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Steam rises at sunrise from the Lethabo Power Station, a coal-fired power station owned by state power utility ESKOM near Sasolburg. REUTERS/SIPHIWE SIBEKO
Steam rises at sunrise from the Lethabo Power Station, a coal-fired power station owned by state power utility ESKOM near Sasolburg. REUTERS/SIPHIWE SIBEKO

As the COP26 climate conference kicked off in Glasgow, SA clinched the first climate finance deal: an $8.5bn commitment by the US, UK, France, Germany and the EU to provide what was described as “highly concessional” finance for SA’s just transition from coal.

So how will this climate deal work? The political declaration on Tuesday provides for a task force to develop a programme of work over the next 12 months — and here is where we run into the devil in the detail. Many questions still need to be answered.

First, is the $8.5bn actually new finance or simply repackaged versions of other agreements? How much of the $8.5bn is made up of grants? And yes, the US, UK, France, Germany and EU do have a climate debt to pay to SA — a debt they and other big emitters owe to many other developing countries that are similarly vulnerable to the climate effects caused by their industrial development.

How much of the $8.5bn represents concessional finance, and what is the nature of the concessionality? Importantly, how will we make sure that these countries deliver against their commitments?

Second, what will SA have to deliver, with what terms and time frames? Given that donor countries are hoping to achieve big greenhouse emission reductions with this deal, and that the climate crisis is intensifying, this finance must be conditional upon the retirement and reduced utilisation of Eskom’s coal power stations. This must be at a pace and scope that allow SA to at least meet the lower bound of its nationally determined contribution.

Allowing SA to emit more greenhouse gases than that lower bound, which also equals the upper range of SA’s fair share contribution for a 1.5°C pathway, would defeat the purpose of the funding.

Third, how will the money be spent? SA desperately needs affordable finance for the huge challenges posed by the transition from coal, already under way as the price of renewable energy plummets and coal export markets rapidly close.

The crisis caused by the paralysing burden of Eskom’s debt, which doesn’t appear to be addressed by this deal, is stifling any efforts to manage the transition. Eskom simply is unable to raise loan finance at an affordable rate to build the renewables and upgrade the transmission infrastructure crucial for connecting what will hopefully soon be a fast-growing renewable energy fleet.

But we need to fund so much more than Eskom’s renewable build and transmission improvements. Climate finance must be allocated to elements of the just transition that include worker transition payouts, reskilling programmes and initiatives aimed at stimulating economic activity and improving social justice outcomes. Examples are improved infrastructure and service delivery for coal towns, and a renewable energy special economic zone on the highveld.

Finance [must go] to a better, cleaner future — and not to line pockets, prop up old, polluting industry, or spare Sasol shareholders from the cost of delaying their climate action

Beyond that, our ecological infrastructure in coal areas, so burdened by coal mining and power generation, needs urgent attention. Without proper closure of coal mines and rehabilitation of coal mining areas, these areas are in effect sterilised for other local development, and hugely detrimental for our climate resilience, water and food security.

What should climate funding not be used for? One, more fossil fuels. We cannot accept climate finance and still approve new coal and gas projects that further harm the climate. This includes the expected procurement of 1,500MW of new private coal power, and 3,000MW of new private gas power — to be purchased by Eskom — set to kick off early in 2022. It also includes the huge gas plant Eskom is planning and possible future “repowering” of its coal plants with gas.

What also should not be funded using meagre climate finance is Sasol’s plans for synfuels in Secunda. Sasol recently told the Presidential Climate Commission that its 2050 plans — largely reliant on switching to gas as a feedstock — was only partly to be financed from its own balance sheet, suggesting that at least some of its plans relied on securing green finance.

Even if we needed gas for flexibility in our energy mix — and many of us disagree that this is the case, gas doesn’t need concessional public finance — it can be funded by private finance. Instead, climate finance must be used to fund medium-duration energy storage to provide flexibility without locking in new gas infrastructure.

Fourth, who will be responsible and accountable for these funds? Eskom, needless to say, has a history of capture and corruption that does not instil confidence. If our public finance institutions, such as the Development Bank of Southern Africa and the Industrial Development Corporation, are going to be roped in, we need far greater commitment and delivery on transparency than we have seen in the past from these institutions.

Finally, how will ordinary citizens in Mpumalanga, the Waterberg and other coal areas make sure climate finance is going to benefit them? We need not only transparency, but real participation in the design and implementation of the just transition by coal communities. We also need proper schemes for public- and community-owned renewable energy, and ownership models that ensure we shift the income inequality that is poisoning SA’s prospects of future prosperity and wellbeing.

We also need proper accountability mechanisms so that everyone can see that finance is going to a better, cleaner future — and not to line pockets, prop up old, polluting industry, or spare Sasol shareholders from the cost of delaying their climate action until the eleventh hour.

The residents of the coal areas have long suffered the negative health effects of our coal addiction, their lifespans shortened and health drastically worsened by the deadly air from coal mines, coal plants and coal-based industry. It is time for their voices to be heard on how climate finance should be spent.

• Fourie is executive director of the Centre for Environmental Rights.

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