Rich countries could help finance South Africa’s coal exit

Representatives from the United States, the European Union, the United Kingdom, France and Germany meet with senior South African government officials to discuss a possible climate deal and ways to achieve it. ‘Help finance the African country’s transition out of coal, Bloomberg reported on Wednesday, citing sources with knowledge of the developments.

Coal is still a major source of electricity generation in South Africa. The country also exports a lot of coal and is the fifth largest exporter of coal in the world. Currently, coal is by far the main source of energy for South Africa, accounting for around 80 percent of the country’s energy mix.

“This is unlikely to change significantly over the next decade, due to the relative lack of suitable alternatives to coal as an energy source,” local utility Eskom said.

South Africa, like other developing countries, has come under pressure from rich developed countries to commit to meeting climate goals and reducing their dependence on fossil fuels, especially coal.

Today, the delegation of officials from the US, UK and EU, along with its members France and Germany, seek to strike some sort of climate deal for an energy transition. in South Africa, in the hope that it can be announced at the COP26 climate conference, hosted by the UK in Glasgow, Scotland, in November, according to Bloomberg sources.

Earlier this month, Africa’s largest bank by market capitalization, FirstRand Limited, said it would no longer fund new coal-fired power plants in its updated energy and fossil fuel policy.

From 2026, South Africa-based FirstRand will no longer provide direct project finance to new coal mines, the bank said, as investor and corporate pressure increases on the banking industry everywhere to rethink financing of fossil fuels.

FirstRand has also committed in its new climate policy to further reduce the cap on its exposure to coal, from 1.5% to 1% of total advances from 2030.

By Tsvetana Paraskova for OilUSD

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