(Bloomberg) — South Africa risks a $9.3 billion climate finance pact by delaying the closure of some coal-fired power stations, a panel appointed by the country’s environment minister said.
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In an agreement known as the Just Energy Transition Partnership, South Africa secured the bulk of commitments from some of the world’s richest countries in 2021 in the form of loans, grants and guarantees. They offered to help the country reduce its dependence on coal for power generation. On condition that it phased out some of its older plants and used the most polluted fuel.
The worst power outages on record last year prompted Eskom Holdings SOC Ltd., the state-owned energy company, to postpone the closure of its facilities. Eskom has said it has decided to postpone the decommissioning of three power stations – Grootvlei, Hendrina and Camden – until 2030.
A unit of the South African presidency earlier this month gave a presentation on the country’s new plans to the World Bank-linked Climate Investment Funds, which is considering allocating $500 million to South Africa. Financing from the fund could leverage an additional $2 billion in investments from other partners. The content and outcome of those conversations have not been disclosed.
JETP partner countries understand energy security concerns, but misalignment with the goal of rapid decarbonization to the lower level of an emissions target range the government has submitted to the United Nations could jeopardize this financing, it said National Environmental Consultative and Advisory Forum. in his report. According to the report, they are unlikely to tolerate a significant rollback of the plans.
The UK, US, France, Germany and European Union signed the pact in 2021, with the Netherlands and Denmark joining later. South Africa generates about 80% of its electricity from coal and has the most carbon-intensive economy of any Group of 20 country, putting most of the world’s largest economies at risk.
The 531-page report, parts of which have been redacted, was commissioned by Environment Minister Barbara Creecy to advise her on a call by Eskom to keep power stations capable of producing 16 gigawatts of electricity open despite exceeding the emission limits. It accepted the recommendation that retrofitting five of the oldest factories with equipment to reduce sulfur dioxide pollution was impractical and granted them exemptions until 2030.
The panel expressed concern over Eskom’s plans to keep the plants open longer than initially planned, saying they emit the most greenhouse gases per unit of electricity produced of all fourteen of Eskom’s facilities.
It also said a separate report commissioned by the minister on sulfur dioxide pollution from Eskom’s factories, which it studied, showed that the health impacts of the pollutant have been underestimated.
“The impact on morbidity is likely to be an order of magnitude greater than the likely underestimated impact on mortality calculated to date for sulfur dioxide in South Africa,” said the authors of the report, which has not yet been publicly released.
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