Understanding the impact of a low carbon transition on South Africa

The report finds that South Africa faces a cumulative transition risk of over $120 billion in present value terms between 2013 and 2035, primarily driven by falling demand and prices for coal exports. While the public balance sheet explicitly faces only 16% of this downside risk, implicit transfers—such as bailouts and social support—could increase the national government's share to over half. The analysis highlights that approximately 75% of these risks are external, and nearly 50% were already realized by 2017. Furthermore, current investment incentives may add another $25.8 billion in risk through projects like new oil refineries and coal infrastructure. The report recommends that the government adopt transition risk assessments, reconsider high-risk investments, and potentially tax oil price windfalls to offset losses.

• South Africa faces a cumulative transition risk exceeding $120 billion in present value terms between 2013 and 2035, with risks expected to accelerate in the mid-2020s. This risk could potentially jeopardize the country's investment grade sovereign rating.
• Approximately 75% of the transition risk is driven by factors outside the South African government's control, such as global demand shifts for coal and oil. By 2017, nearly 60% of the transition value at risk—approximately $60 billion—had already been lost compared to 2013 business-as-usual forecasts.
• While the national government explicitly faces only 16% of the downside risk, implicit transfers—including the need for bailouts, decommissioning costs, and support for unemployed workers—could increase its share of the cumulative risk to more than 50%.
• Current investment incentives favor industries exposed to transition risk, with planned projects—including a new oil refinery, coal IPPs, and rail expansions—potentially adding $25.8 billion to the country's transition risk.
• A global low-carbon transition presents potential upside benefits, most notably a net gain of over $40 billion from lower global oil prices, which could be used to offset risks in other sectors if the government implements proactive fiscal policies such as increasing taxes on oil products.

APA

Huxham, M., Anwar, M., & Nelson, D. (2019). Understanding the impact of a low carbon transition on South Africa. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2019/03/CPI-South-Africa-ES-final.pdf

Chicago

Huxham, Matthew, Muhammed Anwar, and David Nelson. Understanding the impact of a low carbon transition on South Africa. Climate Policy Initiative, 2019. https://www.climatepolicyinitiative.org/wp-content/uploads/2019/03/CPI-South-Africa-ES-final.pdf.

Wikipedia

{{cite report |last1=Huxham |first1=Matthew |last2=Anwar |first2=Muhammed |last3=Nelson |first3=David |title=Understanding the impact of a low carbon transition on South Africa |publisher=Climate Policy Initiative |date=March 2019 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2019/03/CPI-South-Africa-ES-final.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{huxham2019understanding, author = {Huxham, Matthew and Anwar, Muhammed and Nelson, David}, title = {{Understanding the impact of a low carbon transition on South Africa}}, institution = {Climate Policy Initiative}, year = {2019}, month = mar, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2019/03/CPI-South-Africa-ES-final.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }