On Sunday President Cyril Ramaphosa appointed ministers from his ANC party and the pro-business opposition Democratic Alliance (DA) to serve in his “government of national unity”.

In one of the most significant changes, Ramaphosa took away pro-coal minister Gwede Mantashe’s control of the energy sector. Hilton Trollip, a Cape Town University energy researcher, told Climate Home that Mantashe had previously “paralysed” the government’s renewables programme.

The Department of Mineral Resources and Energy has now been split in two. Mantashe is only keeping control of mining and hydrocarbons, while the ANC’s Kgosientsho Ramokgopa, previously the electricity minister, will now be in charge of setting energy policy with a wider mandate. 

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Trollip said it was unclear if Ramokgopa would boost renewables as he has not held much power until now. But there is now a better chance that Mantashe’s highly contentious Integrated Resource Plan – which envisages a slowdown in renewable energy investments and a switch to gas-fired power – will be revised, he added.

DA’s Dion George is the new environment minister replacing Barbara Creecy, who has been moved to transport.

Creecy played an active role in several COP climate talks, most importantly successfully proposing a global goal on adaptation at COP26 in 2021. 

JETP talks

Owing to its heavy reliance on coal for electricity, the country is Africa’s biggest emitter of greenhouse gases. 

That made it a prime candidate for a world-first funding agreement, backed by wealthy nations, aimed at ramping up investments in clean energy while also protecting those reliant on the fossil fuel sector.

But two and a half years after it was announced, the now $9.3 billion “Just Energy Transition Partnership” (JETP) has made little tangible progress on the ground. 

Meanwhile, as the country grapples with rolling blackouts, state-owned utility Eskom has announced plans to delay the decommissioning of at least three of its coal-fired power plants by several years  – raising the risk that funding partners will walk back on their offers.

A general view of Kendal Power Station, a coal-fired station of South African utility Eskom, in the Mpumalanga province. REUTERS/Siphiwe Sibeko

Kevin Mileham, the DA’s shadow minister of mineral resources and energy, told Climate Home that South Africa’s JETP “will need to be accelerated” as the country is currently not on track to meet global climate goals.

The party wants to see “a rapid roll out” of the programme which will require improved dialogue with the wealthy European and North American countries funding part of it, he added.

It also wants to advance the implementation of a climate change adaptation strategy and believes South Africa needs to do a better job at tracking and reporting its efforts to reduce carbon emissions, Mileham said.

Much of the progress will hinge on the government’s ability to form a united front on foreign policy and forge an effective relationship with the international funding partners.

The ANC and DA have regularly clashed on international affairs, such as the country’s support to Palestine.

They will need to “reconcile their differences [on foreign policy] and come to a shared understanding on international multilateral processes,” says Happy Khambule, energy and environment policy director at Business Unity South Africa, a business lobby group.

Tensions over private sector role

He added that private companies, which will have a significant role in the transition, want to see policy certainty enhanced in the months ahead.

The group is awaiting the finalisation of the Electricity Regulation Amendment Bill, which promises to open up the electricity market and put an end to Eskom’s longstanding monopoly, and the Integrated Resource Plan.

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Meanwhile, the DA’s preference for greater private sector involvement in the energy transition could create fresh tensions with key stakeholders. Left-wing adversaries often deridingly label the DA a “neoliberal” party.

The country’s largest trade union group COSATU wants the newly separated energy department to “stop the privatisation of electricity and energy”, and instead promote state and social ownership models.

“We don’t expect major shifts with regards to the just transition, but rather a more focused approach on its implementation, in particular to make sure workers and communities and value chains are not left behind,” a spokesperson for the organisation told Climate Home.

The just transition should be overseen by multiple government departments given “the triple crisis” of unemployment, climate change and energy shortages, they added, suggesting that, for example, the finance ministry should raise spending on climate-focused public employment schemes.

(Reporting by Nick Hedley, editing by Joe Lo and Matteo Civillini)

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But, as vague ambitions now turn into concrete plans, the reality looks rather different.

A timeline for the early closure of coal power plants is absent from the investment blueprint for the Just Energy Transition Partnership (Jetp) unveiled at a Cop28 side event on Friday. The government expects instead to operate plants “flexibly” and to rely on the controversial co-firing of biomass and ammonia with coal.

Rich countries have also largely backtracked on their initial promise to offer financial support on more attractive terms than Vietnam could already secure from investors. Nearly 60% of the money will be provided as commercial loans, while the tiny share of grants available is primarily earmarked for technical support, the 223-page document shows.

Leo Roberts, a coal transition expert at E3G, said there are “major reasons” to be concerned.

“The investment plan is no longer the pathway to replacing coal power with clean alternatives the Jetp originally promised. Instead, it focuses on expensive or unproven technologies,” he added. “Those directly undermine the pace and scale of the energy transition.”

Hydropower push

Nearly a year after the initial announcement, Vietnam’s prime minister Pham Minh Chinh has mapped out how Vietnam aims to spend the $15.5 billion pledged by G7 nations to boost the deployment of renewables and cut dependence on coal.

Under the agreement, Vietnam aims to peak its emissions by 2030 – five years earlier than planned – and source close to half of its power from renewable energy within the same timeframe.

The development of dozens of hydropower projects across the country forms the backbone of the government’s strategy to hit the targets. A significant proportion of the donors’ money is already directly allocated to those projects. While the plants are a source of low-emission energy, the construction of dams and reservoirs has caused social and environmental issues in the country, including displacement and water scarcity.

