South Africa Secures a Historic Investment to Transition Away from Coal

Pollution remains a major problem in the Highveld, a region in eastern South Africa. (Wikimedia)

South Africa received a pledge of $8.5 billion to transition the country’s energy sector away from coal at the 2021 United Nations Climate Change Conference (COP26) in Glasgow on November 2, according to Al Jazeera. This deal, financed by the U.S., U.K., France, Germany, and the EU, represents a historic achievement in cooperation between a group of wealthy states and a member of the Global South in combating climate change, reports Reuters. 

South African President Cyril Ramaphosa stated on November 2 that the funds contained within the agreement would come via a mix of grants and loans, according to the New York Times. He explained that these funds would be used to invest in renewable energy technology, provide economic support for those formerly dependent on the coal industry, and decommission old coal power plants throughout the next 15 years. However, the South African government has not shared specific details on its plans to accomplish these goals or to what extent coal will be phased out.

According to Reuters, Ramaphosa called the deal a “watershed moment.” The New York Times added that Ramaphosa stated it was “proof that [South Africa] can take ambitious climate action while increasing our energy security, creating jobs and harnessing new opportunities for investment, with support from developed economies.”

These sentiments were echoed by energy policy researcher and expert on coal at the University of Cape Town Jesse Burton, who called the deal “a first of its kind agreement between a coal-intensive developing country and a group of donor governments to work together and fund a just transition away from coal.” He also added that it would be a “major test,” according to the New York Times. 

U.K. Prime Minister Boris Johnson praised the deal for its ability to aid in global decarbonization by “choking off international finance for coal.”

Al Jazeera noted that South Africa’s economy has long relied on its coal industry for energy but sees it as an important economic engine now more than ever. South Africa is the seventh-largest coal producer, with coal power plants providing over 80 percent of the country's electricity. South Africa is also the fourth largest coal exporter, totaling roughly 30 percent of its production. The coal industry provided, according to Reuters, more than 90,000 jobs to South African miners in 2020, and it supports an additional 30,000 workers in power plants. With the economic hardship caused by the COVID-19 pandemic and global energy crunch raising the price of coal, the government views the industry as a potential lifeline for economic stability.

The combination of these factors has made South Africa hesitant to transition away from coal. Mineral and Energy Resources Minister Gwede Mantashe called the idea “economic suicide.” In addition, South Africa’s state-run power utility Eskom is $27 billion in debt, making the transition financially difficult even with political will, according to Foreign Policy. 

Nevertheless, South Africa pledged to decrease its emissions over the next decade in order to meet its 2030 Paris Climate Goal. The recent agreement is a step in the right direction for South Africa, and the $8.5 billion will go a long way in helping the world's 12th largest producer of greenhouse gases do its part in combating global warming. Additionally, this deal represents a potential model for the decarbonization of the Global South—a region that in many cases does not have access to the wealth necessary for a timely transition—through the support of wealthy countries in the Global North.