Climate funds approve $2.2B coal-exit plan for South Africa
A climate fund associated with the World Bank has endorsed South Africa's efforts to reduce its dependence on coal, unlocking up to $2.6 billion (€2.25 billion) in financing and providing a significant boost to the country's energy transition plans.
The approval of the updated plan by the Climate Investment Funds, which was stalled after South Africa last year asked to delay the closure of three coal-fired power plants to ease an energy crisis, will see the CIF disburse $500 million (€432.6 million) to the country, News.Az reports citing foreign media.
That clears the path for as much as $2.1 billion (€1.8 billion) from multilateral lenders including the World Bank and the African Development Bank, plus other sources.
“CIF’s Clean Technology Fund Trust Fund Committee approved an update to South Africa’s Accelerating Coal Transition investment plan” on 11 June, the fund said in a response to queries.
Under the plan, it said South Africa can now put forward detailed costing for projects it had outlined and then get approval for their funding from the trust. It referred additional questions on financing to the South African government, which confirmed that the plans are still in place.
The financing will play an important role in South Africa’s energy transition. The country relies on coal for about 80% of its electricity generation and has the most carbon-intensive economy of any country in the Group of 20.
“That opens up a really amazing dynamic,” Rudi Dicks, head of the project management office in the presidency, said at a meeting of the Presidential Climate Commission in Johannesburg on Friday. “It will allow the funding flows and a serious conversation about the front-loading” of that finance.
The decision also rescues support that looked to be in peril after South Africa, back around September, asked to alter the plan, which had originally been endorsed in 2022.
That request delayed approval until after the 20 January inauguration of US President Donald Trump and subsequent pullback by America from a range of international climate initiatives. The actions of US representatives then thwarted an opportunity to support the South African plan in March, people familiar with the situation said at the time.
Of the 15 contributors to the $12.5 billion CIF the US was the biggest as of end-2024, having provided $3.8 billion. It’s closely followed by the UK at $3.6 billion. Germany, Japan and Canada have each contributed more than $1 billion.
Disbursements by the CIF can be blocked if any of the nations that have contributed to the funds object or ask for more time to seek additional details on what the funds will be used for, and under what conditions. Approval can be granted if a country abstains rather than votes against the plan. It’s unclear how voting went on 11 June.
The US State Department referred queries to the Treasury. The Treasury didn’t respond to an earlier request for comment.
Earlier this year the US withdrew from plans backed by rich nations to help Indonesia, Vietnam and South Africa reduce their reliance on coal. That step cost South Africa $1 billion in loans. Shortly after his inauguration, Trump promised to yank the US out of the Paris Agreement, an international climate pact. He also cancelled a pledge of $4 billion to another international climate institute, the Green Climate Fund.
Separately, relations between the US and South Africa have been strained.
Trump also halted aid to the country and his top officials have boycotted G-20 meetings hosted by South Africa this year.
Similar news