The Vietnamese government also plans to expand its power grid, bolster battery storage, and invest in offshore wind and solar.

Contested coal conversion

New coal plants will continue to be built until 2030, while the government drafts a more detailed plan to deal with existing ones.

A phase-out of coal power plants at a large scale “is not feasible in the near-term” – the investment plan states – “but some older plants may be able to transition to alternative energy sources and uses”. In particular, those that have operating for at least 20 years will begin a phased conversion to biomass and ammonia “provided the price is right”.

NGOs have criticised the use of biomass co-firing, on the basis it prolongs the life of coal plants, emits more CO2 than is commonly accounted for and harms forest ecosystems. Ammonia co-firing is “very costly and has limited feasibility for deployment at scale”, according to E3G.

Loans not grants

A major issue is rich countries are reluctant to commit public money as grants. None have directly allocated finance to retire coal plants early. The plan refers to a need for social security and retraining of workers affected by the transition, but it is unclear who will pay for this.

Contributors prefer to invest in renewable energy projects, which bring a return through electricity sales.

Over half of the $8 billion in public finance will be “commercial” loans disbursed by development banks. Cheaper loans on concessional terms represent roughly a third of the package. Grants make up less than 4% of the money offered by governments, with guarantees and equity contributing to the total.

Commercial banks, part of the GFANZ coalition, are expected to invest the remaining $7.5 billion of the package.

At the launch event, the Vietnamese prime minister was flanked by the EU Commission president Ursula von der Leyen and the UK net zero minister Claire Coutinho.

Von der Leyen called the partnership “a success story”. It is “a good example of everything we want to achieve here at Cop28,” she said. “We want to bring emissions down while driving economic growth up.”

She was echoed by Coutinho, who told Minh Chinh “we are uniting all our efforts behind you”. The Jetp model is “powerful”, she added, “because it is just”.

Silence over environmentalists’ crackdown

Neither of them raised concerns about human rights. The Vietnamese government has brutally cracked down on the civil society representatives that would normally have been key stakeholders in the programme.

Five environmentalists have been jailed in the last two years on tax evasion charges, which human rights groups say are trumped-up accusations. In the most recent case, Hoang Thi Minh Hong, director of the campaign group CHANGE, was handed a three-year prison sentence and a 100 million Vietnamese dong ($4,100) fine last September.

Vietnamese campaigner Hoang Thi Minh Hong was sentenced to three years in prison last September. Photo: CHANGE/350Vietnam

Two weeks earlier Ngo Thi To Nhien, director of an independent energy policy think-tank, had been arrested on a charge of “appropriating documents of agencies and organizations”. Nhien worked for the EU, the UN, and the World Bank and, before her detention, had reportedly provided technical advice for the development of the Jetp.

At the time, the EU, Germany, the US, and UK said they were deeply concerned about the imprisonment of environmentalists.

Campaigners decried the silence over the crackdown at the investment plan launch.

“We urge multilateral development banks and donor governments not to bulldoze ahead with the Jetp,” said Tanya Lee Roberts Davis, NGO Forum on ADB’s Just Transitions Advocacy Coordinator. “Doing so would mean acting as complicit bystanders in the silencing and reprisals faced by community rights, workers’, environmental, and climate advocates.”

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At the G20 summit on the island of Bali last December, Indonesia and a group of rich countries and banks announced a $20 billion deal to move the Southeast Asian nation from coal to clean energy.

But this announcement left a lot of the details vague. Since then, Indonesia has been pushing for the funders to provide grants instead of loans, which add to the country’s debt burden.

Yesterday, Indonesia published its investment plan which revealed that some of its climate commitments had been watered down.

The reason is that the funding made available by international partners was not adequate, according to Fabby Tumiwa, director of the Institute for Essential Services Reform (IESR) and part of a working group advising the Indonesian government.

“I am disappointed because we expected the plan could be aligned with Paris Agreement targets”, Tumiwa told Climate Home. “This pushes the JETP further away from that”.

Targets watered down

A draft plan seen by Climate Home in August said Indonesia would retire a sixth of its coal-fired power plant capacity by 2030.

But that target was dropped from yesterday’s final version. Instead, Indonesia now plans to start shutting down coal plants before their scheduled closure no earlier than 2035.

Meanwhile, it plans a massive scale-up of renewables and a reduction of the capacity of existing coal plants in order to get to its 2030 emission reduction target.

In September, an Indonesian government official told Reuters: “It is very clear that they [Western nations] are not eager to provide financing for early retirement”.

The government has also dropped a target to peak its power sector’s emissions at 290 million tonnes of carbon dioxide by 2030.

Captive plants headache

While the new target of 250 million tonnes looks more ambitious, Tumiwa said it is less so because it excludes coal power plants known as captive.

These are power plants that do not provide general electricity to the public but power specific industries like Indonesia’s fast-expanding nickel sector.

The blueprint unveiled this week excludes these so-called captive plants from its calculations altogether, as “more work is required to develop a viable decarbonization plan” for them, the document says.

Rich nations offer loans not grants for Vietnam’s coal transition

This issue, which delayed the publication of the plan in August, has been complicated by the use of wrong assumptions in the modelling for the targets agreed upon last year when the deal was first announced.

“The number of captive plants is way higher than what it previously thought”, said Tumiwa.

