A Framework for Understanding the Just Energy Transition Partnership on South Africa’s Just Transition

This policy brief by the Institute for Economic Justice critiques the USD 8.5 billion Just Energy Transition Partnership (JETP) for South Africa, arguing that its reliance on 'de-risking' private finance through Independent Power Producers (IPPs) and blended finance shifts commercial risks to the state while privatising gains. The authors contend that this model threatens to increase energy poverty, worsen the national debt profile, and undermine the localisation of renewable energy manufacturing. The document proposes alternative financing pathways, including the regulation of PPPs, 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 a group of partners including 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 'de-risking' private investment through blended finance and Public-Private Partnerships (PPPs), specifically Independent Power Producers (IPPs), is described as an expensive approach where the state assumes most commercial risks via sovereign guarantees.
• IPPs are highly leveraged entities that use Special Purpose Vehicles (SPVs) for 'off balance sheet' financing, which shields project owners from risk. In Bid Windows 1-4, IPPs averaged a debt-equity ratio of 80% debt and 20% equity, compared to Eskom's 74.6% debt and 25.4% equity.
• The state's financial exposure to IPPs is significant; as of 2021/22, IPPs had R200 billion in state-backed guarantees for 5 GW of capacity, meaning the guarantee per 1 GW (R38.47 billion) is much higher than for Eskom (R7.95 billion).
• Contractual 'lock-ins' and 'take or pay' clauses prevent the state and consumers from benefiting from the falling levelised cost of electricity (LCOE) for renewables. Eskom remains bound to early bid-round contracts at tariffs higher than current market rates.
• Private financiers use de-risked projects to extract financial rents through short-term speculation, such as reselling IPP securities in secondary markets or refinancing loan agreements when market conditions improve.
• The JETP model may exacerbate energy poverty by creating pressure to increase user fees and tariffs to guarantee the revenue streams promised to private financiers.
• The focus on IPP financing may undermine the localisation of renewable energy manufacturing and decent work creation. IPPs are viewed as 'impatient capital' that resists local content requirements in favour of importing cheaper components to maximise short-term returns.
• The authors propose 'odious debt' repudiation and climate reparations as alternatives. They specifically cite a 2010 World Bank loan of R3.75 billion to Eskom for the Medupi power plant as a candidate for cancellation due to associated corruption and environmental impact.
• The document suggests 'allocative green credit policies'—integrating monetary, fiscal, and industrial policy—to direct finance toward productive green investments. This includes direct instruments like interest rate ceilings or quantitative lending targets for green sectors.

APA

Baloyi, B., & Krinsky, J. (2022). A Framework for Understanding the Just Energy Transition Partnership on South Africa’s Just Transition. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2026/02/IEJ-policybrief-ClimateFinance1.pdf

Chicago

Baloyi, Basani, and Jezri Krinsky. A Framework for Understanding the Just Energy Transition Partnership on South Africa’s Just Transition. Institute for Economic Justice, 2022. https://iej.org.za/wp-content/uploads/2026/02/IEJ-policybrief-ClimateFinance1.pdf.

Wikipedia

{{cite report |last1=Baloyi |first1=Basani |last2=Krinsky |first2=Jezri |title=A Framework for Understanding the Just Energy Transition Partnership on South Africa’s Just Transition |publisher=Institute for Economic Justice |date=November 2022 |url=https://iej.org.za/wp-content/uploads/2026/02/IEJ-policybrief-ClimateFinance1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{baloyi2022framework, author = {Baloyi, Basani and Krinsky, Jezri}, title = {{A Framework for Understanding the Just Energy Transition Partnership on South Africa’s Just Transition}}, institution = {Institute for Economic Justice}, year = {2022}, month = nov, url = {https://iej.org.za/wp-content/uploads/2026/02/IEJ-policybrief-ClimateFinance1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }