Europe to give SA billions to help free country from coal and Eskom

Greener pastures for South Africa’s energy crisis may not be as unattainable as previously thought, with renewable energy leading the charge in terms of a sustainable, long-term solution, and a little help from abroad. 

The country received a much-needed boost in the form of an $8.5 billion (R131 billion) pledge from France, Germany, the UK, the US and the European Union, it was confirmed at the 26th annual United Nations Climate Change Conference (COP26) in Glasgow, Scotland. 

While preparing for the COP26, South Africa submitted a revised Nationally Determined Contribution (NDC) to reduce domestic carbon dioxide (CO2) emissions to within a suitable target range, in line with the Paris Agreement. 

This was decided on to be between 420 megatons of CO2 equivalent and 350 CO2 equivalent by 2030. 

ALSO READ: SA must transition to clean energy – but it’s too broke to do so

But the Centre for Environmental Rights (CER) warned only the 350 megatons of CO2 were on par with the globe’s greenhouse gas emissions limit. 420 megatons of CO2 is well above the 1.5°C predicted temperature increase. 

What does the loan mean?

The promised billions to South Africa will be given to the country over the next three to five years, in the form of grants and concessional finance. 

This is aimed at supporting the revised NDC, to help the country achieve a just transition to a low carbon and climate resilient economy. 

A just transition importantly includes supporting workers and communities currently dependant on the coal sector. These people will have to go from having jobs in fossil fuels to sustainable, green jobs. 

The transition from coal to renewable energy cannot be just if decarbonising the economy does not sustain employment, livelihoods and economic inclusion for historically marginalised communities. 

ALSO READ: How SA’s addiction to coal is sacrificing the planet to try keep the lights on

The money will help speed up renewable energy investment, and develop new sectors such as electric vehicles and green hydrogen. 

While this takes place, Eskom will also be able to finance repurposing coal-fired power stations, and decommission them, which will be taking place over the next 15 years. 

With promises already being made through the political declaration announced on Tuesday, details on how much the loans and grants willbe are stilllacking. 

This information is integral to incorporate transparency in ensuring a just transition. 

To iron out the details, a joint task force will be created to take forward this new and much-needed partnership over the next few months. 

If renewables are cheaper, why is SA lagging behind?

South Africa’s Integrated Resource Plan, although perhaps due an upgrade, is finally underway, with preferred bidders appointed under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in October. 

ALSO READ: Mantashe announces 25 preferred bidders for renewable energy projects

To date, government has signed agreements with 93 independent power producers (IPPs). 

In addition to this, the bidders, creating 25 green energy projects, bring South Africa’s REIPPPP to 1,995MW. The bid window five of the programme is aiming at procuring 2,600MW of renewable energy – 1,600MW from onshore wind farms, and 1,000MW from solar photovoltaic plants. 

With the new green projects, 2,583MW of renewable capacity will be added to the national grid. 

This is good news for South Africa’s economy, and for consumer pockets, with University of Cape Town professor Anton Eberhard calculating that the cheapest REIPPPP five bids costing between 34.4c and 37.5c per kilowatt hour (kWH). 

Eskom’s input costs for coal-generated power are currently at 42c/kWH, a total which excludes power station maintenance and refurbishment. 

The affordability of renewable energy therefore nullifies any claims that it is pricier than fossil fuels, an argument used to delay the rollout of green energy in previous years. 

Eskom is keen to invest in green energy, its group CEO André de Ruyter explained in August. Climate scientists, environmental groups and investors are also gearing up for a just transition. 

ALSO READ: ‘Turn coal shovels into turbine blades’, says de Ruyter in push for renewables

Environmental organisations have said Department of Mineral Resources and Energy Minister Gwede Mantashe is the only “outlier”, looking to save coal and invest in contentious projects such as the liquified natural gas power ship saga. 

However, it is hoped that the billions due to come South Africa’s way will push even the most sceptical candidates in the right direction, to help get the country in line with the world’s goal of keeping temperature increases at 1.5°C. 

South Africa is currently Africa’s largest carbon emitter. 

COP26 talks will continue until 12 November.