South Africa is set to get multibillion-rand loans from the governments of the US and Germany to accelerate the country’s just energy transition programme.
Last week, the US government announced the country will get a share of the $1 billion (R18 billion) loan facility to drive renewable energy projects.
Also last week, Germany committed a further funding of EUR355 million (R6.2 billion) for the next-year cycle to boost SA’s move to clean energy sources.
US treasury secretary Janet L Yellen announced last week that the US Treasury has signed a loan agreement for the Clean Technology Fund (CTF) – a multilateral trust fund that helps to scale up low carbon technologies in developing countries using resources appropriated by Congress and signed into law by president Joe Biden.
The announcement came two months after US secretary of state Anthony Blinken visited SA, saying his government will work closely with African countries as they determine how to best meet their specific energy needs. This includes pursuing energy access and economic development goals through technologies such as energy-efficiency and renewable energy, as well as gas-to-power infrastructure.
In a statement, the US Treasury says this contribution also makes good on the country’s pledge to support the CTF’s Accelerating Coal Transition Investment Programme made at the 2021 G7 Summit alongside G7 partners.
The loan will be used to support US climate commitments, including just energy transition partnerships.
“Today’s $950 million loan to the Clean Technology Fund – the first of its kind from the US Treasury – is a strong down payment on the president’s $11 billion climate finance pledge and an indication of our continued support for emerging market countries committed to transitioning toward clean and renewable sources of energy,” says treasury assistant secretary for international trade and development Alexia Latortue.
“We expect this contribution to help drive the overall just energy transition partnership programmes, while building on multilateral development bank expertise and engagement in these countries. This loan also represents an innovative approach to financing that is highly leveraged and thus allows us to achieve much-needed greater scale of climate finance.”
The nearly $1 billion loan will fund CTF projects developed by the multilateral development banks, including those developed in alignment with the priorities of the national accelerating coal transition investment plans that will be presented by the governments of South Africa, Indonesia, India and the Philippines starting in October 2022, says the statement.
The announcement comes as SA is making strides in moving away from fossil fuels to introduce green energy sources to the national electricity grid.
This, as embattled power utility continues to struggle to keep the lights on, due to the ageing coal-fired power plants, among a host of other issues bedevilling the state-owned company.
Meanwhile, SA’s National Treasury department says in a statement that the 2022 government-to-government negotiations on South African-German development co-operation took place on 5 October in Pretoria.
The German delegation was headed by Birgit Pickel, director general for Africa at the German ministry for economic co-operation and development, and included the GIZ and KFW.
The South African delegation was headed by representatives from National Treasury.
South Africa and Germany reconfirmed the five bilateral focal areas of peaceful and inclusive societies, climate and energy, sustainable economic development, training and employment as well as health and pandemics.
Pickel highlighted the just energy transition partnership as a milestone in international co-operation and emphasised Germany’s strong commitment to this partnership in order to support clean and just transition towards climate neutrality in South Africa.
The countries emphasised the importance of the “just” component of transition to protect livelihoods and the economic base of the coal basin in policy discussion around JETP.
South Africa and Germany will further strengthen the existing bilateral TVET and skills development co-operation, and complement these by further initiatives focusing on pathways from learning to earning.
Share