The consequence is that reaching the headline emission peaking target promised in the original commitment is “extremely difficult”, as the document now acknowledges.

“Indonesia’s power sector, accounting for the full extent of off-grid captive power, is likely to exceed this target”, it concluded.

Loans not grants

Despite Indonesia’s complaints, the investment plan reveals that the vast majority of the finance is in the form of loans and grants make up just 2.5% of the money.

About three-fifths of the money are loans on better than commercial terms while the rest is bank guarantees and ordinary loans at commercial interest rates.

The US is the biggest funder but its finance is dominated by commercial loans and a multilateral development bank guarantee.

The European Union and European nations like France, Germany – as well as Canada – are providing grants and concessional loans.

The investment plan is subject to public consultation so is not completely final.

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But disagreements between Indonesia and the wealthy countries backing it meant that the launch was delayed.

What were they arguing over? You guessed it – money. Specifically, how much of the $20 billion promised should be grants versus loans?

The wealthy countries represented by the US and Japan say 0.8%, while Indonesia says ‘a lot more than that please!’

While negotiations continue, the Indonesian government official in charge told Climate Home News they need to see how much is being put on the plate before committing to specific targets.

The pioneer of energy transition partnerships, South Africa, got 3%, which now looks positively generous in comparison. Is it any wonder India hasn’t followed through on talk about a similar deal?

This week’s news:

• Devastating Beijing floods test China’s ‘sponge cities’
• China plans to recycle solar panels and wind turbines
• Indonesia delays $20bn green plan, after split with rich nations on grants and new coal plants
• US sparks controversy by backing oil company’s carbon-sucking plans
• One of 2023’s most extreme heatwaves is happening in the middle of winter

Carbon removal hijacked?

While the US plays Scrooge in Jakarta, back in Washington it’s ‘hey big spender’!

The government is giving out up to $1.2 billion for companies to invest in machines that are meant to suck carbon out of the atmosphere.

That’s all good in principle – the clever folks at the IPCC say we’re going to need this technology to compensate for the hardest-to-clean-up sectors.

But a big chunk will go to Occidental, whose CEO admits she sees these machines as a way to prolong their oil pumping business. Notably, this is not one of the hardest to clean up sectors.

With the Saudis lobbying the IPCC to emphasise carbon removal and Japanese coal plant owner Mitsubishi investing in it, is the fossil fuel industry hijacking the concept for its own ends?

The post Money row delays green plan – Climate Weekly appeared first on Climate Home News.

The investment blueprint is supposed to set out how foreign funding will help wean the Southeast Asian country off coal. But international talks on it have been tense, with Indonesia wanting more money on better terms from rich countries.

Originally slated for public release on Wednesday, the Just Energy Transition Partnership (Jetp) document is now scheduled to be officially unveiled later in the year as experts need additional time to develop “a technically credible pathway”, the Jetp Secretariat said in a statement. The Secretariat acts as a coordinating body and represents both Indonesia and the donor countries.

Tense negotiations

The setback follows nine months of tumultuous behind-the-scenes negotiations since the deal between Indonesia and a group of international partners led by the US and Japan was announced at the G20 summit in Bali.

Disagreements over the type of funds provided and technical challenges in ensuring the coal-to-renewables switch have been the biggest roadblocks so far, according to sources with knowledge of the discussions.

US sparks controversy by backing oil company’s carbon-sucking plans

Instead of launching the plan, on Wednesday the Jetp Secretariat submitted a draft document to the Indonesian government and its international partners for further review.

Dadan Kusdiana, Indonesia’s Secretary General of the Ministry of Energy and Mineral Resources, told Climate Home News the government is “committed to the energy transition”, but it will have to review the technical findings “to see if the targets are credible and workable”.

Energy transition targets

The partnership aims to peak Indonesia’s total power sector emissions by 2030, bring the sector’s net-zero target forward by ten years to 2050 and accelerate the rollout of renewable energy to reach at least 34% of all power generation by 2030.

Indonesia relies on coal for nearly half of its electricity production. Coal consumption in the country hit a record high in 2022, while the share of renewables in the energy mix slightly declined. The financial help promised by developed countries aims to reverse the course.

Similar deals have been struck with South Africa and Vietnam, but the Indonesian program is going to face particular challenges.

Whereas South Africa’s Apartheid-era coal plants are close to retirement, Indonesia’s are only on average nine years old, which makes compensating their owners for shutting them down early much more costly. On principle, the program should also strive to make the transition to clean energy fair for more than a quarter of a million people employed by the country’s coal industry.

Major roadblocks

Indonesia’s plans to build new coal power plants to power metal smelters – so-called captive plants – have also raised concerns. A coalition of NGOs recently sent a letter to the Jetp’s funders saying the plans “threaten global climate goals ” and could “stifle any progress” made on the other fronts.

Kusdiana told Climate Home the pipeline of captive plans is among a set of additional information currently being discussed by Jetp partners, alongside the need for a “massive” grid expansion and financial arrangements.

One of 2023’s most extreme heatwaves is happening in the middle of winter

‘Debt trap’ fears

Indonesia falls short on peatland restoration, risking destructive fire season

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At the New Global Financing Pact Summit in Paris, Senegal’s president Macky Sall said the money would help his country get 40% of its electricity capacity from renewables by 2030, up from about 30% now.

Sall said the deal will help “increase our resilience” and “secure our energy system” while French president Emmauel Macron said it would boost economic development and access to electricity.

