Investment, growth and development in South Africa

This case study examines the economic impacts of an accelerated energy transition in South Africa. Using an integrated macroeconomic modelling framework, it compares a Current Policies scenario with an Enhanced Policies scenario consistent with South Africa’s net-zero objective. Results indicate that GDP could be around 1.5% higher by 2035, driven mainly by energy investment, with net gains in energy sector employment and reduced fossil fuel import dependence, without accounting for avoided climate damages. Realising these gains depends on investment mobilisation at scale and effective policy implementation. The case study therefore explores some institutional, policy and financing conditions relevant to the delivery of South Africa’s second NDC and sets out priority actions to strengthen institutional co-ordination, sequence interdependent reforms and investments and manage the distributional and political economy consequences of the energy transition.