CIF’s R8bn for South Africa’s coal to clean power transition

South Africa is set to receive $500 million (over R8 billion) from the Climate Investment Funds (CIF), one of the world’s largest multilateral funds for climate action in developing countries, for a just transition from coal to clean power.

The funds take the form of concessional, risk-bearing capital from CIF’s Accelerating Coal Transition (CIF ACT) investment programme to build momentum toward ambitious climate, energy, and development goals.

It is expected that the country will use the funds to replace current coal-fired power generation with clean power and energy storage systems.

However, the amount is less than one percent of the estimated billions of dollars that South Africa needs by 2030 for a just transition.

Minister of Forestry and Fisheries and Environmental Affairs Barbara Creecy said, “A just energy transition that is procedurally just, equitable in sharing risks and opportunities, and one that is restorative, is a climate and developmental imperative that we can no longer ignore.”

She added, “Noting that estimates indicate that over the next eight years South Africa needs over $60 billion [R1,018 billion] in investments to effect the transition, the CIF ACT finance will make a meaningful contribution towards South Africa walking down that ambitious pathway to a brighter future of our people, addressing our energy needs, promoting sustainable development and leaving no one behind.”

The country’s Just Energy Transition is clear in its aims that workers and local communities benefit from such a change, in particular with access to – and creation of – employment opportunities. Funds from CIF is also expected to support governance, community infrastructure as well as SMMEs that are climate smart.

South Africa, India, Indonesia and the Philippines coal-related emissions combined account for over 15 percent of global emissions.

CIF stats snapshot for South Africa:

• Installed generation capacity sourced from coal-fired power stations: 87 percent;
• Contribution to carbon dioxide emissions: Nearly 50 percent;
• Decommissioning several coal-fired power stations: Can prevent about 71 million tons of carbon dioxide in potential GHG emissions; and
• Lead implementing partner for CIF ACT in South Africa: World Bank, in conjunction with the African Development Bank and the International Finance Corporation.