GREEN BONDS IN SOUTH AFRICA

The report examines how green bonds and transition finance can support South Africa's shift from a coal-dependent energy system to a low-carbon economy. It highlights the critical role of the two largest emitters, Eskom and Sasol, and proposes various financial models, including sovereign green bonds and asset-backed securities, to attract international capital while managing the social implications of a 'Just Transition'.

• South Africa faces significant economic risk due to its high carbon intensity of exports, which is the highest globally, making it vulnerable to international carbon pricing and mechanisms like the EU’s Carbon Border Adjustment Mechanism.
• The South African energy sector is dominated by coal, with 89% of electricity generated from coal power, a share higher than G20 peers India (74%) and China (68%).
• Two entities, Eskom and Sasol, are responsible for over 50% of South Africa's emissions, with Eskom accounting for 42% and Sasol for 11%.
• Eskom is heavily indebted, with R484bn (USD32bn) in debt, and operates an aging fleet where up to 12.1GW of installed capacity has been out of commission, leading to daily load shedding.
• Renewable energy has become the lowest-cost technology for new power capacity in South Africa, rendering coal, nuclear, and hydro no longer economically competitive for new-build generation.
• Green bonds provide several benefits to issuers, including access to a larger and more diverse pool of investors, potential for a lower cost of capital (a 'greenium'), and a positive signal to the market regarding climate risk preparation.
• For Eskom to be eligible for entity-level transition finance, it must implement a credible strategy aligned with the Paris Agreement, which would likely require all coal to be offline by 2040.
• Sasol's current 2030 target to reduce emissions by at least 10% is considered insufficient for entity-level transition finance, as it does not align with the global goal to nearly halve emissions by 2030.
• The report argues that new gas-fired power projects are not eligible for green or transition finance due to methane leakage and the risk of locking in high-emissions infrastructure.
• Proposed financial models for the transition include sovereign green bonds to lower financing costs for Eskom, green asset-backed securities (ABS) to remove balance sheet risk, and the 'Just Transition Transaction' (JTT) to refinance Eskom debt conditional on CO2 reductions.

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} }