South Africa has long been dependent on coal, finding it difficult to leave fossil fuels in the past for a future in green energy. The African country has produced and exported coal to bolster its economy as well as to provide energy for its population of over 60 million. However, now it has a $2.2 billion coal-exit plan thanks to funding from the World Bank. 

Coal contributes around 82 percent of South Africa’s energy mix. In addition, roughly 28 percent of the country’s coal production is exported, primarily through the Richards Bay Coal Terminal, making South Africa the fourth-largest coal exporting country in the world. It was also the world’s 15th-highest emitter of carbon dioxide in 2023. 

Although there is a multitude of coal producers in South Africa, just five account for around 85 percent of saleable coal production. Meanwhile, 11 mines contribute 70 percent of the output. The country’s coal deposits are relatively shallow with thick seams, making them easier and, generally, cheaper to mine, than the international average. At the present production rate, there is more than an estimated 50 years of coal supply left.

Its long dependency on coal, both for energy and revenue, has made many doubtful that South Africa will be able to move away from the fossil fuel any time soon. However, in June, the World Bank’s Climate Investment Funds (CIF) announced a new funding plan to support South Africa’s Accelerating Coal Transition investment plan. The CIF plan was put on hold last year after South Africa requested to delay the closure of three coal-fired power plants to ease an energy crisis. The CIF plans to provide South Africa with $500 million in funding, which could open the door to a further $2.1 billion in investment from multilateral lenders. South Africa must now provide projected project costs for approval from the CIF.

The CIF initially announced the plan in 2022, but it has taken several years to get to this point, and progress will rely heavily on South Africa’s ability to shift away from a dependence on coal by developing its renewable energy capacity. There are plans to disperse CIF funds to several different countries around the world to support a global green transition. Of the 15 fund donors, the U.S. was the biggest, having contributed $3.8 billion by the end of 2024, followed by the U.K. at $3.6 billion, then Germany, Japan and Canada, which have contributed over $1 billion each. 

Fears have mounted over the future of U.S. contributions to the fund and in support of other international climate action following President Trump’s planned withdrawal from the Paris Agreement and the decision to cut the U.S. contribution to the Green Climate Fund. Earlier in the year, the U.S. withdrew from plans backed by rich nations to help Indonesia, Vietnam, and South Africa reduce their coal dependency. 

Environmentalists have long been calling for South Africa to reduce its reliance on coal and develop its renewable energy sources, but this has long fallen on deaf ears. In 2020, the government approved the procurement of a huge quantity of new coal-fired capacity as part of South Africa’s energy mix. While the government has stated its support for the development of renewable energy projects, such as solar and wind energy, it has repeatedly said it will continue to pursue coal, oil, and gas production.  

However, in April, a court ruled that the government’s new coal plans were unlawful, invalid, and against the country’s constitution. The decision came three years after three South African environmental and climate justice groups took the South African government to court to fight the authorisation of new coal-fired power. 

Despite the strong opposition to new coal development on the grounds of environmental concerns, not everyone is happy leaving coal in the ground. Hundreds of thousands of coal workers are concerned about the prospect of losing their jobs as South Africa transitions away from the fossil fuel. A 2023 government reportestimated that 80,000 coal mining jobs were at risk in the Mpumalanga province alone. Many believe that greater progress needs to be made in developing the country’s renewable energy sector before coal plant closures can take place. 

Joanne Yawitch, who leads the government’s Just Energy transition unit, stated, “These coal transitions are difficult right around the world and they take decades to achieve. And, in many parts of particularly the developed world, what it’s taken is throwing a lot of money at them in order for them to work.” 

To be successful in moving away from coal, the government must establish a clear roadmap to increase South Africa’s renewable energy network, supported by the development of an adequate transmission network. In addition, to avoid widespread job losses, the government must also plan for a just transition, in which coal workers are provided with training to develop the skills needed to work in other parts of the energy sector. 

By Felicity Bradstock for Oilprice.com 

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