South Africa needs almost 100 billion dollars by 2027 to finance the Just Energy Transition Plan (JETP), to diversify the economy away from coal, and has so far obtained about half of this amount.
‘The agreement on South Africa’s JETP of 8.5 billion dollars [8.2 billion euros] reached during COP27 in Egypt consisted of public and private funding, representing a small part of the funding needed for the country to achieve energy diversification away from coal,’ reads the report ‘The State of African Energy in 2025’.
The total amount of funding needed is ‘99 billion dollars [96.1 billion euros] between 2023 and 2027’, according to the document, produced by the African Energy Chamber, an organisation designed to promote energy investments on the continent.
Around 70 per cent of this amount would be allocated to the energy sector, with green hydrogen and electric vehicles receiving the remaining 22 per cent and 8 per cent respectively.
‘The 8.5 billion dollars [8.2 billion euros] received from the International Partners Group (IPG), together with 33 billion dollars [32 billion euros] from the private sector, and 10 billion dollars [9.7 billion euros] from the public sector – including development finance institutions and multilateral development banks -, has enabled South Africa to obtain more than half of the investment needed for its energy transition plan, which serves as a catalyst for obtaining the missing value,’ the analysts point out in their report on the African energy sector.
South Africa will try to attract national investors and international private entities in the form of grants, guarantees and concessional financing under the JETP, which is a vehicle to help emerging economies move away from coal dependency and deal with the social consequences of the energy transition to cleaner fuels.
‘Ensuring a just energy transition has its own challenges despite the ambitious targets; since the agreements were signed, progress in defining specific investment programmes has been slower than anticipated, all the more so because the agreements were signed in the form of political commitments even before the technical and coordination details had been defined,’ say the African Energy Chamber analysts.
The result, they conclude, is that ‘the implementation process has faced delays due to lengthy public consultations and negotiations that stem from the complexity and political sensitivity of the issue, which requires reconciling the different interests of the parties involved.’
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