New online tool offers instant assessment of a project’s ‘just transition’ credentials

A new online portal has been launched to enable project originators and/or financiers to determine quickly whether the project being assessed aligns with the principles of South Africa’s just transition and could, thus, qualify for just-transition financing.

Developed by Trade and Industrial Policy Strategies (TIPS), the Just Transition Finance Tool is free to use and has been designed to provide a consistent, evidence-based way to assess a project’s just credentials using an algorithm that interrogates the project’s climate, socioeconomic and community objectives.

TIPS research fellow Sandy Lowitt says this “three-legged stool” approach can be employed across projects of all sizes, be it a multibillion-rand energy or industrial investment, or small-scale community cooperatives seeking seed funding.

Lowitt stresses, however, that the tool is limited to assessing the project’s ‘just transition’ credentials and offers no view on the project’s commercial viability, and does not replace the need for a due diligence.

Given that South Africa’s project pipeline includes climate-related developments and initiatives driven by socioeconomic objectives – such as employment creation, service delivery and community development – the tool incorporates two assessment gates: a green, or climate-led gate; and a socioeconomic improvement-led gate.

Both pathways require meaningful contributions across all three legs of climate, socioeconomic and community improvement, but the thresholds are adjusted to reflect the project’s primary purpose.

This, Lowitt explains, avoids penalising projects that are socially transformative but not primarily environmental in nature.

On completing the online submission, which involves clear definitions, dropdown menus and guided activity lists to remove ambiguity, applicants will receive an instant response informing them whether or not a project qualifies.

Qualifying projects also receive a certificate with a unique QR Code as proof that the project meets the just transition project criteria. However, TIPS is still seeking formal recognition for this certification, ideally through a government sponsor.

TIPS is also keen to enter into partnerships with financial institutions so that applicants whose projects fail to secure certification can be offered feedback, as well as guidance on how to improve the project’s credentials.

The tool has, thus, been developed to be embedded into third-party websites to facilitate such partnerships.

Lowitt expressed optimism that the move to standardise the way just-transition projects are assessed will help address some of the challenges that have arisen since the launch of South Africa’s Just Energy Transition Investment Programme (JET-IP) in 2023.

There has been particular concern over the slow implementation of projects, limited funding disbursements from the international donors that pledged more the $12-billion in support of the JET-IP, as well as so-called ‘just transition washing’, whereby conventional projects have been rebranded in a bid to access funding.

The Just Transition Finance Tool, which was launched formally at an event hosted by Bowmans, can be access through: https://www.tips.org.za/projects/just-transition-finance