The governments who have said they will contribute funds are France, Germany, the UK, Canada and the European Union. The USA and Japan, which have backed similar deals, are not involved in this one.

Carbon credits touted as saviour of coal-to-clean energy deals

The deal is known as a Just Energy Transition Partnership (JETP). Similar multi-billion deals have been struck over the last two years with South Africa, Indonesia and Vietnam.

Unlike these bigger nations, Senegal is a tiny emitter and does not dig up or use much coal. It relies on fossil fuel imports from abroad and has one of the highest electricity prices in Africa.

Whereas negotiations with these countries have focused on closing coal plants and rolling out renewables, the deal Senegal will just focus on rolling out renewables.

Meeting the target will be a challenge, as the government aims to provide electricity to all its citizens by 2025. About a fifth of Senegal’s 16 million people do not have access to electricity. These are mainly poorer people in rural and island areas. Economic development is likely to bring more electricity use.

According to a joint statement between the Senegalese and wealthy governments, the money will be a mixture of grants, loans on better than market terms, investment guarantees, export credits and technical assistance.

A precise breakdown of these different categories was not made available. Neither was the breakdown of how much each governments is contributing.

The chair’s summary of the Paris talks at which the deal was announced said that it includes private investors as well as multilateral development banks and government funding.

Wealthy governnments have sought to hide these details in previous deals and contributors have later said their share was just the “amount they are willing to consider”.

A spokesperson for Canadian environment minister Steven Guilbeault told Climate Home that “Canada will work with partners and development banks to secure the agreed mobilisation of resources, and we recognize that additional funding might be needed during and beyond the JETP period [of three to five years]”.

The share of grants as opposed to loans and the terms of those loans has been a source of contention in previous deals, with the recipient countries pushing for grants so as to not add to their debt burden.

A source of contention with Senegal has been the role of gas. Most big Western countries have promised to stop funding fossil fuels abroad whereas Sall has publicly slammed them for that stance, telling a Chinese-organised conference that it comes at a “fatal cost” to developing countries.

In the joint statement, which does not mention any fossil fuels by name, Sall said Senegal would be “securing our energy system thanks to all our natural resources in line with the Paris Agreement”.

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The statement added that Senegal “with the effective support of” the rich countries would study “the most cost-effective low-carbon and climate resilient pathway” for energy.

A statement from Germany’s development ministry BMZ said Senegal wants to promote gas production but that would not be financed by this deal.

The money will be spent on renewable energy and the infrastructure to enable it, like electricity storage and measures to improve the stability of the electric grid.

A working group of Senegalese and rich country representatives will meet regularly to discuss the partnership, a technical secretariat will be set up within four months and an investment plan will be drawn up within a year.

This article was updated on 22 June to include the spokesperson for Steven Guillbeault’s comments. And to correct the headline which originally put the figure as $2.5bn not $2.7bn and €2.5bn. The article was updated again on 26 June to clarify that the share of renewable energies in installed capacity in Senegal’s electricity mix is around 30% – the article previously used a different measurement to say 10%. And the detail that private investors are included was added, following the release of the chair’s summary.

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Details of the agreement to accelerate Vietnam’s energy transition remain unclear even to the southeast Asian nation, according to Sunita Dubey, Vietnam’s country lead for the Global Energy Alliance for People and Planet (Geapp), which supports the government’s transition plans.

“The terms and conditions for… the funding are not currently clear to the broader development community, including the [Vietnamese] government. We have been asking G7 [countries]. I believe even Vietnam has been asking G7,” Dubey told Climate Home in an interview, lamenting a lack of transparency over the financing arrangements offered by wealthy nations.

She added that the details should be revealed in an investment plan expected later this year.

In December 2022, Vietnam became the third country to agree a Just Energy Transition Partnership (JETP) with a group of wealthy countries and development banks to wean itself off coal, which currently generates most of its electricity.

Criticism over the lack of transparency of the deal follows similar concerns over the secrecy of energy transition agreements struck with South Africa and Indonesia.

Rich nations mobilise $15.5bn for Vietnam’s coal-to-clean transition

The group of donor countries is known as the International Partners Group (IPG). It consists of G7 nations, plus the EU, Norway and Denmark.

The agreement will help Vietnam peak its emissions by 2030 – five years earlier than planned – and enable the country to source close to half of its power from renewable energy.

The funding is due to be mobilised over the next three to five years. Half of the money will come from governments, the Asian Development Bank and the International Finance Corporation, the World Bank’s private sector arm.

The rest will come from private investment co-ordinated by the Glasgow Financial Alliance for Net Zero.

Lack of transparency

Like in Indonesia, the contribution made by each government has not yet been revealed.

Climate Home previously reported on how the details of the Indonesian package are similarly shrouded in secrecy. The breakdown of South Africa’s financing package was kept under wrap until Climate Home obtained a summary of the breakdown.

In all three negotiations, the share of loans versus grants was a key battle line.

“We don’t have any visibility on how it will come, what the grant amounts will be, and for the loans what the concessionality will be,” said Dubey, adding that there’s “no transparency”. Concessionality refers to the terms of loans below market rate.

Geapp collaborates with the Vietnamese government on capacity-building, research and technical assistance for the country’s just energy transition plans.

“The climate crisis is one of the biggest challenges of our times,” Dubey added. “Vietnam became one of a few countries to sign a JETP last year, demonstrating their commitment to reaching net zero carbon emissions by 2050.”

