South Africa Unveils Job Plan Amid Coal Phase-Out Backlash

(Bloomberg) -- South Africa rolled out a plan to create new jobs as it struggles to counter criticism that its shift away from the use of coal will devastate communities dependent on the fuel for their livelihoods.

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The country on Friday unveiled its Just Energy Transition Partnership Funding Platform, which is designed to match money from a $9.3 billion climate finance pact with some of the world’s richest nations, with projects. Many of those are expected to be in the country’s coal-belt province, Mpumalanga.

Labor unions and communities in the eastern region, which supplies almost all of South Africa’s electricity and coal, have expressed disquiet about the push to transition the country away from the use of the dirtiest fossil fuel.

Coal mines employ about 90,000 people, many thousands more work at coal-fired power plants while communities and local municipalities depend on the economy that’s developed around the industry. The concern has been exacerbated by the fact that South Africa’s unemployment rate is at 33.5%.

“Mpumalanga is ground zero for our energy transition,” said Patricia de Lille, a cabinet member who was standing in for the country’s Electricity Minister Kgosientsho Ramokgopa, said at the event, which took place in a venue in view of a massive coal-fired power plant. “While we decarbonize we must also diversify.”

Replacing the jobs lost from the coal industry is a hard problem to solve. The nation’s best solar and wind power resources are on the other side of the country, in the three Cape provinces — North, West and East. And once up and running renewable energy plants use very little labor compared to coal mines and power plants.

The pact — with Germany, France, US, UK, European Union, the Netherlands and Denmark — has, since it was signed in 2021, become a political football in South Africa. Gwede Mantashe, who at the time was the minister responsible for the electricity sector said the west was using South Africa as a “guinea pig” for the energy transition. Unions have called for it to be scrapped.

The success of South Africa’s JETP is key, as it was the first of a series of agreements that have been put in place to try and help coal-dependent developing countries decarbonize. Indonesia, Vietnam and Senegal are pursuing similar agreements.

It has been criticized for the slow pace of disbursing funds with little money aside from some grants and direct loans to the National Treasury having been distributed. The amount of money targeted at creating new livelihoods also pales compared to projections of what will be spent on power infrastructure and nascent, capital-intensive industries such as green hydrogen and new energy vehicles.

“We are looking to create a direct link between a funder and a beneficiary,” said Jerrod Moodley, a finance specialist in the presidency’s project management unit. The beneficiary could be a community organization, a nonprofit or a labor union for instance, he said.

In addition to jobs in renewable energy plants, the government envisions developing more jobs in the province in the tourism and agricultural industries.

In its first year it will aim to get 20 projects worth 600 million rand ($34 million) funded and 50 worth 1.5 billion rand in the second, he said.

South Africa has the most coal-intensive economy of any of the Group of 20 large economies and relies on the fuel for about 80% of its power generation. By some measures, only Mongolia and the Solomon Islands are more dependent on the dirtiest fossil fuel.

(Updates with potential job creation areas in third last paragraph)

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