COP26: EIB pledges $1bn for South Africa’s energy transition
The EIB’s funding forms part of an $8.5 billion commitment from France, Germany, the UK, the US and the EU to finance South Africa’s transition away from coal-fired power.
European Investment Bank (EIB) president Werner Hoyer confirmed at the COP26 today that the bank would be financing €1 billion of the new Just Energy Transition Partnership to support South Africa’s decarbonisation efforts.
The governments of South Africa, France, Germany, the UK and the US, along with the EU, yesterday announced the ambitious new plan to finance the transition of South Africa’s electricity system to help the country achieve its updated Nationally Determined Contribution (NDC) emissions goals.
The Just Energy Transition Partnership will mobilise an initial commitment of $8.5 billion over the next three to five years for the first phase of financing, through various mechanisms including multilateral and bilateral grants, concessional loans and investments, technical support, guarantees and risk sharing instruments; with the aim of mobilising additional funding from the private sector.
It will work to identify financing options for innovative technical developments and investments, including electric vehicles and green hydrogen, to help the creation of green jobs.
The partnership is expected to prevent up to 1-1.5 gigatonnes of emissions over the next 20 years and support South Africa to move away from coal and to accelerate its transition to a low-emission, climate-resilient economy. The upper range of the country’s proposed new 2030 NDC target range represents a 28% reduction in GHG emissions from its Paris Agreement targets.
“We are proud of our engagement in this partnership,” said Hoyer at an EIB press conference this morning. “The transition for South Africa is particularly difficult and painful, and therefore they need this kind of transition support. We will cooperate closely with the South African government on this.”
“We know the situation of Eskom, South Africa’s electricity utility, which is the single biggest borrower in Africa,” added EIB vice-president, Ambroise Fayolle. “We’ll give our full support to this partnership and we’re happily contributing to the magnitude of €1 billion.”
Also at COP26 yesterday, the EIB agreed a partnership with European Commission and Bill Gates’s Brealthrough Energy Catalyst to boost investments in critical climate technologies. The partnership aims to mobilise up to €820 million ($1 billion) between 2022-2026 to accelerate the deployment of – and rapidly commercialise – innovative technologies that will help deliver European Green Deal ambitions and the EU's 2030 climate targets.
Each euro of public funds is expected to leverage three euros of private funds and investments will be directed towards a portfolio of EU-based projects with high potential in four sectors: clean hydrogen, sustainable aviation fuels, direct air capture, and long-duration energy storage.
