Africa (Commonwealth Union) _ South Africa’s climate finance needs are far from being met, with a recent report indicating a substantial gap between pledged funds and actual requirements. At COP26 in Glasgow, the country secured a commitment of $8.5 billion from a subset of G7 countries to aid its transition away from coal-burning power plants. However, a study by the Presidential Climate Commission reveals that, despite policy commitments and increased climate finance, the financial flows fall significantly short of the estimated needs. The tracked annual climate finance reached an all-time high of $8.5 billion on average in 2019-2021, but the estimated annual needs range from $21 billion to $33.5 billion. In essence, climate finance in South Africa needs a three to fivefold increase from the current average of $8.5 billion per year.
The study underscores the necessity of ramping up climate finance to meet ambitious emission reduction targets. Private actors dominate annual investments, accounting for 86%, with 91% of tracked climate finance coming from domestic sources. The report emphasizes that South Africa requires an average of $21 billion per year to achieve its net-zero goal by 2050 and $33.5 billion per year to meet its NDC target by 2030. However, current financial flows fall significantly short of these needs. While international sources contribute only 9%, domestic actors provide the majority of private finance.
The identified low-carbon sectors attracting climate finance in South Africa include clean energy, low-carbon transport, smart water (supply and demand), circular economy, and sustainable agriculture. Despite the increased attention to climate finance, the report suggests that the country needs double or triple the amount pledged in Glasgow annually. The International Partner Group (IPG) initially pledged $8.5 billion, covering only 12% of South Africa’s funding needs for its Just Energy Transition Investment Plan (JET-IP) over a five-year period. The IPG offer, which now stands at $11.8 billion, still falls significantly short of the $98 billion needed for the initial five-year period according to JET-IP.
As negotiations continue, South Africa aims to secure adequate, predictable, and at-scale means of implementation support for its climate actions and just transitions. The country will advocate for a substantially scaled-up, long-term financial goal for developing nations, based on their needs, during ongoing climate discussions.
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