Rich nations head to SA to urge exit from coal
Four of the world’s richest nations will send a delegation to SA as soon as next week to seek a deal to begin closing the country’s coal-fired plants, according to people familiar with the matter.
Officials from the US, UK, France and Germany are looking for an agreement with Eskom, which generates almost all of SA’s power from a fleet of 15 coal plants. Any deal struck could be announced during the UN climate talks known as COP26, set to start in Glasgow, Scotland, on October 31, one of the people said.
“The developed economies have a responsibility to fund the just transition to a low-carbon economy and climate-resilient society,” said Albi Modise, a spokesperson for the department of forestry, fisheries & the environment. He confirmed that John Murton, the UK’s envoy to COP26, will visit the country “to assess opportunities for enhanced co-operation”, but added that the dates are still being finalised.
COP26 president Alok Sharma has said he wants to use the summit to “consign coal to history”. But he’s met resistance from a number of middle-income countries that rely on coal. A Group of 20 meeting in July failed to reach an agreement on phasing out coal.
SA’s use of coal has made it the world’s 12th biggest emitter of greenhouse gases, ahead of the UK, which has an economy eight times its size. Eskom alone accounts for more than 40% of SA’s emissions.
While the utility has laid out plans to start closing down its coal plants and having them at least partially replaced with renewable energy, gas-fired generation and battery storage, its debt burden of R402bn hinders it from borrowing more money to pay for the energy transition.
With about 20,000 power plant workers, 90,000 coal miners and many thousands more involved in the transport of the fuel, there are also social implications to take into account.
In July, Eskom CEO André de Ruyter suggested a facility from development-finance institutions that would be paid over a number of years. In an August presentation to the government, the company said it was in initial talks to raise R33bn from five such organisations. Mandy Rambharos, the head of Eskom’s Just Energy Transition department, has previously said the phase-out could cost more than $10bn.
Multilateral development banks including the World Bank are under pressure from the UN to hasten the green transition. Earlier in 2021, the Asian Development Bank became the first to announce plans to help pay for the early retirement of coal plants.
A range of funding options will be discussed during the SA visit, the people said. One potential option is access to as much as $2bn that the US, France, the UK and Germany pledged at June’s Group of Seven meeting to help phase out coal globally.
John E Morton, the US treasury’s first climate counsellor, will also attend, according to one of the people. The US treasury declined to comment. A spokesperson for the French environment ministry confirmed discussions are talking place.
“One of the major challenges of COP26 will be the decarbonisation of the electricity mix throughout the world, particularly in the major emerging countries,” they said.
The UK and German governments didn’t immediately respond to requests for comment.
Bloomberg. More stories like this are available on bloomberg.com
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