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Netherlands and Denmark Boost South Africa's Landmark Climate Finance Deal

Published October 19, 2023
1 years ago

South Africa’s path towards a green energy future recently gained increased traction, as the Netherlands and Denmark joined the Just Energy Transition Partnership (JETP), a landmark climate finance deal conceived to facilitate South Africa's shift away from coal-based energy. This underlines the global solidarity in combatting climate change, in a move hailed as a pivotal step forward in the nation's energy transition journey.



Identified as the world's 14th-largest source of greenhouse gas emissions, South Africa relies on coal for over 80% of its electricity generation. The JETP's aim is to provide financial support and the necessary resources for South Africa to transition away from its heavy reliance on coal, offering a potential blueprint for similar initiatives in other coal-dependent developing countries, such as Indonesia and Vietnam.


The JETP, with founding members including the European Union, Germany, France, the United States, and the United Kingdom, had previously pledged R160 billion ($8.5 billion). However, the recent addition of the Netherlands and Denmark will boost the global effort towards decarbonization, and expedite South Africa's transition process.



While financial contributions from the Netherlands and Denmark are yet to be declared, both European nations have a track record of active involvement in South Africa’s fight against climate change. As part of an earlier visit to South Africa, state-backed Dutch corporations pledged to support a $1 billion green hydrogen fund and a €300 million ($317 million) public infrastructure fund to invest in water and energy. Furthermore, Denmark has confirmed its commitment to contributing R3.2 billion ($171 million) to green energy projects in South Africa and assisting with the establishment of wind energy initiatives and electricity market development.


Despite the significant stride towards a greener future, South Africa's President Cyril Ramaphosa faces political challenges, primarily from South Africa's coal-dependent industries and unions concerned about potential job losses resulting from the shift away from coal.


Nevertheless, the intensifying global push for eco-friendly initiatives and the ageing infrastructure of South Africa's coal-fired power stations necessitate this advancing transition. The bulk of the new demand is currently being fulfilled by rapidly expanding renewable energy projects, largely privately funded.


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