Almost a year ago at COP26 in Scotland, the European Union, Germany, France, the UK and the US partnered to accelerate South Africa’s decarbonisation plans by helping finance the move from its heavy reliance on coal to cleaner and renewable energy sources. 

That partnership came to be known as the Just Energy Transition Partnership (JETP). 

Our Burning Planet reported at the time that, ​at the COP26 media conference launching the partnership, US President Joe Biden said: “By closing South African coal plants ahead of schedule and investing in clean power alternatives for the people of South Africa, and supporting an equitable and inclusive transition in South Africa’s coal sector, we are following through on the pledge the G7 partners made in Cornwall to accelerate the transition away from coal in developing countries.”

I’m pleased to join US President @JoeBiden and other leaders at #COP26  in announcing a historic partnership to support a just transition to a low carbon economy and a climate resilient society in South Africa. #BetterAfricaBetterWorld 🌍 pic.twitter.com/neHRP3GInI

— Cyril Ramaphosa 🇿🇦 (@CyrilRamaphosa) November 2, 2021

In the months that followed, the partnership has been described by UN Secretary-General António Guterres as being a “model” and example of how to “build coalitions of support including developed countries, financial institutions, those with the technical know-how. 

“This is crucial to help each of those emerging countries speed the transition from coal and accelerate the greening of their economies.”

Just days from COP27 in Egypt, Our Burning Planet sought to find out what the deal is about, how it came about and how it is connected to South Africa’s long-term plans to transition.

We spoke to Mandy Rambharos, the erstwhile general manager in the office of the Group Chief Executive of Eskom Holdings, who was responsible for managing the Just Energy Transition (JET) office and a member of the Presidential Climate Commission (PCC).

“The entire [Just Energy Transition Partnership] deal was originated by Eskom. We have … a number of factors that we’re dealing with. So, the ageing coal plants, the need to decarbonise … a lot of pressure from investors, from our original equipment manufacturers, our customers around the decarbonisation plan. 

“Also our [coal-fired power] plant [fleet] is ageing … it’s on average 42 years old, and a … confluence of a number of factors that were sort of hitting us at the same time, and when we looked at what would be a good way forward, what would be … in line with our carbon ambitions, in line with the fact that we needed to put new capacity on the grid quickly and cleaner capacity … we came up with our just energy transition strategy.” 

Read more in Daily Maverick: “Let the sunshine in: Eskom’s De Ruyter paints a greener future for Africa’s top greenhouse gas emitter”

“But the big problem, of course, is affordability. How do we afford to do this given Eskom’s current position? And so the whole just energy transition, the financing … became something that we looked at in terms of ‘how can we get a facility that could fund clean projects and in a way that will help … [with the] decommissioning plan, but also in returning economic activity’. So making the energy transition just,” said Rambharos.

“We conceived this multilender financing facility to work like a building. You know, when you’re building a house and you take out a loan with the bank, and they … loan out money to you as you reach different stages of your house – whether it’s foundation height or ceiling height or window height – and then you get the money disbursed to you. 

“So, we envisage a similar sort of thing where we will have a multilender facility that is funded by a number of lenders, given the price tag of the transition. And we will then present … the projects at different stages.

“We have what’s called the Project Stage Gate model. So, at different levels of readiness of the project, money will be made available to continue the projects. 

“So, that was one of the … safeguards we saw in terms of a facility, because, given the propensity in this country for corruption, given Eskom’s past, given State Capture, we thought, if you’ve ever gone to lenders and said, ‘give us a whole bunch of money’, you need to have safeguards and governance around that,” Rambharos said. 

She added that they then formulated a plan to approach lenders. 

“The whole idea was that we would approach the lenders and say, ‘we have a very set plan from an Eskom perspective, this is our shutdown plan for the coal plants, this is the capacity we think we need to be added, this is funding that will be needed for the generation plants for the transmission infrastructure that needs to be built, for the distribution infrastructure that needs to be built.”