A spokesperson for the European Commission told Climate Home that funding arrangements “will be subject to further discussion among the parties”.

Governments sworn to secrecy on ‘$20bn’ for Indonesia’s energy transition

Jake Schmidt, of the US-based Natural Resources Defense Council, expects the Vietnam deal to mirror the South African one. “I believe grants will be a pretty small percentage, alongside loans with better terms than they would get in the market,” he told Climate Home.

The South Africa deals includes less than 4% of grants.

To receive the funding, the Vietnamese government is tasked with sketching out an outline of the investment opportunities and the measures required to deliver the energy transition. The deal gives Vietnam until November to submit an initial plan.

From coal to clean energy

Vietnam is among the world’s top 20 coal users and currently relies on the fossil fuel for around 50% of its electricity generation.

To deliver on the energy transition deal, the government must first overcome the administrative roadblocks that have thwarted the delivery of its energy plans. The country’s Power Development Plan 8 (PDP-8) - its blueprint for energy policy until 2030 - has been delayed for two years.

“The PDP-8 has to be modified because the drafts circulated before the JETP deal are not consistent with the targets they set in the agreement, especially in regards to coal capacity and gas expansion," said Schmidt.

Some political wrangling is expected. “There are still some forces in Vietnam that want to use more coal and gas," he told Climate Home.

Human rights at the fore

Vietnam’s treatment of climate activists is likely to remain a sticking point during the negotiations.

Vietnam is a one-party system in which, according to leading NGOs, the government has unleashed a “new wave of repression” against its critics. Four prominent environmental rights defenders have been imprisoned since 2021 on spurious tax evasion charges. The UN, the US, Germany and others have condemned the arrests.

The political agreement states the need for media and NGOs to be included in the process “so as to ensure a broad social consensus”. Campaigning groups like Global Witness have criticised the language as “weak”.

The activists' release is unlikely to be a deal-breaker. But Schmidt expects partner countries will continue to put pressure on Vietnam to address the situation.

“Otherwise it just becomes harder and harder to sustain the financing, because this kind of violations will make lawmakers in the US and the EU nervous," he said.

Vietnam's ministry of industry and trade, which is responsible for energy policy, did not respond to a request for comment.

The post Vietnam’s energy transition deal is a ‘black box’, partner warns appeared first on Climate Home News.

At the G20 leaders summit on the Indonesian island of Bali in November, a group of governments and banks announced they would give $20 billion to move Indonesia away from the coal that currently generates most of its electricity.

Indonesian investment minister Luhut Pandjaitan said the just energy transition partnership (JETP) was a “groundbreaking model of international cooperation” which would fulfill a promise to his granddaughter to “make policy that would benefit future generations”.

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But the governments would not reveal who was paying which part of the $20bn or what form the support would take. One bank said its stated contribution to the figure was only the amount it was “willing to consider”.

Tight lips

A spokesperson for one of the governments told Climate Home they would not reveal how much they were giving because “we agreed among the partner countries that we communicate only our cumulative contribution as a group at this point”.

The Indonesian government has been sworn to secrecy too, according to a source close to it.

“Indonesia is being hostage by [the other governments] not to disclose their funding commitment and the financial modalities,” they said.

Just an estimate

One of the few entities to reveal its contribution is the EU-funded European Investment Bank (EIB), whose commitment is counted  as €1bn ($1.06bn).

But a spokesperson told Climate Home that this amount was just what it is “willing to consider committing” and is “subject to agreement on key policy aspects and to a suitable pipeline of eligible investments”.

IMF warns against ‘protectionism’ in rich world’s green subsidies

The only breakdown of the $20bn that that has been publicly revealed is that $10bn will come from the public sector and $10bn will be from private banks that are part of the Glasgow Financial Alliance for Net Zero (Gfanz).

When a similar deal with South Africa was announced at Cop26, only the public money ($8.5bn) was included in the announcement. But subsequent deals with Vietnam and Indonesia have pumped up the headline figure by including private money.

As with Indonesia, the details of this South African deal were kept secret until Climate Home revealed the figures.

Grants vs loans

They showed that only 3% of the funding was grants and the rest are loans, which will add to South Africa’s debt.

The breakdowns of loans versus grants for Indonesia has not been revealed.

But the EU has revealed that just 1% of its $2.5bn, which includes the EIB’s contribution, will be grants.

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The UK says its $1bn contribution will be a World Bank guarantee.

The US, Japan, Canada, France, Germany, Italy, Denmark and Norway have not announced how much they are contributing or how it will be spent.

Political risk

Despite the lack of transparency, implementation of the financial agreement is now stepping up.

On 16 February, the US and Japanese governments sent officials to Jakarta to commemorate the establishment of a JETP secretariat, hosted by Indonesia’s energy ministry.

A delegation of bankers from Gfanz is expected to visit Indonesia on a scoping mission next week and a full investment plan should be drawn up by September.

South Africa tried to weaken corruption safeguards in coal phase out deal, says CEO

However, the source close to the Indonesian government said the money may come too slowly due to donor country conditions.

Under the deal, the Indonesian government has to implement reforms first, to the satisfaction of these countries. But the reforms are complicated and risky, particularly with a presidential election scheduled for February 2024.

So the risks will be taken before the election while the rewards will only start flowing afterwards, the source said.

