Climate Investment Funds (CIF) endorsed new investment plans for a just transition from coal to clean power in South Africa and Indonesia for a total amount of $1 billion. The decision intends to equip each country with access to $500 million in concessional, risk-bearing capital from CIF’s Accelerating Coal Transition (CIF ACT) investment program to build momentum toward ambitious climate, energy, and development goals.
In South Africa, CIF is set to support the decommissioning of several coal power plants, preventing approximately 71 million tons of CO2 in potential GHG emissions. This is equivalent to taking nearly 14 million gasoline-powered cars off the road for a year. Workers and local communities affected by the transition, including women and other vulnerable groups, will benefit from resources to access new employment opportunities and influence decision-making. “A just energy transition that is procedurally just, equitable in sharing risks and opportunities, and one that is restorative, is a climate and developmental imperative that we can no longer ignore. I welcome the decision by the Climate Investment Funds’ governing body to approve $500 million in concessional resources under the ACT Investment Program. Noting that estimates indicate that over the next 8 years South Africa needs over $60 billion in investments to affect the transition, the CIF ACT finance will make a meaningful contribution towards South Africa walking down that ambitious pathway to a brighter future of our people, addressing our energy needs, promoting sustainable development and leaving no one behind,” said South Africa’s Minister of Forestry and Fisheries and Environmental Affairs Barbara Creecy.
The plants’ energy generation capacity is set to be replaced by clean power and energy storage systems. Currently, 87% of South Africa’s installed generation capacity comes from aging coal-fired power plants, responsible for nearly half of the country’s CO2 emissions and frequent outages. Last year, South Africa announced an ambitious climate plan which emphasized the decarbonization of its electricity sector.
Indonesia’s Minister of Finance Mulyani Indrawati said “as a country, we are strongly committed to transition away from coal to cleaner forms of energy. Any potential solution must reflect our country specific considerations like electricity over-supply, young fleet of coal plants, and just transition of our people. The Climate Investment Funds’ ACT Investment Program allows us that flexibility to deploy a financial toolkit to tackle these critical challenges holistically. I welcome the recent endorsement in principle of our ACT Investment Plan by the CIF governing body and look forward to our continued partnership to deliver on the critical energy transition agenda.” Coal is an abundant natural resource in Indonesia, the world’s largest coal exporter, and the power plant fleet potentially has decades of economic life and harmful emissions ahead. But coal combustion is costly for the economy and public health: it is the single-largest source of global temperature increase and contributes to air pollution, causing over 4 million deaths every year. Indonesia recently committed to reaching net-zero by 2060.
Coal is an abundant natural resource in Indonesia, the world’s largest coal exporter. The coal power fleet is relatively young there, with potentially decades of economic life and harmful emissions ahead. But coal combustion is costly for the economy and public health: it is the single-largest source of global temperature increase and contributes to air pollution, causing over 4 million deaths every year. Indonesia recently committed to reaching net-zero by 2060.
Both countries plan to promote women’s climate leadership and support their involvement in designing and implementing coal-to-clean transition strategies.
South Africa, India, Indonesia, and the Philippines, representing over 15% of coal-related emissions globally, were selected as the first beneficiaries of our Accelerating Coal Transition (ACT) investment program, the first multilateral effort to advance an equitable, inclusive shift away from coal power in developing countries. In 2021, G7 leaders committed up to $2 billion to capitalize ACT and related CIF energy transition initiatives. In fulfillment of this pledge, the United States recently announced a contribution of nearly $1 billion to CIF ACT.
Renewable energy is increasingly more cost-competitive than coal, with the number of uncompetitive coal plants expected to grow by over two-thirds globally by 2025. The transition to clean energy represents an enormous economic opportunity for developing countries and our shared climate future.
“With these new investment plans, South Africa and Indonesia are stepping up and striving to show the world a new path forward: One in which we break our dependence on coal, support those most vulnerable in the transition, and unleash a new green economy all at the same time,” said CIF’s CEO Mafalda Duarte when announcing the investment plans.