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Rambharos said various lenders were approached about 18 months before COP26. 

“[Eskom CEO] André de Ruyter and myself, and the Eskom team as well, had various discussions with all of those lenders from the time that we conceived the plan. And then we started to involve the DPE [Department of Public Enterprises] and the government in general, because we’re state-owned … we can’t borrow money without approval from government.” 

She explained why the plan, which would eventually underpin what was to become known as the JETP, was seen as attractive to lenders.

“They saw it as a way of decarbonising, or contributing to decarbonising, in a way that was cheaper than decarbonising in their own countries. So, the value proposition that we put on the table was that Eskom is the biggest emitter in the country and it’s cheaper to fund a tonne of carbon reduction in South Africa than it is to fund a tonne of carbon reduction in Europe, and because carbon emissions have no borders, it doesn’t matter where you decrease the emissions – you still have a positive impact.” 

Moreover, according to Rambharos, the plan aligned with international climate agreements and principles such as the principle of “common but differentiated responsibility and respective capabilities”, which recognises that all states are responsible for addressing global environmental destruction – but not all are equally responsible.   

“In the Paris Agreement and the climate negotiation process, there’s what’s called ‘climate financing’, where developed countries invest in developing countries to help their decarbonisation and help decarbonisation globally.” 

The United Nations Framework Convention on Climate Change explains that, in accordance with the principle of “common but differentiated responsibility and respective capabilities” as set out in the Convention, “developed country parties are to provide financial resources to assist developing country parties in implementing the objectives of the UNFCCC”. 

Chief among these objectives is to rapidly reduce the emission of planet-warming greenhouse gases.  

Rambharos said “there’s a confluence of factors that Eskom was facing; the debt, ageing plants, decarbonisation goals … and also by building renewables and transmission infrastructure where we’re shutting our coal plants, we could enable a just transition”. 

“So, the local manufacturing angle, the returning economic activity to the coal belt, turning Mpumalanga from a coal energy hub to a renewable energy hub, it was all of those things that came together quite nicely in terms of a just energy transition plan.” 

Read more in Daily Maverick: “Mpumalanga a potential renewable energy hub, not Mantashe’s envisaged ghost towns – Eskom’s Mandy Rambharos”

Rambahros said the deal was mostly done by the time COP26 rolled around. 

“Government took over the negotiations from us then [at COP26] and it became a political declaration that was agreed. After COP26, we already – as Eskom – had an investment plan. So, that’s what the money was premised on. 

“We already had a plan in place in terms of what the project pipeline was. But when the climate envoys came to South Africa and had a discussion with government ministers here, it was then that we also had the inclusion of electric vehicles and green hydrogen from the dtic [Department of Trade, Industry and Competition] that wanted that included in the plan. 

Good to visit @Eskom_SA’s #Komati power station today with 🇺🇸 colleague @johnemorton . Komati will close next year and ESKOM are busy developing plans for a #justtransition away from coal power generation. The kit in the foreground is fantastic…. 1/ pic.twitter.com/NLrxIQJUxl

— John Murton (@JohnMurton) September 30, 2021

“We’ve always maintained that the priority should be the electricity sector, because that’s where you get the biggest bang for your buck, in terms of decarbonisation. But it’s also where the country’s priorities are right now – we don’t have enough electricity capacity. 

“When we got back from COP26, the Presidential Climate Finance Task Team was set up with Daniel Mminele leading it and, in the last year, the discussion has been around developing this investment plan … that’s now been approved by Cabinet and that plan will be made public at COP27. 

“And the investment plan is basically saying, what is the money going to be spent on … what is the investment pipeline for South Africa’s transition.” 

She explained that the investment plan deals with “way more” than $8.5-billion. 

“It tells you what the cost of the full transition is … if we had to completely transform our economy, what it will cost. But saying that, $8.5-billion is a good start and the majority of that money will go into Eskom’s pipeline.” OBP/DM