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Andre De Ruyter told police his coffee was poisoned with cyanide last month, after he had submitted his resignation as chief executive of Eskom and before this was made public.

As chief, De Ruyter sought to clean up corruption and mismanagement at Eskom, which has a central role in the country’s shift from a coal-dominated energy mix to renewables.

Specialist newswire EE Business Intelligence reported that, after drinking a cup of coffee in his office at Eskom’s headquarters in Johannesburg, De Ruyter became weak, dizzy and confused, shaking uncontrollably and vomiting copiously. He subsequently collapsed, unable to walk.

His security detail rushed De Ruyter to a doctor, where his condition was diagnosed as cyanide poisoning and treated accordingly. De Ruyter said he had reported this to the police.

It came at a time of heightened political tension. Days later, the ruling party at its annual conference decided to transfer control of Eskom to the government ministry of Gwede Mantashe, a defender of coal.

The head of the African Climate Foundation, Saliem Fakir, told Climate Home that these developments were “a huge disappointment” and would slow down the country’s energy transition.

Bumpy few months

President Cyril Ramaphosa is pursuing an $8.5 billion deal with rich nations to cut coal use, which generates 70% of South Africa’s electricity, and create green jobs.

Under the package, Eskom is tasked with repurposing aging apartheid-era coal plants to clean energy, building electricity transmission lines and promoting rooftop solar power.

Yet a scandal over the theft of millions of dollars from his game farm has weakened Ramaphosa’s authority. Political commentators and the main opposition party say mining and energy minister Mantashe has used the crisis to his advantage, gaining power within the party.

On 8 December, Mantashe accused De Ruyter of “actively agitating for the overthrow of the state” by forcing planned power cuts, known as “load shedding”, on South Africans. Eskom had taken these measures since before De Ruyter became chief in December 2019, as South Africa’s electricity demand often outstrips supply.

Gwede Mantashe, South Africa’s minister of mineral resources and energy (Pic: GCIS/GovernmentZA/Flickr)

Neither Ramaphosa or public enterprises minister Pravin Gordhan publicly defended De Ruyter from Mantashe’s criticism. On 13 December, De Ruyter handed in his resignation.

The next day he was allegedly poisoned and the day after that his resignation was made public. It’s not clear whether any attempted assassin knew he had resigned.

South African climate activist Alex Lenferna told Climate Home that De Ruyter “was moving things towards clean energy” and that his exit “may well see a rollback”.

From 16 to 20 December, the ruling African National Congress party gathered in Johannesburg for its elective conference. The conference decided that Mantashe’s energy ministry should take over control of Eskom from Gordhan’s public enterprises ministry. Ramaphosa later promised to implement this decision.

‘Coal fundamentalist’

Mantashe is a former coal miner and calls himself a “coal fundamentalist”. He has publicly criticised clean energy policies pursued by Ramaphosa and De Ruyter’s Eskom.

Five days after Ramaphosa announced the $8.5bn energy transition pact in November 2021, Mantashe told an energy conference “South Africa is rich with coal”. He added: “Globally, one summit after the other, certain industrialised countries refuse to jettison their use of fossil fuels. What had been pitted as global agreements lay hollow.”

Fakir told Climate Home that Mantashe was likely to slow down Eskom’s energy transition.

After the end of apartheid, South Africa’s coal mines came under predominantly black ownership. Those businesses enjoy good relationships with the political elite and want Eskom to keep buying their coal, Fakir said. De Ruyter was seen as a threat to those interests.

Fakir said that the rich nations backing the partnership would take note of Eskom’s troubles. “There will be deep, deep scepticism that this can be pulled in the right direction,” he said.

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Over the years, there have been various vehicles for this. Loans, grants, technology and training pass from developed to developing countries directly and indirectly through multi-lateral development banks and specialist vehicles like the Green Climate Fund.

At Cop26 in Glasgow last year, a new vehicle was announced. The UK, US, France, Germany and the US announced they would provide $8.5bn to help South Africa transition from coal to clean energy.

They called this a “just energy transition partnership” (Jetp). The “just” means they aim to look after the coal workers whose jobs are under threat from the transition from coal to clean energy.

Since then, other countries have jumped on board. At the G7 summit in Germany in June, the group of seven developed economies declared their support for the concept, adding Canada and Japan to list the of potential financial backers.

The German hosts also invited Senegal, Indonesia and India along to the Bavarian summit. They, and Vietnam, then began talks with the partners on their own South-African style deals. So, as the first anniversary of the Jetp concept approaches, how are those talks going?

South Africa – Ambitious plan with stingy backing

South Africa’s Jetp got a lot of fanfare at Cop26. President Cyril Ramaphosa described it as a “watershed moment not only for our own just transition but for the world as a whole”.

Details were slow to emerge. But South Africa has been doing the legwork. On Friday, Ramaphosa unveiled a 200-page blueprint for economic transition, poverty reduction and an end to blackouts through investment in renewables, green hydrogen and electric vehicles.

This will use the $8.5bn as a catalyst, Ramaphosa said, but that “is not sufficient to meet the scale of our ambition”. After factoring in expected investments from multilateral development banks and the private sector, there is a $39bn shortfall over the next five years, he estimates.

To shore up more investments, John Kerry is proposing to finance the part of the transition by allowing banks and companies to claim carbon credits for funding emissions cuts. The idea is controversial and has divided partner countries. Kerry could make an announcement at Cop27.

