SUMMARY: A just transition transaction (JTT) in South Africa aims to address complex challenges of financing a transition away from coal. Accelerated decarbonisation of electricity isessential for mitigation globally and in South Africa. However, the national utility Eskom, a state-owned enterprise, is in crisis with majoroperational, structural and financial problems, including legacy debt of €25bn. How and to what extent can a just transitiontransaction catalyse deep, structural change that is required in South Africa’s electricity system and promote social justice?
KEY FINDING / RECOMMENDATIONS: The architecture of the JTT needs to include a blended finance vehicle, combining international concessionary and domestic commercialfinance. Finance enables transition if it respects certain principles,promotes ambitious decarbonisation and assures compliance. A tough problem is whether such finance is provided at activity – or entity-level. The innovation proposed to fund social justice is that concessional value provides significant and predictable flow of funds into a Just Transition Fund. The JTT partially addresses Eskom’s financial challenges, and thereby the strain on the country’s fiscus against a background of increasingpublic debt. Significant mitigation on the scale of 1–1.5 Gt CO2-eq over thirty years is achievable. The transaction may be ofwider interest: Emerging economies with high coal dependenceand socio-economic risk during energy transition might translate lessons from South Africa’s JTT for their own contexts.