Germany Weighs €720M in New Climate Loans for South Africa

BREAKING NEWSJanuary 26, 2026 at 10:00 PM UTC

TLDR

Germany in talks with South Africa for €720 million in concessional climate financing under the Just Energy Transition Partnership
Funding to support South Africa's shift away from coal towards cleaner energy, focusing on renewable power and electricity grid upgrades
Loans, if approved, would raise Germany's total support for South Africa under JETP to €2.68 billion, part of a broader US$8.3 billion package launched at COP26

Germany is in talks with South Africa over an additional €720 million in concessional climate financing under the Just Energy Transition Partnership, according to Rainer Baake, Germany’s special envoy for the program.

Speaking at a press conference, Baake said the funding would fall under the JETP framework, which supports South Africa’s shift away from coal toward cleaner energy. The partnership focuses on renewable power, electricity grid upgrades, and measures to manage the economic impact of decarbonization.

If approved, the loans would raise Germany’s total support for South Africa under the JETP to €2.68 billion, up from an initial €986 million. Germany has steadily increased its role in financing the transition. In July, Berlin approved a €500 million concessional loan to support decarbonization, following earlier agreements in 2022 and 2023 that lifted KfW-backed financing to €1.3 billion.

Germany’s contribution forms part of the broader US$8.3 billion JETP package launched at COP26 with France, the UK, the US, and the EU. South Africa generates about 80% of its electricity from coal, making it the most carbon-intensive economy in the G20.

Finance Minister Enoch Godongwana said the financing would support energy security while advancing long-term climate goals.

Key Takeaways

The talks underline the scale of funding needed for South Africa’s energy shift. Coal dominates power generation, and replacing it requires large investments in renewables, transmission lines, and storage, alongside support for workers and communities tied to fossil fuels. Concessional loans lower financing costs and reduce pressure on public finances, but they still add to debt. How funds are deployed will matter. Grid investment and project execution speed will shape whether cleaner capacity comes online fast enough to stabilize supply. The JETP also serves as a test case for climate finance in emerging markets. Donors are pushing for measurable progress, while South Africa seeks flexibility to balance growth, jobs, and emissions cuts. If Germany’s additional funding is approved, it would signal continued confidence in the program at a time when global climate finance faces competing demands. The outcome will show whether JETPs can deliver both energy security and emissions reduction without creating new fiscal strains.

South Africa