According to research issued on the margins of the World Economic Forum on Thursday, transitioning South Africa’s coal-dominated economy to a more sustainable path will cost at least $250 billion over the next three decades.
According to the consultation paper, over half of the entire expenditure, $125 billion, is needed to scale up wind and solar power projects as the country mothballs coal-fired facilities that now supply the bulk of its energy demands.
The paper was written by academics at Stellenbosch University in South Africa in collaboration with the Blended Finance Taskforce, an organization established in 2017 to assist in the mobilization of large-scale private money in order to achieve the United Nations’ Sustainable Development Goals.
South Africa is the world’s 12th largest producer of greenhouse gases and Africa’s largest. The United States, the United Kingdom, France, Germany, and the European Union agreed in November to contribute a $8.5 billion plan to aid South Africa’s transition away from coal, though the terms and timeframes are still being worked out.
“Under an aggressive decarbonisation scenario (coal off by 2040), it would cost at least $250 billion spent over the next three decades in South Africa to transition to a low-carbon, more equitable energy system,” the authors said.
Aside from renewable energy projects and infrastructure, money is set aside for gas plants and energy flexibility, new transmission lines, and reskilling thousands of coal employees whose jobs are in jeopardy, a political hot potato for the ruling African National Congress and its labor allies.
“Aligning the appropriate type of capital with the proper investments and prices is critical to attaining South Africa’s fair energy transition objectives,” the research stated, adding that the concept of “just” should include the issues faced by people in coal-dependent areas.