AfrElec: South Africa signs €600mn loan agreements with France, Germany to reduce reliance on coal through just energy transition

France and Germany have signed loan agreements with South Africa for each to extend €300mn ($301.5mn) in concessional financing to support the country’s efforts to reduce its reliance on coal through a just energy transition to cleaner energy sources.

The loans are provided by the French and German public development banks, AFD and KfW, directly to the South African government via its National Treasury, Mining Weekly reported on November 9.

The financing agreements were announced at a ceremony held at the ongoing United Nations Climate Change Conference (COP27) in Egypt. The signing represents a significant milestone in the implementation of the Just Energy Transition Partnership (JETP) formed at COP26 in November 2021.

The JETP is a long-term partnership between South Africa, France, Germany, the United Kingdom, the United States and the European Union. The group aspires to support South Africa in accelerating its journey to a low-carbon economy and climate-resilient society, writes Mining Weekly.

South Africa continues to rely on coal to produce most of its electricity and the coal sector remains significant to the country’s national economy. However, Ramaphosa has recently announced the country’s Just Energy Transition Investment Plan 2023-2027 to kick-start the decarbonisation of its coal-dependent economy.