Rich nations seek South African coal exit deal

The UK, US, France and Germany will send delegations to South Africa to pursue a deal whereby the African nation accelerates a phasing out of coal-fired power generation.

The industrialised countries want state-owned utility Eskom to shut its 15 coal-fired power plants faster than previously planned to aid global efforts to cut greenhouse gas (GHG) emissions and curb climate change.

The UK's chief climate envoy John Murton will visit South Africa to "assess opportunities for enhanced cooperation around a just energy transition," South Africa's Department of Forestry, Fisheries and the Environment (DFFE) told Argus. But the date for his visit is still to be finalised, it said.

Murton wants to meet ministers in the DFFE, the Department of Public Enterprises (DPE), the Department of Trade, Industry and Competition (DTIC) and the Department of Mineral Resources and Energy (DMRE), among others.

The discussions will be "exploratory in nature," said DFFE spokesman, Albi Modise. "The developed economies have a responsibility to fund the just transition to a low carbon economy and climate resilient society," he said.

The South African government has indicated that it is willing to consider speeding up a planned decommissioning of coal-fired power for concessional international funding. One option being considered is for Eskom's plants to be repurposed to run on natural gas or renewables instead, which would also cut South Africa's greenhouse gas (GHGs) footprint.

Global Carbon Atlas ranks South Africa as the world's 14th largest emitter of GHGs based on 2019 data. The country relies on coal to meet around 90pc of its electricity needs.

State-owned Eskom is burdened with R400bn ($27bn) in debt, which makes it reliant on government bailouts to keep afloat and has been identified by ratings agencies as South Africa's biggest economic risk.

Eskom's head of the Just Energy Transition, Mandy Rambharos said it was discussing various funding options with the UK, US, French and German governments, as well as the World Bank.

The utility would like "an irreversible agreement, whereby the lenders commit to the funding while Eskom commits to the phase-out plans," she said.

Earlier this year, Eskom said it hoped to secure over 100bn rand of international climate finance to help it transition from coal-fired to lower-carbon power and become financially sustainable over the next five years.

It hopes to announce a financing deal at the upcoming UN climate summit (Cop26) in Glasgow, Scotland, in November, Rambharos said.

Ahead of Cop26, all countries must submit revised nationally determined contributions (NDCs) to the UNFCCC in line with the Paris Agreement's requirement to do so every five years.

Last week South Africa adopted a more ambitious GHG emissions target than that originally proposed by the DFFE. The country's cabinet approved a revised target range of 350-420 t CO2 equivalent (CO2e) for 2030, in line with the Presidential Climate Commission's recommendation and the global 2°C target. By contrast, the DFFE had proposed a range of 398 – 440mn t CO2e for 2030.

Under South Africa's electricity sector blueprint, the Integrated Resources Plan (IRP), the government has set a target to increase renewable energy's share of installed capacity from 11pc to around 34pc by 2030, while at the same time cutting fossil fuels' contribution from 80pc to around 51pc.

Last week the cabinet also approved the submission of the long-stalled National Climate Change Bill to parliament, which seeks to align policies that advance South Africa's shift towards a lower carbon and climate-resilient economy. A draft version of the bill was first released in June 2018.

By Elaine Mills