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G7 nations including Germany, the U.S., the U.K. and France will contribute $8.5 billion toward decarbonizing South Africa’s energy matrix, enabling the country to meet its revised National Determined Contribution as set forth by the Paris Agreement.
While full details have yet to be disclosed, the climate financing deal will take the form of grants and concessional finance and go toward investment in renewable energy and emerging clean technologies, such as electric vehicles and green hydrogen.
Since ratifying the Paris Agreement on Climate Change in 2016, South Africa has committed to reducing its domestic carbon emissions to levels between 420 CO2-eq and 350 CO2-eq by 2030.
“[This] represents our country’s best effort to confront climate change, which will have a devastating impact on sub-Saharan Africa without large-scale mitigation and adaptation efforts,” stated South African President H.E. Cyril Ramaphosa, during the announcement of the deal at the COP26 in Glasgow on Tuesday.
While South Africa’s renewable energy sector has seen explosive growth in recent years, the country is still heavily reliant on coal-fired power – from which it derives almost 90% of its energy – and an estimated $11 billion in climate finance is needed for the country to full transition to renewables, and to keep state-owned public utility Eskom financially solvent.
“This will provide a significant boost to investment and growth while ensuring Eskom can access resources to finance repurposing of coal fired power-stations due for decommissioning over the next 15 years,” added President Ramaphosa.
