Just Energy Transition of South Africa in a Post-COVID Era

The article provide insights into how the South Africa energy transition will influence the socioeconomic conditions and how policies can be made proactive. The article makes use of an empirical simulation analysis of four policy shocks on South Africa’s economy as part of the energy transition. The simulation design starts with the business-as-usual baseline run reflecting the projected evolution of the economy in the absence of any policy interventions. The four policy simulations are designed to capture the effects of increasing costs related to financing investment for fossil fuel projects, the possible spillover effects of deteriorating financing, fiscal, and risk conditions, hypothetical restrictions on coal export in the future, and the impacts of the required energy transition in South Africa.

Key Findings/Recommendations:

The results show that the Mpumalanga region, is highly exposed to policy changes related to the fossil fuel industry. The first scenarios which simulate a benchmark increase in financing costs related to the coal and refined petroleum industries show damage to the coal industry, negatively impacting the Mpumalanga economy. Scenario 2, which simulates a benchmark increase in economy-wide financing costs, indicates damage to the general macro economy, but the negative impacts on coal production and employment are mitigated by improved performance in other sectors over time. Scenario 3, which simulates a hypothetical restriction on coal export, highlights the potential for the local coal industry to come under increasing pressure in the future to find buyers for its output. Scenario 4, which simulates the impacts of the required energy transition in South Africa, suggests that transitioning away from coal towards greener electricity production can significantly positively impact the environment and public health while generating employment and income growth in the economy.

Read online: https://www.mdpi.com/2071-1050/15/14/10854#B8-sustainability-15-10854