COP27: Who will keep an eye on the money?
At last year’s COP26 meeting, several European countries pledged the equivalent of R150 billion ($8.5 billion) to help Eskom out of its quagmire. This money is earmarked to help Eskom, one of South Africa’s biggest polluters, along with Sasol, shut down ageing power plants and migrate to renewable energy.
Mmmm, I am probably not the only one worrying about how this money will be spent and who is going to ensure it does not get stolen. South Africa does not have a great track record when it comes to money management.
With COP27 rapidly approaching, many countries are under pressure and getting hot under the collar, and it is not just from global warming. They are under pressure to dramatically reduce carbon emissions and meet the targets set by the United Nations.
COP27 is set to be held on Africa’s home turf of Sharm el-Sheikh, Egypt, from 6 – 18 November 2022.
Top of the agenda is how countries are tracking relative to the United Nation’s goal of Net Zero by 2050. It’s a daunting task, and most countries are falling scarily short of their targets for various reasons.
The Climate Action Tracker is an independent scientific analysis that tracks government climate action and measures it against the globally agreed Paris Agreement aim of “holding warming well below 2°C and pursuing efforts to limit warming to 1.5°C. (https://climateactiontracker.org/) This extract is from their website.
“The South African government has set a new and stronger 2030 target range, but domestic policies and their successful implementation will need an additional boost to meet it. The new target represents a significant change compared to the previous target, providing a good example of how governments can increase their mitigation ambition over time. Despite being a step in the right direction, the updated target is not yet Paris Agreement compatible.
Uncertainty on the successful implementation of the Integrated Resource Plan (IRP2019) continues to remain high, given state-owned utility giant Eskom’s unresolved financial and operational problems and the government’s mixed messages on the transition to zero carbon electricity system”.
Courtesy – The Climate Action Tracker
South Africa has a lot of work to do to achieve its targets. Some progress is being made, with more effort going into a Just Transition from coal-fired power stations to energy that comes from renewable sources such as sunshine, water, and wind.
President Cyril Ramaphosa assures us there is no longer a cap on how much power renewable providers can create and deliver to the grid.
The current plague of load shedding should help push citizens and businesses towards green power, as it is not sustainable to keep spending large amounts of money on fuel to continue powering polluting generators.
International Help
At last year’s COP26 meeting, several European countries pledged the equivalent of R150 billion (8.5 billion) to help Eskom out of its quagmire. This money needs to go towards aiding Eskom, one of South Africa’s biggest polluters, along with Sasol, shut down ageing power plants and migrate to renewable energy.
At COP27, South Africa and its funding partners – the US, UK, Germany, France, and European Union – will announce steps to implement the programme to help Eskom and Sasol. News of the deal emanated from the COP26 summit in Glasgow in 2021. However, as we try to move to a green future, the head of Eskom’s energy transition department, Mandy Rambharos, resigned just as negotiations with our European partners became complex.
This month, the 1,000MW Komati power station near Middelburg in Mpumalanga will kick off Eskom’s programme of decommissioning generating capacity. Eskom will then follow with shutdowns of Hendrina, Camden, and Grootvlei power stations, with a combined volume of about 4,700MW, to be closed over the next five years. The shutdowns mean the loss of 22,000MW generation capacity, half of the installed 45,000MW, by 2035.
Let’s face it; we are nowhere near getting enough renewable energy into the pipeline to offset these closures because we don’t have the necessary infrastructure. We have been far too focused on generating capacity and not the network. Failing to focus on the grid will undoubtedly mean more power outages for South Africa, with a resultant dent in economic growth, expected to come in at a mere 2.1% this year.
Follow the money
Former Absa CEO, Daniel Mminele is heading up South Africa’s climate finance team. With a 20-year career at the South African Reserve Bank under his belt, culminating in two five-year terms as deputy governor, he has been entrusted with oversight of this funding, in a country where corruption is endemic. He will need to have his wits about him.
He will work alongside National Treasury’s asset and liability division to advise the cabinet on the funding composition, affordability, and alignment with our regulatory environment.
This team will also engage with partner countries and the private sector and oversee the development of relevant financing mechanisms and facilities to enable the flow of international climate finance to support South Africa’s Just Transition in the electricity, electric vehicles, and green hydrogen sectors.
Now is not the time to muck about. We need strict control over the money and how it is invested to ensure it achieves the intended outcome.