Netherlands, Denmark to Help Pay for South Africa’s Energy Transition

(Bloomberg) -- South Africa’s cabinet said the Netherlands and Denmark have joined the Just Energy Transition Partnership, a landmark climate finance deal meant to help the country transition away from coal and serve as a prototype for similar pacts with Indonesia, Vietnam and Senegal.

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The initial members of the pact — the European Union, Germany, France, the US and UK — have pledged $8.5 billion in finance. Together, the two new signatories have pledged an additional amount of about $333 million, Neil Cole, a finance manager within the South African Presidency, said.

Expanding the JETP could give momentum to the implementation of an agreement that’s been bogged down by delays and opposition from South African coal-mine workers since it was announced almost two years ago at the COP26 climate summit in Glasgow. South Africa’s government is yet to produce an implementation plan that would allow the bulk of the funds to flow to the country.

Their admission of more countries may ease earlier tensions between rich nations aiming to bolster their climate credentials, as the JETP funding partners group had initially been confined to Group of Seven members, people familiar with the situation said previously.

The Netherlands has committed to provide €155 million ($163 million) in grants while Denmark has agreed to contribute 169 million Danish krone ($24 million) in grants, 487 million krone in concessional loans and 545 million krone in commercial loans, Cole said.

Both countries have courted the African nation in recent months.

Mark Rutte, the prime minister of the Netherlands, and Mette Frederiksen, his Danish counterpart, visited South Africa in June, accompanied by business delegations. During that visit, state-backed Dutch firms pledged backing for the creation of a $1 billion green hydrogen fund in South Africa and a €300 million public infrastructure fund to invest in water and energy.

Denmark has also been advising Pretoria on wind energy and the creation of an electricity market, while the Netherlands has funded a project to replace jobs at a coal-fired power plant with an agriculture initiative.

Spain, Canada and Switzerland have also made pledges to help South Africa fund its energy transition, the cabinet said. They are not part of the pact.

Spain’s pledge was made last year when it said it would provide €2.1 billion through a mix of financial instruments with the country’s government working with its development finance institution, COFIDES, and South Africa’s Industrial Development Corp.

Switzerland will provide grants of 32 million swiss francs ($36 million) while Canada will provide a grant of 1.6 million Canadian dollars ($1.1 million), Cole said. Canada also contributed to energy transition programs that were announced earlier, he said.

(Updates with amounts pledged in second and fifth paragraphs)

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