International Finance Institutions (IFIs) – Just Transition Initiative

Summary

The authors seek to offer insights into how transitions impact people, economies, and the environment, as well as the extent of the effectiveness of different kinds of responses including the impacts of not responding. Moreover, it provides useful considerations related to the needs of those who lose out in society, while addressing overall concerns about inequalities in societies affected by deep structural changes. The report was used to inform EBRD’s approach to just transitions, as set out in the document “The EBRD Just Transition Initiative”.

The authors highlight that without measures to promote a “just” transition, resistance will likely undermine its pace. They draw inferences from other deep structural transitions, such as the steel industries in the United Kingdom (U.K.) and Newcastle, Australia, as well as the gold industry in Free State Province, South Africa, to offer insights into what to expect from a green transition.

The authors suggest a series of considerations for EBRD’s operational response to a just transition in order to create viable short-term and long-term solutions for local populations who are affected. Notably, they point out the need for strategic planning for impacted communities, governance structures, and state capacity to implement just transition actions, along with a holistic approach to regional economic development.

Summary

This case study examines the Concentrated Solar Power (CSP) plant in Upington developed by Eskom, South Africa’s state-owned electricity utility. Although not fully commissioned at the time of publication (2014), the project aimed to help meet the country’s rapidly increasing energy demand in accordance with its ambitious clean energy plan by reducing greenhouse gas emissions, establishing local supply chains and infrastructures, creating local jobs, and improving the region’s wealth. However, the project was considered exceptionally challenging and ambitious due to its proposed technology choice, generating capacity, and storage potential.\n\nThe project was entirely publicly financed through lending on a concessional basis from six international financial institutions (IFIs), supplemented by Eskom contributions. Project risks included debt financing and foreign exchange risk as well as various administrative and procurement requirements. The study evaluates Eskom’s risk management approach and provides recommendations to future developers and financiers seeking to replicate the project, noting that its scale suggests future, larger projects will see reduced costs and greater efficiency. Since concessional finance from external sources is limited and there are constraints on debt financing from public funds, the authors suggest that private actors such as local and foreign commercial banks are needed to deploy and establish further CSP plants.
This case study examines the Concentrated Solar Power (CSP) plant in Upington developed by Eskom, South Africa’s state-owned electricity utility. Although not fully commissioned at the time of publication (2014), the project aimed to help meet the country’s rapidly increasing energy demand in accordance with its ambitious clean energy plan by reducing greenhouse gas emissions, establishing local supply chains and infrastructures, creating local jobs, and improving the region’s wealth. However, the project was considered exceptionally challenging and ambitious due to its proposed technology choice, generating capacity, and storage potential.

The project was entirely publicly financed through lending on a concessional basis from six international financial institutions (IFIs), supplemented by Eskom contributions. Project risks included debt financing and foreign exchange risk as well as various administrative and procurement requirements. The study evaluates Eskom’s risk management approach and provides recommendations to future developers and financiers seeking to replicate the project, noting that its scale suggests future, larger projects will see reduced costs and greater efficiency. Since concessional finance from external sources is limited and there are constraints on debt financing from public funds, the authors suggest that private actors such as local and foreign commercial banks are needed to deploy and establish further CSP plants.