Germany is advancing additional concessional climate financing to South Africa under the Just Energy Transition Partnership (JETP).
Speaking at a press conference in Pretoria, Rainer Baake, Germany’s special envoy for the JETP, said Berlin is in discussions to provide an additional €720 million (about R13,7 billion) in climate-related concessional loans.
If finalised, the package would lift Germany’s total climate finance commitment to South Africa under the initiative to about €2,68 billion (about R51,0 billion) – up from its original €986 million (about R18,8 billion) pledge in 2021.
The JETP was launched at COP26 in Glasgow as a framework between South Africa and an international partner group to mobilise a blend of climate finance instruments, including grants and concessional loans, to support decarbonisation of the energy sector and a just transition.
Baake said Germany has already disbursed three policy loans totalling €1,3 billion (about R24,8 billion) to South Africa’s National Treasury, linked to the implementation of agreed energy-sector reforms.
Concessional climate loans are structured with below-market interest rates, longer maturities and grace periods, which reduce the cost of capital for long-term infrastructure relative to commercial borrowing – as described by Baake in outlining Germany’s JETP loan terms.
For the electricity sector, the intent of these loans is to support energy-sector reforms and transition-aligned infrastructure and investment programmes including electricity network infrastructure, renewable energy and associated regulatory reforms, as outlined in National Treasury’s statement on the €500 million KfW policy loan and in the JETP framework’s objective of mobilising concessional finance to unlock transition investment.
