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South Africa’s $8.5 billion energy arrangement could serve as a model for other coal-dependent nations.


After the COP27 Climate Summit in Cairo, Egypt, the South African government and its investment partners have started a big plan to switch from coal to green energy that will cost $8.5 billion.

The UK, the US, France, Germany, and the European Union all support the deal, which is called the Just Energy Transition Plan. It is seen as a way for other coal-dependent developing countries to cut their greenhouse gas emissions.

South Africa will shut down 90% of its coal-fired power plants under this plan so that it can develop renewable energy sources and improve its grid infrastructure.

The energy transition agreement serves as a model for countries such as Indonesia and India, and it is symbolic after Russia’s invasion of Ukraine increased demand for fossil fuels.

In the next five years, the investment plan calls for spending $7.6 billion on electricity infrastructure, $700 million on green hydrogen projects, and $200 million on an electric vehicle industry.

That is still far short of what South Africa requires, but the expectation is that it will serve as a down payment for additional funding, particularly from the corporate sector.

South Africa gets a lot of its energy from coal, but it still has power outages all the time. It’s still not clear how the country can cut back on coal and switch to renewable energy sources while also increasing its power supply.

At the G20 summit in Bali this month, a similar deal is likely to be announced with Indonesia. Talks are also going on with Vietnam, Senegal and India.




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