Climate Investment Funds Back $2.6 Billion Coal Exit Plan for South Africa

A World Bank-linked climate fund has approved South Africa’s updated plan to reduce its reliance on coal, unlocking up to $2.6 billion in financing and giving a significant boost to the country’s energy transition, according to Bloomberg.

The Climate Investment Funds (CIF) cleared the way for an initial disbursement of $500 million, paving the way for up to $2.1 billion in additional funding from multilateral lenders including the World Bank and the African Development Bank.

The approval follows delays after South Africa requested last year to postpone the closure of three coal-fired power plants amid an energy crisis.

CIF confirmed that on June 11, its Clean Technology Fund Trust Fund Committee approved the updated Accelerating Coal Transition investment plan, allowing South Africa to submit detailed project costs for further funding approval. The South African government confirmed the plans remain active.

South Africa currently depends on coal for approximately eighty percent of its electricity generation and has the most carbon-intensive economy among the Group of Twenty nations.

Rudi Dicks, head of the project management office in the presidency, described the funding approval as “a really amazing dynamic,” highlighting that it would “allow the funding flows and a serious conversation about the frontloading” of finance.

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The decision also salvages support that seemed at risk after South Africa’s request to revise the plan delayed approval until after the January 20 inauguration of former U.S. President Donald Trump.

The subsequent U.S. withdrawal from various international climate initiatives, including canceling a $4 billion pledge to the Green Climate Fund and withdrawing support for coal reduction programs in South Africa, Indonesia, and Vietnam, further complicated matters.

This U.S. retreat cost South Africa $1 billion in expected loans, straining bilateral relations.

As of the end of 2024, the United States was the largest contributor to the $12.5 billion CIF with $3.8 billion, closely followed by the United Kingdom with $3.6 billion.

Germany, Japan, and Canada each contributed over $1 billion.

Funding disbursements by CIF can be blocked if any contributing country objects or requests additional details, although approval can still proceed if a country abstains from voting.

The exact voting outcome on June 11 remains unclear.

Bloomberg notes that the U.S. State Department referred questions to the Treasury, which did not respond to requests for comment.

Relations between South Africa and the U.S. have remained tense, with Trump’s administration halting aid to South Africa and senior U.S. officials boycotting G-20 meetings hosted by the country this year.

This approval marks a critical step in South Africa’s efforts to transition away from coal while securing much-needed financing to support cleaner energy alternatives.

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