Cape Town - The western countries’ intentions in providing billions of euros in loans to apparently support South Africa’s transition from coal have come under the spotlight as countries such as France and Germany continued importing large volumes of the fossil fuel from South African suppliers.
This, after news broke that France and Germany will lend South Africa €600 million (R10.7 billion) more.
South Africa, France and Germany have signed loan agreements for the two European nations to each extend €300m in concessional financing to South Africa to reduce its reliance on coal through cleaner-energy sources.
The French and German public development banks, AFD and KfW, have provided the loans to the government via the National Treasury.
This is the first step in the implementation of the Just Energy Transition Partnership (JETP) announced at COP26 in November last year.
The JETP is a long-term partnership between South Africa, France, Germany, the UK, US, and the EU.
Last year the founding partners of the JETP, known as the International Partners Group (IPG), pledged to mobilise an initial amount of $8.5 billion (R150.6bn) over the next three to five years to advance the partnership.
However, these have raised questions after it emerged that South Africa was seemingly the answer to the EU’s woes in finding alternative suppliers to Russia’s coal.
The EU is reported to have imported 40% more coal from South Africa’s main export hub in the first five months of this year than over the whole of 2021.
The Richards Bay coal terminal (RBCT) delivered 3.24 million tons of coal to European countries by end-May this year, 15% of RBCT’s overall exports – up from 2.3 million tons (4%) in 2021, the figures showed.
South Africa continues to depend on coal to produce most of its electricity and the coal sector remained significant to the country’s economy. Eskom’s generation division has 15 coal-fired power stations with an installed capacity of 44 013MW.
The National Union of Metalworkers of South Africa (Numsa) said the Ramaphosa-led government has “sold out” the working class with the deal.
“First of all there is no social plan, not even for the province of Mpumalanga which will be most affected by the closure of coal-fired power stations. Secondly, they claim there will be re-skilling and retraining of workers,” said Numsa spokesperson Phakamile Hlubi-Majola.
“It is a fact that coal power stations are labour intensive but renewable energy plants are not.
“There might be jobs at the construction phase, but in the long term the plant will not absorb all those workers and it means thousands of them will be displaced.
“Also, nothing in the president’s plan speaks about ownership by workers or the community who will suffer job losses caused by the closure of power stations.
“Who will pay? Our children and their children will pay through poverty, and joblessness and inequality will worsen.
“There is nothing to celebrate with this deal. Only the banks and international finance capital are celebrating because they will profit at our expense,” Hlubi-Majola said.
The EFF said it would oppose any plans Ramaphosa had to decommission coal-fired power stations and mines.
The party accused Ramaphosa of surrendering the country’s future to environmental imperialists, saying that the plan would put paid to the economies of small towns such as Emalahleni, Secunda, Lephalale and many others which economies are based on coal extraction.
“We are going to oppose this thing.
“There won’t be any America who will build energy security here in South Africa.
“We have got our own capacity. There are also a lot of options that we can explore in relation to coal.
There are coal technologies that we can explore because we have 400 years of lifespan, and we are just instructed by Americans,” the EFF’s Floyd Shivambu said.
But National Treasury acting director-general Ismail Momoniat said the funding was welcomed.
AFD regional director for Southern Africa and its country director for South Africa, Audrey Rojkoff, said most countries around the world were trying to find a balance between inevitable short term trade-offs and the long-term perspective of a future where nature and people prospered.
Foreign policy specialist Siseko Maposa said the elephant in the room needed to be addressed, as developed countries placing “erroneous pressures” on the governments of coal-dependent developing countries for swift energy transition was “questionable”.
“Particularly given that many of these very same developed countries have chosen jobs and the protection of their economies when embarking on transitioning to renewables.
“Having said that, we cannot continue to ignore the fact that South Africa is among the largest emitters of carbon dioxide in the world,” Maposa said.
“Undoubtedly a transition is needed, but one that is careful, finds the right balance between economic short-term trade-offs and long-term environmental/climate goals, and remains conscious of the socio-economic risks involved.”
The University of Pretoria’s Graduate School of Technology Management’s Professor David Walwyn said the investment was a good thing.
“It’s a big deal, it’s a good thing that shows the world is prepared to fund energy transitions.”
According to Walwyn the spike in coal sales was a “short-term spike” caused by the Russia-Ukraine war.
Eskom said it was working through the details, and would release a statement in due course.
Cape Times