Rich Countries Could Help Finance South Africa’s Coal Exit

Representatives of the United States, the European Union, the UK, France, and Germany are meeting with South Africa’s top government officials to discuss a potential climate agreement and ways to help fund the African country’s transition away from coal, Bloomberg reported on Wednesday, quoting sources with knowledge of the developments.

Coal is still a major source of South Africa’s electricity generation. The country also exports a lot of coal and is the world’s fifth-largest coal exporter. Currently, coal is by far the major energy source for South Africa, comprising around 80 percent of the country’s energy mix.

“This is unlikely to change significantly in the next decade, due to the relative lack of suitable alternatives to coal as an energy source,” local utility Eskom says.

South Africa, like other developing nations, has come under pressure from rich developed countries to commit to climate targets and reduce dependence on fossil fuels, especially coal.

Now the delegation of officials from the U.S., the UK, and the EU, and its members France and Germany, is looking to reach some kind of a climate agreement for an energy transition in South Africa, with the hope that it could be announced at the COP26 climate conference, hosted by the UK in Glasgow, Scotland, in November, according to Bloomberg’s sources.

Earlier this month, the largest bank in Africa by market capitalization, FirstRand Limited, said it would no longer finance new coal-fired power plants in its updated energy and fossil fuel policy.

From 2026 onwards, South Africa-based FirstRand will no longer provide direct project finance to new coal mines either, the bank said, as investor and societal pressure grows on the banking sector everywhere to rethink financing for fossil fuels. 

FirstRand also pledged in its new climate policy to reduce the cap on its coal exposure further—from 1.5 percent to 1 percent of total advances from 2030 onwards.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• U.S. Shale Is Finally Ready To Drill
  
• The Harsh Truth Behind Europe’s Energy Crisis
• Are Carbon Taxes To Blame For Europe’s Energy Crisis?