South Africa: Just Energy Transition Partnership

Lord Ahmad of Wimbledon Excerpts

Thursday 30th June 2022 Lords Chamber

[Lord Oates (LD)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and, in doing so, declare my interest as co-chair of the All-Party Parliamentary Group for South Africa.

[The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, South Africa and the International Partners Group—the IPG—chaired by the United Kingdom, have focused on establishing new structures to underpin the long-term partnership. These are now in place, as set out in the recent update to leaders, and work is under way to develop a South Africa-led investment plan ahead of COP 27. The COP president, my right honourable friend Alok Sharma MP, visited South Africa earlier this month to meet Ministers, the head of the Presidential Finance Task Team, the Presidential Climate Commission, Eskom and the groups from the mining community to underline our commitment to delivering this ground-breaking partnership.

[Lord Oates (LD)]

I thank the Minister for his reply. Does he agree that the partnership is not only critical for South Africa’s energy transition but, if successful, it would have huge significance as a model throughout the world—provided, of course, that it provides finance to emerging economies such as South Africa on sufficiently advantageous terms? Does he also agree that UK and South African parliamentarians could play a constructive role in supporting the transition and ensuring that the necessary measures are implemented expeditiously? Would he therefore be willing to meet members of the South Africa APPG to discuss how to take this forward?

[Lord Ahmad of Wimbledon (Con)]

My Lords, I say to the noble Lord: yes, yes and yes.

[Lord Bellingham (Con)]

My Lords, given that the UK and the other four participants have committed to providing a staggering $8.5 billion, part of which will be used to mobilise the private sector, does the Minister agree with me that it is vital that innovative UK firms play a part in this? What is UK Trade & Investment going to do to assist those firms?

[Lord Ahmad of Wimbledon (Con)]

My Lords, as I said to the noble Lord, Lord Oates, I agree, and we are very much at one. Perhaps I did a slight injustice in the brevity of my Answer to the noble Lord, Lord Oates: I pay tribute to his excellent work in re-establishing the APPG.

On my noble friend’s question, the United Kingdom has given a specific commitment to the partnership: of the overall initial $8.5 billion of public capital, the United Kingdom is providing $1.8 billion. We will be looking to see how we can leverage further financing in providing the terms needed to make that crucial energy shift from coal to more sustainable sources.

[Lord Collins of Highbury (Lab)]

My Lords, of course it is an excellent model and one to be followed, but lessons need to be learned so that it can be applied to other developing countries. Moving from 90% reliance on coal is a huge task, but other countries need to make the same sort of transition. One of the organisations the UK Government commit to is British International Investment—the old CDC. How will the lessons learned from this programme be adopted by British International Investment in terms of the transition programmes it operates?

[Lord Ahmad of Wimbledon (Con)]

My Lords, I agree with the noble Lord. I will be open with noble Lords: when you sit down directly with many countries across the developing world, as I did at CHOGM last week, there can be quite challenging discussions at times over the issue of transition, particularly in light of the current global crisis and what we are seeing on energy prices from Ukraine and, indeed, on food prices. That said, I can assure the noble Lord, Lord Collins, that British International Investment, the UK development financial institution, is very much a part of this £1.8 billion commitment. In terms of lessons learned, I think the speed with which these structures can be set up is a direct learning but, equally, we need to ensure local buy-in. This is not about a country such as the United Kingdom prescribing a solution; it must come from within.

[Lord St John of Bletso (CB)]

My Lords, does the Minister agree that at a time when South Africa is facing one of the worst energy supply crises, with stage 6 load shedding, initiatives such as this partnership are to be welcomed but that action also needs to be taken to curb corruption and mismanagement at Eskom, the monopoly electricity supplier in the country?

[Lord Ahmad of Wimbledon (Con)]

I agree with the noble Lord. My right honourable friend the Prime Minister met President Ramaphosa in the margins of the G7 meeting this week. He mentioned Eskom specifically. Eskom’s ambition is to facilitate and be part of this accelerated decommissioning. We are fully aware of Eskom’s record and the sustainability issues surrounding its existing debt. I assure noble Lords that these are being dealt with in a very practical manner.