The biggest concern for South Africa is taking on too much debt. Only 4% of the $8.5bn package comes as grants. The country will pay interest on the rest.

That may not matter too much if the new clean industries turn a profit and boost the economy. However social security and retraining of coal workers is not obviously a profitable enterprise – and risks falling by the wayside.

At a pre-Cop27 briefing, even South African environment minister Barbara Creecy sounded concerned. “We have to be careful of climate financing that enhances debt of developing countries”, she said.

Presenting the blueprint to his climate advisory group, Ramaphosa said he was "placing the ball firmly in the court of the international community particularly developed economy countries that have through their own industrialisation… contributed greatly to the damage of our climate”.

Indonesia - Haggling on ambition

Like South Africa, Indonesia is a coal-producing and coal-reliant emerging economy. Unlike South Africa, its coal plants are relatively new and therefore more expensive to retire early. Indonesia wants more money on better terms than South Africa got.

According to leaked diplomatic cables seen by Politico, rich countries are offering $10bn. The Jakarta-based Institute for Essential Services Reform (IESR) estimates that replacing all of Indonesia’s coal capacity with renewables will cost around $1.2 trillion by 2050. Its director Fabby Tumiwa previously told Climate Home an energy transition partnership worth $15bn would be “a fair amount”.

Tumiwa added that grants should make up more of the deal than they did with South Africa - at least 10%, he said. Replacing coal with renewables will require a lot of investment from state-owned utility Perusahaan Listrik Negara (PLN), he said, and "it is unfair if that cost [is] borne by Indonesia[n] tax payer[s], while we are not the one causing today climate crisis".

The US is co-leading on the talks with Japan. They represent the contributor group of the G7, Norway, Denmark and perhaps soon New Zealand, Politico reports.

The leaked cables reveal the partner countries want Indonesia to cancel a new 5GW coal power plant, remove coal subsidies and roll out renewables faster. IESR research suggests Indonesia could save $5.7bn in health costs by 2030 by cancelling its $1.7bn coal subsidy bill.

The Indonesian government is expected to announce the Jetp deal at the G20 summit it is hosting on the island of Bali on 15-16 November. The country is only sending a vice-president to Cop27, as president Joko Widodo stays at home.

Vietnam - Jailed activists ignored

Vietnam is a one-party state where climate activists are unable to criticise the government freely. 

While the government in Hanoi talks about coal transition to donors, it has imprisoned four leading anti-coal activists on spurious tax evasion charges. The US, Germany and others have condemned the arrests of Nguy Thi Khanh, Mai Phan Loi, Bach Hung Duong and Dang Dinh Bach. 

A spokesperson for Germany's development ministry (BMZ) told Climate Home it had raised human rights concerns with the Vietnamese government. A separate source with knowledge of these discussions, said the Germans "received significant pushback". 

The activists' freedom may not be a deal-breaker. The BMZ spokesperson told Climate Home: "With the agreement on the Jetp, we also hope to be able to send a positive signal to climate activists." 

US climate envoy John Kerry told reporters recently he is “working very hard to get Vietnam to do what is sensible regarding the transition to energy” despite the fact "some forces are fighting to keep coal". 

Jake Schmidt, of the National Resources Defense Council, told Climate Home this was a mistake. “How can you have an investment plan in a country that does not allow experts to operate and ensure that the money is well spent and delivered in the right way? Until these four experts are freed and their ability to operate is resolved I don't think a Jetp can survive in that country." 

According to leaked EU documents reported by Politico, the initial offer of around $5bn is too low to seal the deal for Vietnam. 

The EU and UK want Vietnam to peak power emissions in 2030, cancel planned new coal plants built and build out 60GW of renewable energy capacity by 2030. Vietnam hasn't responded publicly. 

Anti-coal activist Nguy Thi Khanh, winner of the prestigious Goldman Environmental Prize, is in jail on spurious tax evasion charges (Photo: Goldman Environmental Prize)

India - Early stages still

With more people and more emissions than the other Jetp nations put together, India is the biggest prize for emissions reduction. But it's Jetp negotiations are not as far advanced as for the three nations above.

There are no announcements expected at Cop27, which prime minister Narendra Modi is not scheduled to attend. There may be more progress next year when India takes over the G20 presidency from Indonesia.

Senegal - Gas a dealbreaker

Unlike the nations above, Senegal is not a major emerging economy and is not reliant on coal. One source said it was chosen because France wanted a French-speaking nation to take a lead on.

Like most African nations, Senegal's emissions are tiny. A third of its people lack access to electricity. The issue is how much and how quickly emissions grow.

Senegal's prime minister Macky Sall has been vocal about wanting to develop offshore gas deposits. He wants developed nations' help in this and has found a sympathetic ear in Germany's Olaf Scholz.

But, as a group, the partner countries have made clear to him that a Jetp will not finance any fossil fuels. Any deal will focus on renewables, so Senegal can "leapfrog" the polluting stage of development.

These talks have received less political attention and no announcements are expected at Cop27.

The post As Cop27 kicks off, where are the coal to clean deals at? appeared first on Climate Home News.

That can be seen in a summary of the financing provisions obtained by Climate Home News.

It shows that $4.6bn – 54% of the funding – is earmarked as concessional loans, with better borrowing terms than South Africa can access on the open market. Just under half of that money is provided by Germany and France.

The remaining $3.7bn, or 43%, include a mix of commercial loans and investment guarantees to de-risk projects so they attract private investors. These will come from the EU, US and the UK, which is contributing the largest share.

