South Africa has set the bill at R900 billion to meet its emission reduction targets by 2030. Even before the COP26 climate talks in Glasgow the country’s presidential climate change commission was hard at work trying to balance the numbers of what the country could do and how much it would cost.
The commission’s latest estimate is that South Africa would need about R86 billion a year, but that even then there might be a shortfall.
This is according to Dr Crispian Olver, the director of the commission, who gave some insight into the numbers in his keynote address at the Banking Association of South Africa’s virtual Sustainable Finance Conference.
He said South Africa had to cut its emissions from 350 million tonnes to 420 million tonnes by 2030 in terms of the pledge it made at the climate talks. But to meet its target, South Africa would need around R900 billion.
The country committed to ambitious Nationally Determined Contribution targets at COP26 to attract billions in climate funding from wealthy nations. South Africa is among the most coal-dependent nations in the world, and its commitments were a huge talking point at the conference.
Olver believed the funding could come from the public and private sectors as well as international public funding.
Yet the commission believes there could be a R19 billion funding gap per year that will require some innovative thinking to balance.
Olver explained that about R30 billion could be sourced from international public funding, R35 billion from the domestic private sector and about R2 billion from the government.
“There is an annual funding gap of at least R19 billion, probably more, to get the full implementation of the emissions trajectory set out by the Nationally Determined Contribution,” Olver told delegates of the virtual conference.
He explained that of the R900 billion needed to meet the 2030 target:
- R400 billion is likely to be directed to transition the energy mix;
- R150 billion is needed for electric vehicles; and
- R150 billion is needed to kickstart investment in the hydrogen economy.
The R400 million for the energy mix, is largely expected to go towards state utility Eskom to help it transition from its coal dependency to clean energy.
The funding for South Africa’s transition was kickstarted at COP26 when South Africa announced its watershed multibillion-dollar climate finance deal. France, Germany, the United Kingdom, the United States and the European Union pledged R131 billion over the next three to five years in the form of grants, concessional loans and investment and risk-sharing instruments, including mobilising private sector funding.
In return for the funds, Eskom will close down its coal power stations before the end of their normal lifespan, over the next 15 years. The funds will also assist Eskom to build a strong renewable energy sector.