US$1bn for just coal transitions in South Africa and Indonesia

The decision intends to allocate each country with US$500mn in concessional, risk-bearing capital from CIF’s Accelerating Coal Transition (CIF ACT) investment programme to build momentum toward ambitious climate, energy, and development goals. The availability of finance will also directly support and catalyse funding for country platforms, such as South Africa’s Just Energy Transition Partnership and similar initiatives in Indonesia.

The new investment plan paves the way for South Africa to retire several coal-fired power plants, replacing their generation capacity with clean power and energy storage systems. 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.

The CIF ACT-supported decommissioning could prevent approximately 71 million tonnes of CO2 in potential GHG emissions, equivalent to taking nearly 14 million gasoline-powered cars off the road for a year.

CIF finance will also enhance governance and build capacity of provinces, municipalities, and local communities to manage just coal transitions. In parallel, the new capital will promote investment in community infrastructure, new revenue streams for small, medium-sized, and micro climate-smart businesses, and job creation through the scaling-up of energy efficiency and distributed generation programmes.

Minister of Forestry and Fisheries and Environmental Affairs of the Republic of South Africa, Barbara Creecy, said, “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 US$500mn in concessional resources under the ACT Investment Programme. Noting that estimates indicate that over the next 8 years, South Africa needs over US$60bn in investments to effect 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.”

Meanwhile, in Indonesia, CIF will partner with the state utility Perusahaan Listrik Negara (PLN) and the private sector to accelerate retirement of up to 2 gigawatts of coal-fired power by 5-10 years. The investment plan will also pilot solutions for repurposing decommissioned coal assets using solar farms, battery storage, and other climate-smart alternatives.

Both investment plans will feature a grant-making mechanism that promotes women’s climate leadership and supports their involvement in designing and implementing coal-to-clean transition strategies.

Launched at COP26 in Glasgow last year, CIF ACT addresses three critical dimensions of the coal transition: governance, people and communities, and infrastructure. South Africa, India, Indonesia, and the Philippines, representing over 15% of coal-related emissions globally, were selected as the first beneficiaries of the initiative. 

MDBs have a critical role in helping countries meet their climate ambitions. As institutions they have relevant expertise, experience, networks, and safeguards to help developing countries spark lasting structural change. The World Bank is the lead implementing partner for CIF ACT in South Africa, working in partnership with the African Development Bank and International Finance Corporation (IFC). The CIF ACT contribution is part of a US$2.6bn package being mobilised from public and private sources by the South Africa government.

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.