Cape Town - South Africa’s $8.5 billion (about R146bn) climate deal is being used as a blueprint as wealthy nations extend similar offers to Indonesia, Vietnam and other emerging markets that are heavily reliant on fossil fuels.
The COP27 climate change conference in Egypt was extended to yesterday, with nations yet to reach consensus on what measures can be adopted to reduce carbon emissions.
Among the contentious issues is the need for a new fund to help countries deal with the immediate impacts of climate change, the phasing out of fossil fuels and the means to decrease dangerous levels of global warming.
The biggest sticking point by far is the need for a new fund to help countries deal with the immediate impacts of climate change.
However, South Africa’s Cabinet recently approved an investment plan for a $8.5bn package to accelerate the country’s transition away from coal towards clean energy, which has been heralded as a step in the right direction for other developing nations to follow.
The plan outlines the investments required to achieve the decarbonisation commitments made by the government, while promoting sustainable development and ensuring a just transition for affected workers and communities.
Now, Indonesia, one of the world’s largest consumers of coal, is receiving $20bn and Vietnam $11bn. Indonesia’s deal is in partnership with the US, Japan and other developed countries, while Vietnam’s package was pledged by, among others, the EU and the UK.
The package stipulates that Indonesia commits to capping carbon dioxide emissions from its electricity sector at 290 megatons by 2030 – an peak that will apply not just to its conventional grid, but also to power suppliers for industrial facilities.
South Africa, according to industry players, can also learn from Vietnam.
Climate expert Nick Hedley said: “In 2020, Vietnam added 9GW of rooftop solar power in only a few months, to avert an energy crisis. All it needed was some incentives from government. Why can’t we do the same?”
BlackRock, the world’s biggest asset manager, said rich countries should be giving developing nations $100bn a year in grants alone.
Hedley said this would save them money down the line by averting a full-blown climate catastrophe.
“Year after year, wealthy nations have fallen well short of their promise to provide $100bn annually in climate finance to the global south.
“It’s encouraging that the momentum is picking up, and countries like India will probably be next in line after South Africa, Indonesia and Vietnam.
“It’s important, however, that these transactions are as fair as possible. The proportion of grants in the funding mix needs to improve, and the interest rates on concessional loans need to be as low as possible. So far, the loans South Africa has received are priced at 3.3% on average. There’s room for improvement,” he said.
South Africa’s funding deal, backed by the US, UK and EU, was unveiled at last year’s UN-led climate talks in Glasgow.
Leo Roberts of think tank E3G’s coal transition team, said it was imperative that correct protocol was followed.
“The whole world is watching to see if the money is actually mobilised in South Africa. It’s extremely important that donors follow through with their commitments,” said Roberts.
Weekend Argus