Many wealthy countries, and some in the Global South, are already relatively far along in their shifts to cleaner energy. Some emerging markets, however, are falling behind, partly because they do not have the funding required to scale up their clean energy industries.
In this context, South Africa was an obvious candidate for a major climate finance deal. As coal accounts for more than 80% of the nation’s electricity mix, the country ranks among the 15 largest emitters of greenhouse gases from fossil fuels.
In 2021, at COP26 in Glasgow, the International Partners Group (France, Germany, the UK, the US and the European Union, along with Denmark and the Netherlands) pledged $8.97-billion to help South Africa decarbonise its economy, a figure that has since increased to $13.8-billion.
Concessional loans make up $7.6-billion of this funding, which is more than half of the total amount. Concessional loans are loans offered on more favourable terms, such as reduced interest rates, but still require repayment.
Although concessional loans can reduce borrowing costs for South Africa, critics argue they still place a financial burden on the Global South, which is already disproportionately affected by climate adaption and socioeconomic challenges.
Grants make up 7% ($820-million) of the pledged funding. The presidency’s grant register breaks down $613-million of that funding into 152 projects, of which 48 are completed and 87 are at the implementation phase.
🔗 Special feature: South Africa’s Road to a Just Energy Transition