Emissions rise from the cooling towers of the Eskom Tutuka coal-fired power plant in Mpumalanga.
Waldo Swiegers / Bloomberg via Getty Images
- According to a study, SA needs to spend around Rand 4 trillion to replace its coal-fired power plants with green energy.
- The money will have to be spent to compensate for coal-dependent communities whose livelihoods are threatened by change
- Researchers say most of the money will have to come from the private sector, but PIC and other development banks should also contribute.
According to a study, South Africa, the world’s thirteenth source of greenhouse gases, will have to spend $ 250 billion (about R4 trillion) over the next three decades shutting down its coal-fired power plants and replacing them with green energy.
In addition to shutting down the country’s coal plants and building wind and solar power plants, money will need to be spent to compensate for coal-dependent communities whose livelihoods are threatened by change, The Blended Finance Taskforce and Center for Sustainability Transitions in Stellenbosch the university said. Most of the money will have to come from the private sector, according to the study.
The estimate comes as South Africa, which relies on coal for more than 80 percent of its electricity, is negotiating $ 8.5 billion in climate subsidies and soft loans with some of the richest nations in the world. The potential deal, announced at last year’s COP26 climate summit in Glasgow, calls for South Africa to retire some of its coal-fired power plants.
“The $ 8.5 billion commitment may be a catalyst for unlocking this $ 25 billion,” the researchers said in the study released Thursday. “It should offer the global transitional finance blueprint.”
The deal, details of which are expected ahead of the COP27 climate summit in Egypt later this year, is being negotiated between South Africa and a group consisting of the United States, the United Kingdom, France, Germany and the Union. European.
With its old coal-fired power infrastructure, much of which is nearing the end of its life cycle, and an economy heavily reliant on the dirtiest fossil fuel, South Africa is considered an ideal country to make a transition deal with. energy that could be reflected in talks with other nations. Vietnam, Indonesia and India are seen as countries that could initiate talks similar to those pursued by the African nation due to their dependence on coal.
Coal accounts for over 5% of South Africa’s gross domestic product, and the coal industry employs 125,000 people, each with three to 10 employees.
According to the plan presented in the study, the country is expected to install 5 gigawatts of renewable energy capacity per year through 2050. This would create 5,000 jobs per year over the next decade in plant construction, operation and maintenance, the researchers said. .
South Africa is “home to some of the best solar and wind resources globally, offering economic opportunities through an accelerated energy transition,” said the researchers.
Researchers predict spending over 30 years as follows:
- $ 125 billion on 150 gigawatts of solar and wind power plants $ 18 billion on 33 gigawatts of battery storage
- $ 8 billion on 5 gigawatts of hydroelectric storage
- $ 18 billion on 30 gigawatts of natural gas power generation
- 50 billion dollars for the improvement of energy transmission and distribution networks
- $ 24 billion to close coal-fired power plants owned by the national power company, Eskom Holdings SOC Ltd., by 2040.
- $ 10 billion to compensate affected coal workers and to rehabilitate the environment in dormant coal mines
Funding for the program will need to come from the private sector in both South Africa and the rest of the world, the researchers said.
The researchers said government-related institutions such as the Public Investment Corporation, which oversees Rs 2.34 trillion of primarily government employee pensions, the Development Bank of Southern Africa and the Industrial Development Corporation, should play a role.
“Most of the $ 250 billion needed for South Africa’s Just Energy Transition can be financed by private funding that invests in the scalability of renewable energy and other enabling infrastructure,” said the researchers. “About one-third of the funding will serve as capital providers with a non-commercial mandate” to support the social costs of the transition.