Cooling towers at disused coal-fired plant in Soweto, South Africa (Photo: Jay Galvin /Flickr)
Around 97% of the $8.5 billion package rich countries are offering South Africa to shift from coal to clean energy is set to be delivered as loans.
That can be seen in a summary of the financing provisions obtained by Climate Home News.
It shows that $4.6bn – 54% of the funding – is earmarked as concessional loans, with better borrowing terms than South Africa can access on the open market. Just under half of that money is provided by Germany and France.
The remaining $3.7bn, or 43%, include a mix of commercial loans and investment guarantees to de-risk projects so they attract private investors. These will come from the EU, US and the UK, which is contributing the largest share.
Only $230m will be delivered collectively by donor countries as grants – 2.7% of the total package.
South Africa’s cabinet approved an investment plan for the money on Wednesday, but has yet to publish it. A launch is expected at the Cop27 climate summit next month.
The South African government has been in negotiations with partner governments since striking an outline deal at the Cop26 climate summit in November 2021.
South Africa’s president Cyril Ramaphosa has repeatedly said his government would only accept a deal that offered good terms. Most of the money should come as grants, he said shortly after Cop26, and any loans should be at concessional rates.
Ramaphosa's government has been trying to reduce the country's sovereign debt, which stands at around 70% of GDP.
A distinctive feature of the package was its focus on supporting workers in the transition to clean energy, with social protection measures and retraining.
But under the breakdown seen by Climate Home, less than 1% of the money is earmarked for direct social investments. In contrast, 5% is to develop a green hydrogen sector. Climate Home News - link - Chloe Farand - link - more like this (South Africa) - link - more like this (coal) - link
That can be seen in a summary of the financing provisions obtained by Climate Home News.
It shows that $4.6bn – 54% of the funding – is earmarked as concessional loans, with better borrowing terms than South Africa can access on the open market. Just under half of that money is provided by Germany and France.
The remaining $3.7bn, or 43%, include a mix of commercial loans and investment guarantees to de-risk projects so they attract private investors. These will come from the EU, US and the UK, which is contributing the largest share.
Only $230m will be delivered collectively by donor countries as grants – 2.7% of the total package.
South Africa’s cabinet approved an investment plan for the money on Wednesday, but has yet to publish it. A launch is expected at the Cop27 climate summit next month.
The South African government has been in negotiations with partner governments since striking an outline deal at the Cop26 climate summit in November 2021.
South Africa’s president Cyril Ramaphosa has repeatedly said his government would only accept a deal that offered good terms. Most of the money should come as grants, he said shortly after Cop26, and any loans should be at concessional rates.
Ramaphosa's government has been trying to reduce the country's sovereign debt, which stands at around 70% of GDP.
A distinctive feature of the package was its focus on supporting workers in the transition to clean energy, with social protection measures and retraining.
But under the breakdown seen by Climate Home, less than 1% of the money is earmarked for direct social investments. In contrast, 5% is to develop a green hydrogen sector. Climate Home News - link - Chloe Farand - link - more like this (South Africa) - link - more like this (coal) - link
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