Issued by Siyakudumisa Zicina on behalf of the FW de Klerk Foundation on 05/08/24

Introduction:

As the world moves toward greater decarbonisation with efforts aimed at a greener environment, South Africa has been leading a just energy transition (“JET”) movement that is orientated towards reskilling and upskilling the labour force within and outside the energy sector. This means that Pretoria intends on redirecting energy workers towards so-called “green jobs” within the renewable energy sector, including construction, electrical engineering and information technology. These forward-looking ambitions towards a sustainable, low carbon and equitable energy system have resulted in the country being viewed as a pioneer of the JET movement around the world. It should however be noted that South Africa’s just energy transition journey has been and will be a complex one, owing to the country’s long standing coal dependence, financial challenges and high unemployment rate. Thus, questioning the availability of technical mechanisms and human resources to fulfil the energy transition and ensure that it is “just” is crucial. Of greater importance, is understanding the funding opportunities available for South Africa’s just energy transition. Thus, this piece interrogates the country’s JET movement from a budget perspective. 

Understanding the Just Energy Transition:

If undertaken correctly, the concept of JET refers to the imperatives of managing the process of decarbonisation and not disregarding social and economic impacts. The concept recognises that the transition to renewable energy sources should have positive social implications, especially for societies that are dependent on fossil fuel industries. Within the South African context, the JET is a ‘once-in-a-generation’ opportunity that aims at averting climate disasters while transforming economies and industries to address inequality (section 9), exclusion and instil human dignity (section 10), all of which are non-derogable rights (absolute human rights that may not be infringed under any circumstances). Thus, the JET should be viewed as a people-centred initiative that aligns and respects the ethos of human rights. Any energy transition becomes ‘just’ only if the transition: 

• Ensures that challenges and opportunities of the energy transition are distributed fairly, such that affected societies are not disproportionately affected.
• Ensures that it focuses on reskilling, upskilling and creating new job opportunities within the green energy sector.
• Strives for a people-centred approach that involves government, stakeholders, civil society and communities where the principles of human rights, social justice and equality guides the transition towards being ‘just’. 

Equally so, a just energy transition should strive for a healthy financing mechanism that will open opportunities for training, upskilling, reskilling and the creation of new green employment. Over the past years, South Africa has been striving for a financing mechanism for its energy transition that aligns with the ethos of fairness, social justice and human rights. 

South Africa’s Shift Towards Renewable Energy: Ambitions vs Reality?

“As we undertake a just transition towards renewable energy, South Africa must ensure that it strives for a renewable energy revolution that will foster significant growth and job creation in the next decade and beyond”, says President Ramaphosa. 

The success of this “energy revolution” depends on funding opportunities. Two and half years ago, at a UN climate conference held in Glasgow, the governments of the United States of America, France, Germany, United Kingdom, European Union and South Africa signed the Just Energy Transition Partnership (“JETP”) committing themselves to financially support Pretoria’s decarbonisation efforts and achieve a just transition within the energy sector. This partnership promised a $8,5-billion funding package from countries in the Group Seven (“G7”) and European Union (and subsequently the Netherlands and Denmark). Of the $8,5-billion funding package, only 24% has been dedicated towards South Africa’s just energy transition. The government prioritised several areas within the energy sector for its JET including the green hydrogen, just transition within coal-dependent communities, new energy vehicles and skills development creating much-needed opportunities (Figure 1).

Yet, observers have criticised the funding package of the “JETP”, claiming that it is insufficient and inadequate for a JET towards renewable energy that creates early opportunities for training, reskilling and upskilling. Thus, to support the “JETP” efforts, the South African government launched the Just Energy Transition Investment Plan (“JET-IP”) in 2022, later approved by the cabinet in November 2023. This plan set out how South Africa intended to build on and use the partnership funds (Figure 2), investments for a people-centred just transition (Figure 3) and ventured into strategies to enhance its just energy transition, including borrowing from international finance institutions (Figure 4). 

Figure 1: Actioning the Just Energy Transition Partnership.