- South Africa was the first country that signed a Just Energy Transition Partnership (JETP) with G7 countries in 2021 for $8.5 billion. Since then, the country realises it needs more than 10-fold the amount to carry out a just transition.
- Meanwhile, the G7 has shown interest in signing a JETP with India as well. A study by an Indian think tank estimates that India needs $900 billion over the next 30 years for a just energy transition.
- Mongabay India talked to Louise Naude, a commissioner with Presidential Climate Commission (PCC) in South Africa, who emphasised the need for collaboration among Global South countries, especially the ones being considered for JETP, to facilitate better deals.
Though the Government of India denies the need for a uniform policy on a just transition away from coal, the push for such a policy, from experts, is getting stronger.
Recently, a Delhi-based think tank, iForest, released two reports – one proposed a just transition framework, including polices, plans and institutional mechanisms, while the other estimated that India needs $900 billion over the next 30 years for a just energy transition. Both the reports emphasised the need for international cooperation for a just transition in the Global South. The reports state that countries such as India need grants and concessional financing to support the economic diversification of fossil fuel regions, green energy, and industrial development and to build the resilience of the impacted communities.
Meanwhile, there is also an increasing recognition among the global community of the importance of just transition finance, which is reflected in collaborations between developed countries (G7) and developing countries. There have been three such deals in the recent past – the $8.5 billion deal between the G7 countries and South Africa in 2021, a $20 billion deal with Indonesia in 2022 and a $15.5 billion agreement with Vietnam in 2022. The G7 countries have shown interest in signing a similar deal with India too.
From the Global South countries, only South Africa has developed a comprehensive just transition framework so far. To understand the process of just transition in South Africa, Mongabay-India talked to Louise Naudé, a commissioner with the Presidential Climate Commission (PCC), a South African independent, statutory, multi-stakeholder body, established in 2020 by President Cyril Ramaphosa who also chairs the Commission. Naudé is also associated with World Wide Fund for Nature (WWF), South Africa.
Mongabay-India: Experts agree that a proper policy framework is needed to ensure a just transition in India. How did South Africa manage to get one?
Louise Naudé: Everyone realised the need for a vision document when the PCC was established. We realised that we needed to have some rallying vision and document that would guide what it means to have a Just Transition in South Africa. Because that was the mandate of the commission that it must convene and facilitate a just transition.
The PCC has commissioners from government, business, civil society, labour groups, and other entities, like the water Research Commission. It means PCC has representatives from different interest groups in the country. So, each of us was able to visit our constituency and observe what just transition means. All those ideas came to the commission.
There are nine provinces in South Africa. The PCC members visited every province and the affected communities in those provinces. They tried to observe whether the communities were affected by the Low Carbon transition, by terrible droughts, etc. The PCC also worked with the labour unions. Based on all these ideas and understandings, the commission drafted the Just Transition framework for the country.
It (the framework) discusses our vision for just outcomes in South Africa. It talks about the principles of restitutive justice and procedural justice. And then, it digs into some of the vulnerable sectors and what could be done about that. We have almost a definition of what we mean by justice in our country. So that was very useful, and now, the cabinet has adopted it.
Mongabay-India: South Africa has a history of apartheid, where the majority of the country faced racial segregation for decades. The country is now going through a transition that involves rearranging the power-sharing mechanism. The country is in the process of undoing past mistakes. Does it have any role in grabbing a just transition opportunity as South Africa is not only the first country to sign the deal with G7 but also to develop a broader framework for it?
Louise Naudé: Yes. Just Transition is absolutely a social and political question. The technology in the context of capitalist economies that we all find ourselves in, and the businesses utilising and selling and improving those technologies, will not deliver justice. Justice will come only through political will, political consciousness, and social mobilisation. If the voices of the vulnerable, workers, and women are not there and shaping what the Transition looks like, it will not be just. So just Transition is not a technical but a political and social question.
Mongabay-India: After signing an agreement with G7 worth $8.5 billion, South Africa estimated it would cost $97 billion for the next five years. Keeping this in mind, how do you see the progress of the JETP?
Louise Naudé: If you look at our concept of a just transition in South Africa, it’s much broader than energy. The money that is coming through JETP is for energy transition. It’s a piece; we need that. Later, the President set up a small committee to respond to the international partner group to know whether the country wants that money and under what conditions.
That committee then said, we don’t even know what we want to have in our energy transition. We do not know how much it will cost. We realised that we needed to figure out our priorities in just transition. Otherwise, we can throw that $8.5 billion in all directions, which will mean nothing.
The committee then devised three priorities – electricity, electric vehicles, and green hydrogen.
I think these other sectors could also be there. But I do not think there’s anything particularly wrong with those three priorities. They also tried to estimate a cost, which came out as more than $8.5 billion. You must remember this first estimate is only for five years. The whole transition will take longer and cost much more. But in the five years with those three priorities, we have estimated it will cost $97 billion. Some of this will be covered by the JETP $8.5 billion deal. For the rest of the money, we are exploring the market. We call it the investment plan with our priorities. It had to be done very quickly.
Mongabay-India: After signing an $8.5 billion deal with the G7, South Africa again sought loans from Germany and France for the purpose of just transition. There are concerns regarding increasing debt in developing countries. Is climate adaptation in the Global South coming at the cost of climate-related debt?
Louise Naudé: That is what they put on the table. So, we do not control what they put on the table. It has some loans and some grants. Later, during the consultation that PCC has been hosting and people responding to JETP, the country became an uproar. We feel grant components should be a much larger piece of what’s on the table. I do not necessarily object to loans, per se. But what is the terms for these loans are is very important. We need highly concessional interest rates. We are worried about the burden on the country’s economic health and taxpayers. We do not know what will happen to the exchange rate and interest rate ten years down the road, especially when these loans are Euro or dollar-dominated. So, the country is raising all of these concerns, and it is being negotiated. I must say that some of the partner countries have already responded by saying we will give more grants.
Mongabay-India: Many developing countries are signing the JETP with developed countries and the proposal coming from developed countries is in the form of debt. What should be the way for Global South to get finance?
Louise Naudé: I think the Global South countries, especially those being considered by these northern countries for JETP deals, are countries that have a lot of coal and a lot of oil. And I would suggest that those countries from the Global South get together and see what we are willing to settle for. It is important to ensure that we do not get traded off against each other.
I cannot speak for other countries, but in South Africa, we do need that money. We are, in fact, grateful for it. And I think that if three countries need the money, and there is only a limited amount of money on offer, so we might start sort of outbidding each other to take worse loans. Whereas if we clap together, we can say, these are the terms upon which we would all agree so that they cannot play one country against another.
Mongabay-India: South Africa created the commission in 2020 and signed the JETP deal in 2021. What is a critical learning during this journey so far?
Louise Naudé: A big learning for us is that bring in all the social partners as soon as possible. It would help if you had the technical expertise because they are equipped enough to tell you that this widget can cost an X amount of money. But it should be clear that knowledge also rests with the workers and communities. They know several things that nobody knows. So unless you bring everybody in to shape your investment plan, it is not a just investment plan. You may even get pushback from the people.
Banner image: From the Global South countries, only South Africa has developed a comprehensive just transition framework so far. Photo by Kgara Kevin Rack/Wikimedia Commons.
