GREEN BONDS IN SOUTH AFRICA

This report by the Climate Bonds Initiative examines how green and transition bonds can facilitate South Africa's shift from a coal-dependent energy system to a low-carbon economy. It analyzes the specific challenges of the South African market, the roles of major emitters like Eskom and Sasol, and provides frameworks for credible transition finance to avoid greenwashing.

• South Africa faces significant economic risk due to the high carbon intensity of its exports, which is the highest globally. This vulnerability is expected to increase as international carbon pricing and mechanisms, such as the EU’s Carbon Border Adjustment Mechanism, are implemented.
• The South African energy sector is heavily reliant on coal, with 89% of electricity generated from coal power, a share higher than other G20 peers like India (74%) and China (68%). Two entities, Eskom and Sasol, are responsible for over 50% of the country's emissions, with Eskom accounting for 42% and Sasol for 11%.
• Eskom, the state utility supplying approximately 95% of South Africa's electricity, is burdened by R484bn (USD32bn) in debt. While Eskom's 'Just Energy Transition Vision' aims for net zero by 2050, the report notes that to align with the Paris Agreement, all coal would likely need to be offline by 2040.
• Green bonds provide several advantages for South African issuers, including access to a larger and more diversified pool of international investors and the potential for a lower cost of capital (a 'greenium'). They also serve as a market signal that an entity is managing climate-related risks.
• To prevent 'greenwashing' in transition finance, the report advocates for five transition principles: alignment with a 1.5-degree trajectory, science-based goals, the exclusion of offsets from targets, prioritizing technological viability over economic competitiveness, and a focus on action and operating metrics over pledges.
• The report argues against the use of new gas-fired power projects as a transition tool, citing methane leakage and the risk of 'locking in' high-emissions infrastructure for decades. It suggests that if gas leaks more than 3% along the supply chain, it is worse for the climate than coal.
• Sasol, the second largest emitter in South Africa, is focusing on green hydrogen and renewable energy to decarbonize. While its current 2030 target of reducing emissions by at least 10% is considered insufficient for entity-level transition finance, its prototype projects in green hydrogen are noted as encouraging.
• The report identifies several green bond models suitable for South Africa: sovereign or sub-sovereign bonds to finance systemic transitions, corporate bonds for renewable energy, and green asset-backed securities (ABS) to reduce entity-level risk by securing debt against low-risk renewable assets.
• A proposed 'Just Transition Transaction' (JTT) for South Africa would involve a ~$12Bn long-term debt facility to refinance Eskom. This blended finance model would combine concessional and commercial finance, conditional on measurable CO2 reductions and the implementation of a social program for affected labor and communities in Mpumalanga province.
• The report recommends that South Africa implement a harmonized Green Finance Taxonomy to ensure interoperability with global standards (like the EU Taxonomy), which is essential for attracting international capital.

APA

Boulle, B. (2021). GREEN BONDS IN SOUTH AFRICA. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Green-Bonds-in-South-Africa-How-green-bonds-can-support-South-Africas-energy-transition.pdf

Chicago

Boulle, Bridget. GREEN BONDS IN SOUTH AFRICA. Climate Bonds Initiative, 2021. https://www.climatebonds.net/files/documents/publications/Green-Bonds-in-South-Africa-How-green-bonds-can-support-South-Africas-energy-transition.pdf.

Wikipedia

{{cite report |last1=Boulle |first1=Bridget |title=GREEN BONDS IN SOUTH AFRICA |publisher=Climate Bonds Initiative |date=August 2021 |url=https://www.climatebonds.net/files/documents/publications/Green-Bonds-in-South-Africa-How-green-bonds-can-support-South-Africas-energy-transition.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{boulle2021green, author = {Boulle, Bridget}, title = {{GREEN BONDS IN SOUTH AFRICA}}, institution = {Climate Bonds Initiative}, year = {2021}, month = aug, url = {https://www.climatebonds.net/files/documents/publications/Green-Bonds-in-South-Africa-How-green-bonds-can-support-South-Africas-energy-transition.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }