TOWARDS A JUST ENERGY TRANSITION

This policy brief by the Institute for Economic Justice analyzes the USD 8.5 billion Just Energy Transition Partnership (JETP) in South Africa. It argues that the deal's reliance on blended finance and Independent Power Producers (IPPs) shifts commercial risks to the state and consumers while privatizing gains. The document warns that this 'de-risking' approach may worsen South Africa's fiscal position, increase energy poverty through higher tariffs, and undermine local renewable energy manufacturing. It proposes alternative pathways, including the regulation of private finance, debt cancellation for 'odious debt', climate reparations, and the implementation of allocative green credit policies.

• The Just Energy Transition Partnership (JETP) is a USD 8.5 billion 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 (NCD).
• The JETP's reliance on blended finance and Public-Private Partnerships (PPPs), specifically Independent Power Producers (IPPs), forces the state to 'de-risk' private investment, which the authors argue is an expensive approach where the state assumes most commercial risks through sovereign guarantees.
• IPPs are more heavily dependent on state guarantees than the state utility Eskom. For every 1GW of installed capacity, the value of state-backed guarantees for IPPs is R38.47 billion, compared to R7.95 billion for Eskom.
• The use of IPPs may deepen energy poverty by increasing electricity prices. This occurs 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 renewable energy.
• The current financing model risks undermining the localisation of renewable energy manufacturing. IPPs, characterized as 'impatient capital', may resist local content requirements in favor of importing cheaper components to secure short-term high revenue streams.
• The authors suggest that the World Bank loan of R3.75 billion to Eskom for the Medupi coal-fired power plant could be classified as 'odious debt' due to associated corruption and the loan's contribution to environmental degradation.
• As an alternative to de-risking, the document proposes 'allocative green credit policies' that integrate monetary, fiscal, and industrial policies to direct finance toward productive green investments, similar to models used by 'East Asian tigers'.

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} }