R160 billion not enough for South Africa
The world is trying to transition into renewable energies, and South Africa looks set to benefit from the $8.5 billion (R160 billion) investment.
Global warming is the biggest global economic concern, with 2023 the hottest on record, driving the need for global coordinated action.
Hence, as Business Leadership South Africa CEO Busisiwe Mavuso said, COP28 in Dubai this week is an important event for South Africa.
South Africa is at particular risk of global warming due to our nation’s water scarcity and ecology – but we are still incredibly dependent on coal and other fossil fuels to grow the economy. Mavuso added that the transition must also ensure justice for those whose jobs and livelihoods are at risk.
However, there is global support for South Africa’s energy transition, with the Just Energy Transition Investment Partnership (JET-IP), first tabled at COP26, envisaging $8.5 billion (R160 billion) of investment from some of the world’s largest economies.
“However, we must be careful not to be overly focused on the JET-IP as if it can solve all problems – the $8.5bn is only a small part of the total investment needed,” Mavuso said.
That said, the delegation representing South Africa at COP28 said that $26bn-$41bn is needed annually for Africa alone to implement adaptation actions.
In a parliamentary Q&A, Minister of Forestry, Fisheries, and the Environment Barbara Creecy said that the total financing needed for the JET IP is R1.5 trillion over the next five years.
Despite investments from these wealthy nations for JET IP, the domestic private sector, Multilateral Development Banks, and local and international Development Finance Institutions, Creecy said that South Africa still has an estimated shortfall of roughly R660 billion in tackling global warming.
Apart from consolidating the JET-IP investment, the delegation at COP28 – which is expected to be led by President Cyril Ramaphosa – will also be looking for global commitments to help African countries manage climate risks, such as a loss and damage fund and framework to fund adaption investments.
“The DFFE has done good work to institutionalise our climate transition framework, including the recent Climate Change Bill that will provide a framework for emissions targets across the economy,” Mavuso said.
In addition, as it is mainly responsible for most of the nation’s new renewable energy projects, Mavuso said that the private sector should be kept in mind.
“Our partnership with government to tackle the electricity crisis is seeing massive additional investment by private companies to build generating capacity, almost all of it from renewable sources, saving considerable CO2 emissions,” she said.
“Whatever global funding that can be raised should be used to mobilise private funding if we are to have any hope of getting to the volumes of investment needed. That means channelling global funding appropriately to de-risk projects and ensure they are bankable by the private sector.”
“Official funding can also support the justice elements of the transition, enabling communities that will be negatively affected by the exit from fossil fuel generation to find new opportunities, and ensuring that the economic development spurred by the transition is effective in reducing poverty.”
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