Register to comment and receive news in your inboxRegister or Log in

Development Finance Institutions Collaborate on SA’s Just Transition

DFI CEOs Forum

Overall Objective of the CEOs Forum

The overall objective of the DFI CEOs Forum is to strategically locate, define and execute the just transition financing role of DFIs in South Africa, including assuming conceptual leadership roles through ideas and actions that contribute to the global discourse on transitioning towards low carbon economies and climate resilient societies.

  • Approach

The approach of the CEOs Forum is to set up a work programme to be implemented by the DFI Just Transition Task Team made up of executives from each DFI, which in turn will form technical workstreams to focus on a few carefully selected work areas at the initial start of the programme. The Forum is open to all public national and provincial funds, DFIs and fund managers in South Africa. The workstreams conceptualised to frame the work programme of the technical working groups in line with the CEOs roundtables outcomes are outlined below. Each DFI is represented by an executive in the workstreams.

  • Workstream 1 – Define the strategic thrust of South African DFIs and their role in the decarbonization journey of South Africa’s economy

This workstream is expected to outline the individual interests and actions of all DFIs towards just transition and produce a one pager on the overall focus area; outline how the collective DFI role will evolve over time; identify opportunities for collaboration and coordination amongst the South African DFIs and their foreign counterparts; drive the domestic DFI thought leadership on just transition and provide a platform for including other DFIs in South Africa.

  • Workstream 2 – Understand the financial impacts and opportunities associated with the transition, as well as map strategic options for mobilizing climate finance to a low carbon economy and climate resilient society in South Africa by 2050.

In exploring opportunities, this workstream is expected to detail conceptual leadership programmes and projects, drawing on existing leads and experience from investment opportunities and green corridors that respond to the objectives of the DFI Forum. This should include a deliberate consideration of the vulnerable sectors and groups, such as the SMEs, as well as women and youth. The technical workstream should further explore various strategic and innovative measures within existing and new instruments to raise domestic and international capital for financing the just transition. The workstream should leverage the experience of other international DFIs to enhance its approach based on international best practice

  • Workstream 3 – Assess and outline DFI opportunities in advancing/participating in the carbon credit market 

This workstream is expected to coordinate the participation of DFIs and other public funds or fund managers in the national carbon credit markets. A clear collaboration plan with private and public sector institutions, must be outlined for implementation. This will include a review of the Carbon Disclosure Methodology programme with a view to play a role in influencing South Africa’s policy and regulatory environment on carbon markets. The UNFCCC registry can also be explored for benchmarking purposes and to ensure collaboration and alignment with the international community.

  • Strategic Considerations for the Focus Areas of all DFIs.

The Presidential Climate Commission (PCC) has developed a Just Transition Framework (JTF), which seeks to present an over-arching set of principles and strategic guide for all stakeholders as South Africa’s just transition to a lower carbon economy and climate resilient society unfolds. The DFIs will collectively and individually support the PCC in its endeavours.

There is an emerging consensus that the decarbonisation of South Africa’s economic structure will require fundamental and deep transformation of the economic base in the country. Recent flood events, now acknowledged to be at least partly due to climate change, in KwaZulu-Natal have shown that a far-reaching adaptation and socially just transition is an imperative in South Africa.

For the decarbonisation of the industrial base, there is now consensus that immediate attention is required to decarbonise the electricity system, with a focus on decommissioning and repurposing Eskom’s coal-fired power stations, upgrading and extending the grid, and a rapid ramp-up of new renewable projects. Early scoping of technology and project pathways as well as financing the development of a hydrogen production sector is essential to achieve the decarbonisation of the petro-chemical sector. Support for a transformation of the motor and transport sector towards electric vehicles, is also important. These industrial transformations are critical to put the country’s economy on a good foundation by 2030, to achieve net-zero by mid-century. The decarbonisation of the critically important export outputs in the agriculture, manufacturing and mining sectors will depend on the achievement of low-carbon energy inputs into each sector. South Africa’s technology and manufacturing capabilities and capacities should be allowed to play a localized participating role in the deep industrial and economic transformation across all sectors.

Also of great importance is the development of mechanisms, institutional capacity, and governance frameworks, for the successful implementation of a just transition that is adequately geared to finance both the transition and social aspects of South Africa’s decarbonisation journey. In this regard, justice for workers and communities who are negatively impacted by the phase-down of the coal value chain must be ensured. As new value chains develop for servicing and supporting a growing green economy with a focus on the renewables sector, the transition must ensure that skills are developed among the younger population to play a meaningful role in growing these sectors. The assistance that SMMEs will need to transition to new value and supply chains must also be provided for.

It is in this context that each DFI considered the role that it could play. Within the broader ambit of each institution’s core mandate, the areas in which each can support South Africa’s just transition have been analysed. A consolidated view, to harmonise, unify and align the collective programmes of South Africa’s DFIs, has also been developed.