SA ‘needs R300bn boost for a just transition’

SA will need an investment of R300bn from the international community over the next three decades to support a just transition towards low emissions and climate-resilient development, the presidential climate commission says.

The commission released a report, “Laying the foundation for a just transition framework for SA”, on Thursday. It stresses that the government has a significant role to play in creating an enabling environment and consistent market signals to attract this investment.

WORKERS

A just transition means the transition to a low-carbon economy will provide support to workers and communities whose livelihoods are tied to fossil fuel industries.

The report is a summary of consultations and research conducted to date and focuses on policy, the coal value chain, sustainable livelihoods, financing, water security and governance.

The commission has been given the job of producing a just

transition framework for SA in 2022, which will be a strategic plan for achieving a just and equitable transition to net-zero carbon dioxide emissions in SA by 2050. It will present this framework to the cabinet, setting out the course of action to take for social partners over the short, medium and long term.

FINANCING PACKAGE

The commission’s report says SA’s biggest opportunity for attracting international climate finance is in the transformation of the electricity system, specifically focused on decentralisation and decarbonisation. Developed nations have already committed $8.5bn (about R130bn) for use by Eskom for this purpose, an offer that is being considered by the government.

The commission says SA could consider putting together a financing package that is comprehensive and long term.

“This financing package could chart a path for at least 30 years and be in line with national development objectives, helping to attract a combination of donor aid, development finance and private sector finance, including from domestic sources.

“Importantly, this financing package should not come with conditions that may be detrimental to SA’s development imperatives,” the report says.

A range of measures would be needed to secure increased finance. “It will require tracking climate and just transition finance flows, promoting common taxonomies and reporting, using incentives and regulatory measures to scale them up, encouraging blended finance instruments, and tailoring instruments to meet the just transition imperative.”

Communities, workers and small businesses should also reap the benefits of financing the just transition, it says.

SHARING RISKS

“One of the challenges SA might face in financing a just transition is that markets have not yet appropriately valued social outcomes. These outcomes include job creation, better livelihoods for displaced workers, and resilience of vulnerable households to natural disasters.”

Risks in seeking just transition finance must be shared across investors and SA needs a viable base plan.

Development finance can play a critical role in mitigating the risk of long-term finance, where institutions such as the multilateral development banks have considerable experience in long-term institutional capital.

The commission also recommends a regional and Southern African Development Community-wide discussion on just transition finance as projects in one country could affect those in another. For example, the Mpumalanga coal transition will affect water flow into Mozambique (and the largest dam in the Limpopo Basin, the Massingir Dam, which feeds 60,000ha of farmland downstream). Some solutions also lie outside SA’s borders, such as the Inga Dam and energy programme.

Water security will have to be improved as climate change will worsen SA’s current challenges in this regard.