"South Africa seeks to renegotiate coal pact tied to $2.6 billion"

" South Africa seeks to renegotiate coal pact tied to $2.6 billion \r\n\r\nSouth Africa is seeking to alter the terms of a landmark agreement under which it promised to cut its reliance on coal in exchange for access to financing.\r\n\r\nThe government of President Cyril Ramaphosa is pushing to renegotiate a deal with Climate Investment Funds (CIF), a group tied to the World Bank, so that it won\u2019t be required to close three coal-fired power plants in the coming years. The plants, owned and operated by Eskom Holdings SOC Ltd., are among the country\u2019s biggest polluters, according to government advisers.\r\n\r\nSouth Africa\u2019s government is seeking an \u201cadjusted approach to the program with the decommissioning date for three power stations\u201d moved to the end of March 2030, the department overseeing the project in the president\u2019s office told Bloomberg. The decision is motivated by \u201cenergy security concerns,\u201d the department said, adding that South Africa is still working to reduce its emissions.\r\n\r\nThe development has the potential to affect a total of roughly $2.6 billion in financing from multilateral development banks and other sources, the first tranche of which would be a $500 million disbursement from CIF\u2019s Accelerating Coal Transition program. The funds, which are tied to the country\u2019s commitment to weaning itself off the world\u2019s dirtiest fossil fuel, are part of a larger $9.3 billion climate pact.\r\n\r\nThe failure of a G20 nation to live up to its commitments around coal power would represent a blow to a $40 billion program known as the Just Energy Transition Partnership, under which South Africa\u2019s agreement was struck. As the first JETP nation, South Africa\u2019s retreat from the original terms of its agreement would raise questions around the program\u2019s credibility.\r\n\r\nIn response to a request for comment, Daniel Morris, clean energy lead at CIF, confirmed that South Africa is currently \u201cupdating its investment plan.\u201d CIF expects the government to provide an update \u201cby the fall,\u201d he said.\r\n\r\nThe development underscores just how hard it is for developing nations such as South Africa, which relies on coal for about 80% of its electricity, to switch to cleaner energy sources. While Ramaphosa had backed the original terms of the program, the country\u2019s energy and electricity ministers criticized it as representing a threat to the stable supply of power to a nation plagued by constant outages.\r\n\r\nSouth Africa\u2019s JETP investment partners \u2014 the US, UK, Germany, France, the Netherlands, Denmark and the European Union \u2014 remain broadly supportive, according to responses to Bloomberg. But they also voiced concerns about the ramifications of delays in closing coal plants.\r\n\r\nAn official at the US Treasury department said the expectation remains that South Africa can achieve its most ambitious emissions-reduction targets.\r\n\r\nBut the country\u2019s new plan represents a material change to what was agreed, four South African officials familiar with the situation said, asking not to be identified. One said it\u2019s not clear the Eskom plants in question would have the technical capability to run at lower levels, potentially undermining a key plank in the government\u2019s proposed strategy for cutting emissions.\r\n\r\nThe details of specific units and specific stations are \u201cthe subject of rigorous discussions\u201d both internally and with key external stakeholders, a spokesperson for Eskom said, without elaborating.\r\n\r\nJETP commitments have in part been complicated by South Africa\u2019s May 29 election, the most tightly contested since the end of apartheid in 1994. Environment Minister Barbara Creecy, a key proponent of the JETP program, will instead oversee transport, with environmental matters handed over to a member of a separate party within the country\u2019s first coalition government in three decades.\r\n\r\nA panel of experts appointed by Creecy to advise her on Eskom\u2019s appeals against rulings to cut emissions said that any delays in closing coal plants could risk the climate finance package on which South Africa relies. Of Eskom\u2019s 14 coal-fired facilities, the three plants now set for delayed closure are among the biggest greenhouse-gas emitters per unit of power produced, the panel also said.\r\n\r\nSouth Africa, which has the most carbon-intensive economy in the G20, isn\u2019t the only JETP signatory struggling to meet its commitments. Last month, the US said plans in Vietnam to build a new coal-fired power plant may \u201ccomplicate\u201d its progress in meeting JETP targets.\r\n\r\nMeanwhile, South Africa\u2019s efforts to build out its renewable power capacity are falling short. Under Gwede Mantashe, who served as energy minister from 2019 until a new cabinet was announced this week, 46 projects were approved with the combined potential to add 5,939 megawatts of generation capacity to the national grid. To date, only 150 megawatts have been connected."

"South Africa seeks to renegotiate coal pact tied to $2.6 billion"

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