SA faces R3.7-trillion climate bill over the next decade - TimesLIVE
South Africa needs about R3.7-trillion in investments over the next decade to adapt to climate change and mitigate the effects, an issue that is all the more pressing since about $135bn of the country’s exports are destined for net-zero-committed economies.
That puts pressure on Africa’s largest economy to meet its climate commitments or risk its exports being uncompetitive in key markets such as Europe.
The required investment, which equates to 46% of South Africa’s GDP, is contained in the draft biennial transparency report that the country is set to submit to the UN next month as part of the Paris treaty on climate change.
“Financial support needed is substantial, with the Second NDC [Nationally Determined Contribution] estimating investment needs of approximately R250bn for priority adaptation actions and R3.47-trillion for mitigation over 2026-2035,” the report reads.
“These figures represent the broader investment envelope required to implement national climate priorities, while international support remains critical for adaptation, mitigation, loss and damage, technology deployment and institutional strengthening.”
The draft transparency report describes mitigation costs as those that include investments including infrastructure upgrades, coal plant decommissioning, workforce support and electric vehicle deployment.
In 2021 South Africa signed $8.5bn worth of climate and finance deals under the landmark Just Energy Transition Partnership with pledging partners France, Germany, the UK, the US, and the EU. Under the Donald Trump administration, the US withdrew from the agreement.
The transparency report highlights the Green Fund, established in 2024, as a vehicle to raise funding for the adaptation, loss and damage, and mitigation, noting that South Africa expects a fair share of “international finance”.
The report prepared by the department of forestry, fisheries and the environment, acknowledged that the national fiscus is constrained in funding the investment required alone.
“Limited financial capacity and competing development priorities, such as service delivery, infrastructure backlogs and social support needs, reduce the resources available for climate adaptation,” the report says.
“This is particularly apparent at the municipal level, where constraints in capacity and funding limit the ability to implement and maintain adaptation interventions.”
Studies have shown that by the 2050s the annual national cost of climate change impacts in South Africa is projected to range from $116.8m at a 2°C rise in the annual average global temperature to $228.7m at 2.4°C, and it could rise to $522m if no adaptation measures are implemented.
The report notes that 2024 was South Africa’s hottest year since 1951, highlighting recurrent flooding in the Western Cape, the Eastern Cape, and KwaZulu-Natal in 2023 and 2024 that resulted in loss of life, displacement of communities, and extensive damage to infrastructure, further straining public resources and development efforts.
“Taken together, these national circumstances describe a country where climate vulnerability and socio-economic strain reinforce one another: an emissions-intensive, coal-reliant economy exposed to a decarbonising global trading system; a growing, rapidly urbanising population, straining service delivery; and a changing climate already delivering measurable harm,” the report states.
“Realising South Africa’s real strengths — abundant renewable resources, globally significant mineral reserves, and renewable capacity growth already outpacing targets — will depend heavily on international climate finance commitments, including through mechanisms such as the Just Energy Transition Partnership, so that the country’s transition to a low-carbon economy is supported.”
The energy sector is the biggest contributor to South Africa’s emissions, accounting for 78.6% of the total.
South Africa’s mitigation pathway is expected to be shaped primarily by the Climate Change Act, sectoral emission targets, carbon budgets and just transition-related investment.
South Africa’s carbon tax was introduced in June 2019 in a phased approach to ease the transition to net zero.
The EU’s carbon border adjustment mechanism (CBAM) entered its definitive financial phase in January, posing big transition and export risks for South Africa due to its coal-heavy electricity grid and lower domestic carbon tax rates.
South African exporters in carbon-intensive industries — primarily iron, steel, aluminium, cement, and electricity — are directly affected when shipping goods to the EU.
“Emissions-intensive sectors — basic metals, automotive, and agriculture — face growing exposure to carbon border adjustment mechanisms, turning emissions intensity into an emerging trade barrier just as global markets pivot toward decarbonised supply chains,” the transparency report reads.
“The country’s fortunes are thus tightly bound to its coal-dependent energy system, which also explains why it carries the highest per capita CO₂ emissions on the continent.”
The country plans to retire about 8GW-8.75GW of ageing coal-fired capacity by 2030 (and 16.2GW by 2036), though officials are reviewing whether to extend the lifespan of several plants due to delays in replacement gas-to-power projects.