[Baroness Walmsley (LD)]

My Lords, given the time it takes to set up the enabling projects, et cetera, required to achieve the objectives of this scheme, are the Government talking to partners and other appropriate third-world countries and having early discussions about how such partnerships can be set up as soon as possible, or are they waiting for COP 27?

[Lord Ahmad of Wimbledon (Con)]

My Lords, I assure noble Lords that we are doing exactly as the noble Baroness suggests. We are talking to other partners and I pay particular tribute to the current COP president, Alok Sharma, who has championed this issue. In recent weeks, I have also had the opportunity to visit Egypt as part of my portfolio. The discussions with Foreign Minister Shoukry, the president of COP 27, centred around how we can take our learning and experience, including new, innovative structures, to make sure that they can be practically applied in Egypt as well.

[Lord Lilley (Con)]

My Lords, my pre-parliamentary career was working in developing countries on aid and development programmes and my African friends have driven home to me that the precondition of economic growth in Africa is not aid or trade, welcome as they are—and, still less, patronising advice from the West—but cheap and reliable electricity. Again and again they say that. If they have the opportunity of investing in renewables, and it is cheapest when backed up with other electricity from hydro or fossil fuels to provide reliability when the sun does not shine or the wind does not blow, they will choose it without any advice from us. Is it not hypocritical and damaging of us to cut off finance for them if they want cheaper, fossil-based electricity?

[Lord Ahmad of Wimbledon (Con)]

My Lords, again, my noble friend speaks with great insight and expertise, and I agree in the sense that this should not be in any way prescriptive. It should not mean the developed world preaching to the developing parts of the world. As I said earlier, it is about localised buy-in and real management and ownership of this transition by the country we are dealing with. Every transition is difficult, particularly in developing parts of the world. Of course, the ultimate case is to keep the lights on and ensure that the energy required across a given country is provided.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. Does the Minister agree that, as part of a just transition, it is really important that, rather than lecturing developing countries, there is the finance and support to wean them off coal in particular? Will he make it a priority for the Government at COP 27 to look at how we can help the decommissioning of existing coal in those countries, especially when in Asia the age of coal mines is around 11 years, whereas their usual lifespan is around three or four times that?

[Lord Ahmad of Wimbledon (Con)]

My Lords, again, the noble Baroness raises an important point. I say to her that in this framework the “J” is “just”. That is something we recognise and it should do what it says on the tin. I also agree with the noble Baroness about ensuring that proper structured finance is provided in this transition and that as the transition takes place it is systematic, structured and fully supported. What we have seen is that over time experience lends itself to our learnings on this issue. On a broader issue, I recently travelled through north Africa and there is huge potential there when it comes to self-sufficiency in energy and renewables and in food security. Part of our role when it comes to supporting countries as an enabler, including use of ODA, should not be in terms of a handout but a hand up, in ensuring that countries become self-sufficient in the transition to renewables as well as in terms of food security.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, I never cease to admire the wide range of topics that the Minister deals with. Would even he not admit that the whole issue of development would be better dealt with if we returned to a separate international development department and a spokesperson for that department in this House?

[Lord Ahmad of Wimbledon (Con)]

My Lords, I think I have answered seven or eight questions and I was going to be in the unusual position of leaving your Lordships’ Chamber having said that I agreed with every noble Lord who had spoken to the Question. Unfortunately, I will not be able to say that. I do agree with the noble Lord about the importance of the development budget. I have made it no secret. I think the importance of 0.7% is as an enabler, for the reasons I set out in my answer to the previous question. However, as someone who has been a stand-alone Minister in the FCO, then a double-hatted Minister across DfID and the FCO, I believe—and it is not because I had to walk down Whitehall twice a day, which was actually doing my health a great deal of good—that consolidating the two departments into one allows us to talk with strength on diplomacy and development when we are on the world stage. I would welcome an opportunity to share a cup of tea with the noble Lord to explain why I believe in the merits of the combined department.