Japan plans to rapidly negotiate a yen-denominated energy loan with South Africa, while promoting its technology for blending ammonia with coal to reduce carbon emissions in a country that still generates most of its electricity from one of the dirtiest fossil fuels.
During a visit by Foreign Minister Toshimitsu Motegi, Japanese diplomatic officials said the loan would be used by South Africa to enhance its own energy transition targets, asking not to be identified in line with government practice. The size of the loan was not specified.
Japan's offer of energy transition aid to South Africa in a formal agreement adds to nearly $10 billion in climate finance given by European countries to the continent's largest economy. Countries like Germany and Japan are looking to boost their companies' presence in the country, which has some of the world's best solar energy and green hydrogen production capacity.
The loan was first discussed at a meeting between South African President Cyril Ramaphosa and former Prime Minister Shigeru Ishiba at an Africa-focused summit in Yokohama in August.
Japan is promoting a technology called ammonia co-firing, in which a portion of the coal used in power plants is replaced with a hydrogen derivative to prevent emissions of climate-warming gases.
In theory, South Africa's abundant sunshine and wind should allow renewable energy to be used to split water to produce so-called green hydrogen. The clean-burning fuel is then mixed with nitrogen to produce ammonia, which is easier to transport.
Nevertheless, the technology has attracted criticism for potentially extending the life of coal-fired plants. South Africa generates about three-quarters of its electricity from coal.