France and Germany have released 600 million euros to help the energy transition in South Africa as part of an investment plan approved at COP27 in Egypt for a total of 98 billion dollars.
"South Africa, France, and Germany have signed loan agreements for the two European nations to provide 300 million euros each in concessional financing to South Africa in support of the country's efforts to reduce its dependence on coal," the three countries announced Wednesday in a joint statement.
South Africa gets 80% of its electricity from coal, a pillar of the economy that employs nearly 100,000 people. Several power plants are to be shut down by the end of 2030. The state-owned company Eskom, which is in debt, is unable to produce enough electricity with its aging installations and is imposing continuous power cuts.
A $98 billion investment plan for the energy transition of Africa's leading industrial power was approved earlier this week at the UN climate summit in Sharm el-Sheikh, which opened on Sunday, following an agreement in principle reached last year at COP26 in Glasgow.
France, Germany, the United Kingdom, the United States, and the European Union had pledged the support of 8.5 billion dollars with the ambition of making South Africa an example of cooperation in the fight against emissions in developing countries.
The sum released by France and Germany, in the form of loans from the German public investment bank (KfW) and the French development agency (AFD), is the first tranche of this aid. The two countries have pledged one billion euros each to South Africa, which will need at least $500 billion to achieve carbon neutrality by 2050, according to the World Bank.
South African President Cyril Ramaphosa has repeatedly criticized rich countries for providing aid to the poorest mainly in the form of loans that risk adding to their debt.
Southern countries will need more than $2 trillion a year by 2030 to finance their climate action, nearly half of it from outside investors, according to a report commissioned by the COP presidency.