The argument by the Organisation for Economic Cooperation and Development (OECD) that tightening South Africa’s wealth tax regime would rebalance ... generational inequality has a fundamental flaw: it targets a “flighty” base, says an expert from the African Tax Institute.
The announcement was made at the UN’s COP27 climate summit in Egypt’s Sharm el-Sheikh, where developed countries are under pressure to step up their efforts to aid developing countries green their economies.
Britain, France, Germany, the United States and the European Union will provide $8.5bn in the form of grants and loans to help South Africa decarbonise its economy, they said in a joint statement. Funding will come via the Just Energy Transition Partnership (JETP), which was first announced last year at the COP26 in Glasgow.
The funds will go towards decommissioning coal power plants and investments to accelerate the deployment of renewable energy, including new energy vehicles and green hydrogen projects.
Negotiations were tricky, with South African President Cyril Ramaphosa saying Friday that the country needed more money to green its economy.
Africa’s biggest economy relies on coal for 80% of its electricity generation.
According to the pathway, JET IP requires ZAR1.5trn ($85bn) over five years. Including the $8.5bn, there is a current shortfall of approximately ZAR700 billion (44% of the total). The hope is that the private sector will fill in the gap.
“Our support for South Africa’s clean energy and infrastructure priorities, which include efforts to provide coalminers and affected communities the assistance that they need in this transition, will help South Africa’s clean energy economy thrive,” US President Joe Biden said in the joint statement.
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