A 1.5 trillion rand ($84 billion) proposal to start the decarbonization of its coal-dependent economy in South Africa has been sold to the international world.
The 2023–2027 investment plan was presented to the president’s climate commission on Friday by Cyril Ramaphosa. In order to solve South Africa’s frequent blackouts, “unacceptable levels of poverty,” and the climate problem, he dubbed the 200+ page document “a blueprint” for an economic transition from fossil fuels to renewable energy.
“In essence, this investment plan is the first of its kind in both scale and ambition. It provides a vision of a future South Africa which is a leading player in a new low carbon global economy,” Ramaphosa said.
The government is attempting to raise additional funds from foreign country partners, the corporate sector, and philanthropies in order to meet its estimated financial shortfall of ZAR 700 billion ($39 billion) or around 44% of its investment needs.
The pledge by wealthy nations to commit $8.5 billion to the coal-to-clean plan will “play an important catalytic role but it is not sufficient to meet the scale of our ambition,” Ramaphosa said.
According to the president, he informed the US, UK, France, and Germany—countries that made financial contributions—that more money—including “a significantly larger grant funding component”—was required than “what has been put on the table.”
According to the plan, only $330 million, or less than 4% of the $8.5 billion package, will be distributed as grants.
“By releasing this plan, we are placing the ball firmly in the court of the international community, particularly developed economy countries that have through their own industrialisation… contributed greatly to the damage of our climate,” Ramphosa told the commission.
Around 70% of the required investments, or ZAR 1 trillion ($57 billion), are slated for the electrical sector. This entails upgrading the grid, spreading renewable energy widely, and retiring the nation’s outdated coal fleet. In the coal-rich Mpumalanga province, over ZAR 60.4bn ($3.4bn) is earmarked for the development of greener employment options for employees.
With 22% of the investment, the plan places a significant wager on the growth of the green hydrogen industry. This would produce clean fuels for export and decarbonize South African industries. The remaining 8.5 per cent will be used to expand the electric vehicle market and increase South Africa’s capacity to produce combustion-engine vehicles. Ramaphosa stated that this prospectus will be available for consultation and revision.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.