A landmark climate finance deal for $8.5 billion that aims to stop South Africa’s dependence on coal remains uncertain amid anxious negotiations with donor countries on how the money should be spent, Bloomberg reported.
South Africa depends on coal for over 80% of its power and is the 13th biggest emitter globally. The country is looking to receive grants and low-interest loans to decrease its reliance on coal, anonymous sources told Bloomberg.
Among the factors that hold back the deal is the insufficient detail the country has provided on how it plans to spend the funds coming from the U.S., UK, France, Germany, and the EU, the sources said. Negotiators hope to see a version of South Africa’s finance plan during the United Nations’ COP27 Summit in Egypt that starts on Nov. 6.
“There’s legitimate criticism and debate on whether or not this is the kind of best model, but a decent amount of political capital has been invested,” said Jake Schmidt, senior strategic director of the international climate program at the Natural Resources Defense Council, a US non-profit. “We need to make it succeed because others are watching it.”
The deal’s importance is magnified by the war in Ukraine as Russia reduced gas supply to Europe and some countries are returning to coal sites that were being decommissioned in order to decrease emissions.
The use of coal in Europe will likely increase by 7% in 2022 after it went up by 14% last year, according to the International Energy Agency.
South Africa has created an initial draft of the investment plan but is behind schedule in producing a more in-depth second version, the Bloomberg sources said.
The investment partners said the finance deal primarily aims to shut down some of South Africa’s coal plants or repurpose them to produce renewable power. Some of the funding is also aimed at expanding the national power grid.