.

Creecy added: “There still remains an estimated shortfall in financing of approximately R660-billion that government is actively mobilising from a wide range of financing sources.

South Africa is the world's 13th-biggest source of greenhouse gases, with almost half of its emissions coming from coal-fired electricity generation, News24 previously reported.

An essential element of South Africa’s just transition plan is ensuring that the shift doesn't disadvantage workers and communities.

This is why the funding will not only support the decommissioning of coal-fired power plants but also fund alternative employment in coal mining areas.

It will also go towards the rapid deployment of renewable energy.

While a move away from coal towards renewable energy sources, like wind and solar, is the scientifically backed international trend, some South African politicians still cling to the outdated and environmentally harmful coal.

Mineral Resources and Energy Minister Gwede Mantashe is a vocal advocate for coal, and so is the Economic Freedom Fighters (EFF), which  supports a South African energy mix dependent on Russian gas and nuclear power.

In another parliamentary question, EFF MP Yoliswa Yako asked Electricity Minister in the Presidency Kgosientsho Ramokgopa, “what is the point of pursuing the various bid windows for the unreliable renewable generators” given the “positive reports regarding bringing units back from planned maintenance like Unit 4 in Kusile Power Station, the expected new capacity soon-to-be unleashed by Unit 5 and the successes of fuel gas desulphurisation plant for clean emissions”.

Ramokgopa answered that South Africa’s energy supply is determined by the energy mix set out in 2019’s Integrated Resource Plan (IRP). Based on this IRP, coal constitutes 43% of installed capacity, wind 22.53%, solar photovoltaics (PV) 10.5%, concentrating solar-thermal power (CSP) 0.76%, nuclear 2.36%, gas and diesel 8.1% and hydro 5.84%.

“Whilst the IRP is currently being reviewed, Coal, Nuclear and Gas is expected to continue to be significant contributors to SA’s base load demand in the foreseeable future, with investments in cleaner technologies to mitigate negative environmental impacts, coupled with and battery storage to neutralise and solar/wind hybrid solutions to stabilise the intermittency challenges of renewables.”

At a rally in Mpumalanga on Saturday, EFF leader Julius Malema claimed loadshedding is a “manmade problem” because an unspecified “they” want to give business to “their friends, they’re called IPPs – independent power producers”.

“They say we must close the coal mines in Mpumalanga and coal power stations. If you allow that nonsense in Mpumalanga, you’ll be fools. Because the economy in this province is based on coal power stations and the coal mines.

“Protect your coal! Protect your coal power stations! Your power is in this coal! Don’t allow Cyril Ramaphosa with an ugly nose to come and steal your mines here,” said Malema. “Bloody bastard!

“So, comrades, the EFF is not opposed to IPPs, but the closure of coal power stations. It’s a gradual thing. It’s not something that you just wake up in the morning and close a coal power station. We’ll do it on our own, that we introduce alternatives, and we’ll do so on the basis of the interest of our own people. Not on what Britain wants! Not on what America wants!”

He said “when the EFF comes in” – presumably a reference to them coming into government – they will have no part in the $8.5-billion “nonsense”. He didn’t present an alternative to how the EFF would fund a transition.