Inside EWN Roundtable: COP27 €600 million loan, what’s the deal for SA?

inside ewn roundtable cop27 e600 million loan whats the deal for sa

JOHANNESBURG – South Africa (SA) could possibly kill two birds with one stone after signing loan agreements with France and Germany amounting to €600 million to support the country’s move away from its reliance on coal.

The signing of the agreements took place at the COP27 climate change conference in Egypt.

With the financial injection, South Africa can move away from coal-powered stations to cleaner energy while alleviating pressure from South Africa’s hamstrung economy.

During the Inside EWN roundtable discussion on Sunday, a question arose about whether the COP27 loan is what South Africa needs to resolve its energy crisis.

World Bank senior advisor and climate adaptation lead to South African Presidential Climate Commission, Dhesigen Naidoo, explained that although the bulk of the funds was meant for the energy transition, the transport system also needed some injection.

“Although the electricity part is the biggest need for the funds, for now, we are trying to organise for this package to give us a kick start into our transport system and our longer-term plan which is green hydrogen.”

However the funds don’t mean that the process of transition would be expedited as it will take time to move from coal. Naidoo said that moving towards a more sophisticated energy mix or a fully-fledged renewable energy system will take time.

“In the interim, we are going to have a fair amount of coal, some measure of gas and fuel transmissions for some time.”

While the energy transition has the potential to create a value chain of new skills and build the economy – there remains a high risk of job losses that cannot be ignored.

“There is a real possibility of job loss looking at the mining end as well, but we’ve put aside a strategy for investment to get a good solution for everyone and skilling the relevant people.”

An independent consultant in energy research, Hilton Trollip, who was part of the conversation said the loan from the two European countries was a step in the right direction for SA’s energy crisis.

“There are risks involved in the fund but looking at the situation we are in South Africa has to contribute to producing greener gas emissions. It’s not just a loan it has different components to it.”

While there has been criticism of the just energy transition plan, Trollip said that there’s a lot to learn from South Africa starting with thanking the democratic governance.

“I am hoping that we will stick to the words that we agreed to at the presidential climate commission framework and take the investment plan forward.”
Listen to the full conversation below.

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