The African Development Bank has proposed a plan to South Africa that will help the country use the $8.5 billion in climate finance pledged by some of the world’s richest countries to raise even more money.
The AfDB has recommended that South Africa park the money in a special vehicle, bank president Akinwumi Adesina. The SPV, which can request a credit rating, can sell zero-coupon bonds to raise as much as $41 billion, Adesina said in an interview Thursday at Bloomberg’s New York office.
The US, UK, Germany, France and the European Union are planning to provide $8.5 billion to South Africa to help the country reduce its use of coal, which is used to generate more than 80% of its electricity. to arouse, to reduce.
The world’s 13th largest producer of greenhouse gases will have to spend $250 billion over the next three decades to finance the shutdown of coal-fired power plants, the development of green energy sources and an expanded power grid, according to a study published in May.
South Africa is working on a plan to access the funds, which will be a combination of grants, concessional financing and possibly guarantees. The structure of the financing arrangements, which can be project-by-project, may make it impossible to use an SPV structure.
AfDB’s proposal is getting little support from South Africa or its funding partners, according to those in the know.
The funding commitment, to be made available in three to five years, was announced at the COP26 climate talks in Glasgow in November.
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