world’s richest nations that pledged US$8.5-billion in climate finance to South Africa wants the money to be used to retire coal-fired power plants, according to a senior US official involved in the talks, damping suggestions some could be channelled to producing electric vehicles and green hydrogen.
The stance helps clear doubts about the use of the funds. Eskom had initiated the talks last year in a bid to raise money to help reduce its reliance on the coal that is used to generate more than 80% of South Africa’s electricity. Meanwhile, the trade, industry & competition ministry has been lobbying to use the financing to develop new, climate-friendly sectors in the economy, such as electric vehicles and green hydrogen.
Any money for electric cars and hydrogen will likely come from bilateral deals as the closure of coal plants will be a quicker way of cutting global emissions, the official said. In February, President Cyril Ramaphosa spoke of plans to attract R275-billion of investment into a green hydrogen industry and trade minister Ebrahim Patel said Germany had identified the nation as a potential source of the fuel.
The $8.5 billion, which will come in the form of concessional loans and grants, could also be a catalyst for additional private investment, the official said.