TOWARDS A JUST ENERGY TRANSITION

The policy brief argues that the USD 8.5 billion Just Energy Transition Partnership (JETP) in South Africa relies on a 'de-risking' model that prioritises private finance and Independent Power Producers (IPPs), shifting commercial risks to the state and consumers. This approach is criticised for potentially worsening South Africa's debt profile, increasing energy poverty through higher tariffs, and undermining local renewable energy manufacturing. The authors suggest alternatives including the regulation of PPPs, debt cancellation of 'odious debt' (such as World Bank loans for the Medupi plant), climate reparations, and the implementation of allocative green credit policies to direct investment toward productive, labour-intensive green industries.

• The USD 8.5 billion Just Energy Transition Partnership (JETP) is a financing deal between South Africa and the governments of France, Germany, the United Kingdom, the United States, and the European Union to support South Africa's revised Nationally Determined Contribution (NDC).
• The JETP's reliance on blended finance and Public-Private Partnerships (PPPs), specifically Independent Power Producers (IPPs), creates a 'de-risking' regime where the state assumes the majority of commercial risk through sovereign guarantees.
• IPPs are more heavily dependent on state guarantees than the state utility Eskom; the value of state-backed guarantees for IPPs is R38.47 billion per 1GW of installed capacity, compared to R7.95 billion per 1GW for Eskom.
• The use of IPPs may deepen energy poverty because the state is locked into long-term contracts with high tariffs, preventing consumers from benefiting from the falling levelised cost of electricity (LCOE) for renewables.
• Private financiers use de-risked renewable energy projects to extract financial rents through short-term speculative activities, such as reselling IPP securities in secondary markets or refinancing loan agreements.
• A narrow focus on IPP financing threatens the development of a local renewable energy manufacturing sector, as IPPs often resist local content requirements in favour of importing cheaper components to secure short-term returns.
• The authors propose the cancellation of 'odious debt', citing a 2010 World Bank loan of R3.75 billion for the Medupi coal-fired power plant as a candidate due to associated corruption and environmental damage.
• Alternative financing pathways include climate reparations from the Global North, the redistribution of IMF Special Drawing Rights (SDRs), and the use of grants over loans, noting that grants currently constitute only about 3% of JETP financing.
• The document advocates for 'allocative green credit policies'—integrating monetary, fiscal, and industrial policy—to direct banking and institutional capital toward productive green investments and local manufacturing.

APA

Institute for Economic Justice (2022). TOWARDS A JUST ENERGY TRANSITION. https://www.iej.org.za/wp-content/uploads/2022/11/IEJ-policybrief-ClimateFinance1.pdf

Chicago

Institute for Economic Justice. TOWARDS A JUST ENERGY TRANSITION. 2022. https://www.iej.org.za/wp-content/uploads/2022/11/IEJ-policybrief-ClimateFinance1.pdf.

Wikipedia

{{cite report |author=Institute for Economic Justice |title=TOWARDS A JUST ENERGY TRANSITION |date=November 2022 |url=https://www.iej.org.za/wp-content/uploads/2022/11/IEJ-policybrief-ClimateFinance1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{instituteforeconomicjustice2022towards, author = {{Institute for Economic Justice}}, title = {{TOWARDS A JUST ENERGY TRANSITION}}, institution = {Institute for Economic Justice}, year = {2022}, month = nov, url = {https://www.iej.org.za/wp-content/uploads/2022/11/IEJ-policybrief-ClimateFinance1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }