South Africa is highly exposed and vulnerable to the physical impacts of climate change and consequent shifts in global trade. The National Business Initiative (NBI), in partnership with Business Unity South Africa (BUSA) and the Boston Consulting Group (BCG), and together with over 450 stakeholders from business, government and civil society, developed a set of net-zero pathways for an economy-wide just transition as well as an analytical fact base to inform decision-making, coordination and action.
This is a crisis and current climate action is insufficient
- Human activities have indisputably caused global warming. The negative impacts of climate change will intensify with the increase in extreme climate and weather events.
- We need to stabilise global warming at 1.5˚C and reach net-zero emissions by 2050 to reduce the risk of catastrophic climate change.
- The Intergovernmental Panel on Climate Change Special Report on global warming of 1.5˚C released in 2018 stresses the need to stabilise global warming at 1.5˚C to reduce the risk of catastrophic climate change and passing ‘tipping points’.
- Limiting global warming to 1.5˚C requires staying within a total carbon budget, i.e. limiting total cumulative CO₂ emissions.
- To limit warming to below 1.5˚C, global net human-caused emissions of CO₂ need to fall by about 45% from 2010 levels by 2030, and then to reach net zero by 2050.
- To limit global warming to 1.5°C, net-zero-aligned development pathways must be adopted.
- The climate crisis calls for rapid transformation but the current pace and scale of global climate action is inadequate to address climate change, with no credible pathway to 1.5°C.
- South Africa’s Low Emission Development Strategy 2050, published in 2020, committed the country “to ultimately moving towards a goal of net-zero carbon emissions by 2050”.
- South Africa submitted a revised Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) at the 26th Conference of the Parties (COP26) in 2021, pursuing more ambitious emissions reduction targets, the bottom range of which is consistent with a 1.5˚C trajectory.
2+ years of analysis and intensive engagement
250 + HOURS OF TECHNICAL WORKSHOPS
11 individual sector pathway reports
450+ stakeholders from business, government,civil society and labor
snapshot
30+ CEO CHAMPIONS from multiple sectors
The NBI is an independent and voluntary business movement of over 90 of South Africa’s largest companies and institutions committed to the vision of a thriving country and society. We believe in collective action and collaboration to effect change; building a South African society and economy that is inclusive, resilient, sustainable and based on trust
South Africa faces significant physical risks from climate change
Rising temperatures
- Countrywide temperature increases virtually certain
- Largest temperature increases likely in central and western interior, diminishing towards the coast
- Greater daily temperature range
Shifting rainfall patterns
- Rainfall likely to decline across southern Africa, with greatest decline in western interior
- Increase in intense rainfalls likely throughout summer rainfall regions
- Shorter rain seasons and later onset rain seasons possible for both summer and winter rainfall seasons
More extreme temperature events
- Increased number of very hot, heat-wave and high fire-danger days particularly in central and western interior
- Trends likely mirror temperature patterns, with lower increases along the coast
South Africa faces trade and economic threats
- The world’s largest emitters, including China, the United States (US) and the European Union (EU), are among more than 70 countries that have set a net-zero target, covering about 76% of global emissions. These countries also constitute South Africa’s top export partners outside Africa, putting exports at risk if carbon border taxes are implemented, as planned in the EU.
- South Africa is one of the most carbon-intensive economies globally and its trade vulnerability is particularly acute, with a commodity trade balance open to transition risk.
- South Africa must recognise global shifts in commodity value pools, play to its strengths, invest in skills and technologies of the future, and drive international exchange of expertise and technology.
- Failure to transition to a net-zero economy could see South Africa lose up to 50% of its export value, more than one million direct jobs and ~15% of gross domestic product (GDP).
- Inaction may see the country miss the opportunity to capture new green industries to address existing socioeconomic issues.
South Africa faces the triple challenge of inequality, unemployment and poverty; a weak economy that is one of the most carbon-intensive and increasing trade risks while also being highly vulnerable to the physical impacts of climate change.
Reaching net zero for South Africa is an enormous challenge that will see a restructuring of our energy system, building and vehicle stock, infrastructure and large parts of industry – all while addressing pressing socioeconomic challenges.
The path forward
The net-zero transition presents an opportunity for job creation, economic growth, diversification and improved competitiveness, while addressing South Africa’s energy crisis and conditions for weak economic growth.
South Africa needs to manage the significant physical risks associated with climate change while seizing trade opportunities in a way that is just and leads to a future economy that is competitive, socially resilient and inclusive, but we must act now.
Renewable energy
- Renewable energy is critical to driving 60% of emissions reduction in South Africa.
- Around 40% of emissions reduction is linked to the decarbonisation of South Africa’s coal-intensive power generation and around 20% to a further reduction across industries through electrification – meaning that renewable energy substitutes fossil fuels as the main energy source across all sectors.
Ten key actions to keep the net-zero trajectory alive
- To enable a rapid rollout of renewables, South Africa’s power grid needs to urgently be expanded by at least 30 GW by 2030, double what is currently planned
- Roll out renewables at 6–7 GW per year, more than 10x the current rate
- Leverage South Africa’s structural advantages to establish a green hydrogen industry of up to ~9.5 MT per year
- Reverse declining rail use and increase commercial use from ~20% to ~40% and passenger use from ~5% to ~20% of demand
- Densify urban sprawls to increase population density on key transport axes to reduce travel demand and improve housing
- Electrify road transport with ~750 000 electric vehicles on the roads by 2030, requiring 30 000 to 45 000 public charging units, and ban internal combustion engine car sales from 2035
- Increase use of public transport and reduce private vehicle ownership from a maximum of 10 million vehicles in 2035 to 6 million in 2050
- Drive a shift to nutritious, low red-meat diets and address the higher cost of these diets (~4x more) for low-income South Africans
- Act now before heavy manufacturing commodities’ costs increase as economies transition to net zero
- Drive more disruptive action with international support to achieve the lower bound of committed decarbonisation targets
Funding a just transition
- South Africa’s transition to net zero will require massive investments. More than R5.9 trillion will be required over the next three decades to decarbonise the economy. This is equivalent to ~4.6% of South Africa’s current GDP being spent on the transition every year until 2050.
- Given South Africa’s constraints around public financing, large-scale private sector investment and international support will be needed. Around 60% of investment required in the 2020s (such as in renewables generation) are sufficiently bankable and mature to be funded from private sector-dominant sources.
- International development finance will be critical to fund non-bankable investments, including social costs, reskilling costs and to cover the ’economic gap’ in new green industries to crowd-in private sector investment.
- None of this can be achieved without increased collaboration between government, private sector financiers, donor institutions and other key stakeholders. Realising the value of an integrated and coordinated effort at national level is critical.
A just transition to net-zero emissions is not only possible but crucial
The just transition in South Africa is a shift towards an environmentally sustainable, resilient and inclusive economy and society for all. This transition needs to be managed and contribute to the goals of decent work, social inclusion and the eradication of poverty for all South Africans.
Achieving a just transition to a net-zero economy by 2050 will require all social partners in South Africa, including business, to take a transformative approach that addresses distributive, restorative and procedural justice, while boosting South Africa’s economic competitiveness and foundation for an inclusive and climate-resilient society.
Vision
A well-managed shift towards environmentally sustainable economies and societies for all
Challanges and opportunities
Across sectors socioeconomic risks need to be identified and mitigated, and opportunities realised
Building blocks
Building blocks of a transition with contributes to social upliftment and eradication of poverty nd inequality in South Africa
Collaboration
Collaboration across stakeholder groups-private and public sector, communities/civil society and others – will be critical
Guidance towards reaching net zero by 2050 is provided at sector level by the pathways analysis
Key areas where all partners need to play a role
Procedural justice
Empowering(not only supporting) workers, communities and small businesses in the transition
Distributive justice
An equitable distribution of risks, responsibilities and benefits that addresses the direct impact resulting from the transition
Restorative justice
The redress of historical damages against individuals, communities and the environment
Job creation and decent work
Training, capacitation and skilling
Infrastructure planning and rollout
Managing geo and cultural dislocation
Social protection
Service delivery and access to infrastructure and markets
Economic inclusion and participation
Ownership
Ecological restoration
Education
CROSS-CUTTING ENABLERS FOR A JUST TRANSITION: Funding | Policy and governance
Find out more
- Visit Climate Pathways and a Just Transition for South Africa.
- Contact the NBI at info@nbi.org.za.
Source: The original version of this article was published in the Trialogue Business in Society Handbook 2023 (26th edition).