Only $230m will be delivered collectively by donor countries as grants – 2.7% of the total package.

South Africa’s cabinet approved an investment plan for the money on Wednesday, but has yet to publish it. A launch is expected at the Cop27 climate summit next month.

The South African government has been in negotiations with partner governments since striking an outline deal at the Cop26 climate summit in November 2021.

South Africa’s president Cyril Ramaphosa has repeatedly said his government would only accept a deal that offered good terms. Most of the money should come as grants, he said shortly after Cop26, and any loans should be at concessional rates.

Ramaphosa's government has been trying to reduce the country's sovereign debt, which stands at around 70% of GDP.

A distinctive feature of the package was its focus on supporting workers in the transition to clean energy, with social protection measures and retraining.

But under the breakdown seen by Climate Home, less than 1% of the money is earmarked for direct social investments. In contrast, 5% is to develop a green hydrogen sector.

Repurposing coal power stations

South Africa pitched for the funds so that debt-burdened state utility Eskom could repurpose coal-fired power stations. The funding is expected to support Eskom decommission three coal power plants and replace them with renewables.

The utility’s dire financial situation means it is unable to borrow money at market rates.

Through their development agencies, Germany and France are respectively providing $1.2bn and $1bn in concessional finance.

The largest share comes from the Climate Investment Funds’ (CIFs) Accelerating Coal Transition initiative.

With $500m of seed funding, the CIFs initiative is expected to leverage a further $2.1bn in both public and private finance, according to documents published last week. That includes an estimated $875m from the private sector, counted towards the $8.5bn total.

South Africa approves $8.5bn energy transition investment plan

By de-risking investments and reforming policies, partners aim to attract further investments from the private sector in renewable energy. Around 80% of the package is earmarked for the electricity sector.

The UK government, which led negotiations on the package with the EU, is providing the largest share of commercial loans and guarantees to unlock funding from the African Development Bank and the private sector, with a contribution totalling $1.7bn.

US contribution

The US is providing $1bn in funding through its Development Finance Corporation (DFC), whose terms are not preferential enough to be counted as concessional funding.

Jake Schmidt, of the US-based Natural Resources Defense Council, told Climate Home the US' relatively small contribution could be explained by the fact Washington has "historically less bilateral relations with South Africa than other contributing countries".

Schmidt added that donor countries need to mobilise more money to make a deal appealing to other coal-dependent emerging countries negotiating an energy transition partnership, including Indonesia and Vietnam.

"I hope they find a slightly better offer for other countries if they are going to move this forward. South Africa needs financing so desperately because Eskom is in so much debt. But others might not be so desperate."

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In a short statement, cabinet said the plan “outlines the investments required to achieve the decarbonisation commitments made by the government of South Africa while promoting sustainable development, and ensuring a just transition for affected workers and communities”.

The plan, expected to be published at next month’s Cop27 climate summit, follows nearly a year of negotiations between the governments of South Africa and the UK, EU, US, France and Germany, which are contributing funds.

South Africa’s president Cyril Ramaphosa has repeatedly said his government would only accept a deal that offered good terms, based on grants and concessional funding, that aligns with national development goals, including debt reduction and job creation.

Yet insiders told Climate Home News that less than 3% of the money will be delivered as grants, with the rest split between concessional and commercial loans.

International finance experts have questioned whether package offers the country better terms than it can already access on local and international markets.

Small island states to propose ‘response fund’ for climate victims at Cop27

South Africa’s electricity system is the most carbon intensive in the world and depends on coal for more than 80% of its power.

The partnership struck at the Cop26 climate summit in Glasgow was intended to help South Africa create a low-carbon economy and deliver on the upper range of its 2030 climate targets.

At a time when donor countries were failing to deliver on their climate finance promises, including to collectively mobilise $100bn a year by 2020, the package was hailed as a model for emerging economies to go green.

But participating governments have been slow to reveal who is contributing what and how it will be spent.

“The whole world is watching to see if the money is actually mobilised in South Africa. It’s extremely important that donors follow through with their commitments,” said Leo Roberts, of think tank E3G’s coal transition team.

South Africa turns to renewables, gas and batteries to end power cuts

The investment plan will focus on the electricity sector, electric vehicle manufacturing and development of green hydrogen.

It is expected to cover the closure and repurposing of coal-fired power plants by state utility Eskom, expansion of the transmission network and social protection and retraining for workers who lose their jobs.

Campaigners are worried a skew towards commercial loans will add to South Africa’s debt burden and leave workers behind. They have repeatedly called for more transparency in the process.

While the private sector is likely to support investments in renewable energy, other activities such as reskilling coal workers need public finance – largely in the form of grants.

“The terms have to be fair finance. They have to reduce the debt load,” Saliem Fakir, executive director of the African Climate Foundation, told Climate Home.

Indonesia is learning lessons from South Africa’s tough energy transition deal talks

For Roberts, of E3G, the lack of transparency led to a misleading idea that the partnership was a “new climate finance paradigm”.

“It is a diplomatic and political process to bring countries and stakeholders together at a table for discussion and to use an amount of public finance to leverage private finance. And that is ground-breaking. The price tag was a distraction but was needed to get everyone to the table,” he said.

Fakir said that process had the potential to create “a big shift” in South Africa. “It allows sovereign ownership of a process and arrangements for much larger-scale funding,” he said.

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