South Africa

South Africa's energy system remains at a crossroads: as its energy crisis continues, it is moving forward with the Just Energy Transition Investment Plan (JET IP), and is in the process of adopting a renewable energy plan. However, it is continuing to pursue controversial fossil gas capacity and potentially faces delays in its shift away from its heavy coal reliance as it props up its failing state-owned electricity company ESKOM.

Uncertainty remains in the future of South Africa’s power sector as the government has not yet presented an updated Integrated Resource Plan (IRP). The Presidential Climate Committee (PCC) has recommended renewables and battery storage as least cost options and the full phase-out of coal, but leaves the potential role of gas an open question that requires more research while the government continues to pursue new fossil gas capacity.

Further, South Africa has presented its JET IP; however, the energy crisis threatens delays to decommissioning coal plants. Accelerating the rollout of renewables could close the capacity gap to allow South Africa to stay on track. Market indicators point to rapidly increasing renewables deployment with the import of solar cells, panels and modules hitting record highs in the first half of 2023. Overall, the CAT continues to rate South Africa’s climate targets and policies as “Insufficient”.

The energy crisis in South Africa has continued to worsen with 2023 reaching record-breaking load shedding, impacting the economy as well as the everyday lives of South Africans. Several of the measures passed by President Ramaphosa, such as the removal of the licencing threshold to unlock investment in distributed generation, have seen success. Government efforts to reform Eskom, South Africa’s public utility, are ongoing, with a new plan to provide debt relief for Eskom equivalent to over half of the company’s debt over the next three years to enable investment and maintenance of the power system.

While renewables deployment has been slow, bid windows for new renewable capacity continue to attract investment, with solar dominating Bid Window 6. This includes one of the world’s largest solar and battery facilities, on which construction began in July 2022. Renewables have also been successful in ‘technology-neutral’ procurement rounds. While gas made up the majority of energy procured under the Risk Mitigation Power Purchase Programme (RMPPP), so far only three hybrid solar and storage projects totalling 150 MW have started construction with controversial gas capacity procured facing delays due to concerns and court challenges over procurement and licensing irregularities.

South Africa has advanced several positive climate policies and measures:

• In October 2023, South Africa’s National Assembly approved the Climate Change Bill, which still needs approval from the National Council of Provinces and the President. If passed, the Bill would be a significant step forward for South Africa, making its NDC legally binding, requiring the government to set sectoral emission targets and to allocate carbon budgets to significant GHG emitting companies.
• South Africa presented the JET IP in November 2022, which details financing needs of USD 98bn over the next five years for catalysing a sustained just energy transition. The JET IP further outlines how best to direct the initial offer of USD 8.5bn from donor countries to priority investment areas. The majority of the initial offer will go to the power sector, supporting a transition away from coal and including support for impacted coal workers, with investments also in new energy vehicles, primarily battery electric vehicles, and green hydrogen.
• South Africa is using the JET IP to discuss additional funding with other donors, with recent commitments from the Netherlands, Denmark, and Spain adding USD 3.5bn to the pot in September 2023. A more comprehensive implementation plan is expected to be launched in November 2023.
• South Africa is also aiming to develop value chains for renewable energy and storage technologies through the South African Renewable Energy Masterplan (SAREM), released for public comment in July 2023, with a focus on driving industrial development and creating inclusive jobs.
• In August 2021, the government changed the licencing threshold for new generation from 1 MW to 100 MW, and, in December 2022, completely removed it. According to the government’s estimates, the pipeline of private sector embedded generation capacity has grown to more than 10 GW, though it is unclear how much of this is renewable capacity.

While there has been progress on procuring renewables and removing barriers to private participation, transitioning away from fossil fuels still faces challenges. To meet its ambitions for a just energy transition, South Africa could:

• Follow the guidance of the PCC and pursue a low-cost renewables-based electricity system. While PCC recommendations on the role of fossil gas remain unclear, all least-cost models reviewed by the PCC add no new coal or nuclear due to high costs and a transition to more affordable renewables with co-located storage.
• Accelerate the decommissioning of coal and set an ambitious phase out plan for coal power plants incorporated into key national plans including the finalised JET IP and updated IRP. New coal capacity additions are not cost-effective or compatible with limiting global warming to 1.5ºC. Recent CAT analysis shows South Africa needs to cut its coal power reliance significantly by 2030 and phase it out by 2040.
• Frontload assistance to coal communities who are most affected by the coal phase out to ensure a smooth and just transition for affected groups, building capacity and necessary administrative infrastructure, and setting out clear and predictable plans.
• Prioritise urgent investments in transmission and distribution. As specified in the JET IP, investment in transmission and distribution infrastructure is critical to ensure uptake of private sector-driven deployment of renewable energy. Grid infrastructure will need additional, external support in the form of concessional finance and budget assistance.
• Improve policy certainty to support investment and implementation by accelerating the adoption of several important draft policies and laws, including the Climate Change Bill, the Renewable Energy Master Plan, the updated IRP, and the Electricity Regulator Act Amendment Bill.

The CAT rates South Africa’s climate targets and policies as “Insufficient”. The “Insufficient” rating indicates that South Africa’s climate policies and commitments need substantial improvements to be consistent with the Paris Agreement’s 1.5°C temperature limit.

South Africa’s updated 2030 emissions reduction target is rated as “Almost sufficient” when compared to modelled domestic pathways, and “Insufficient” when compared with its fair-share contribution to climate action. South Africa’s targets and policies are not stringent enough to limit warming to 1.5°C. If fully implemented, South Africa’s current policies would be consistent with more than 3°C warming if all other countries followed a similar level of ambition.

The updated 2030 emissions reduction target submitted to the UNFCCC in September 2021 follows the Presidential Climate Commission recommending 350-420 MtCO₂e (incl. LULUCF).

South Africa’s 2030 NDC target has a range, of which we rate the upper end, because reaching that would comply with the NDC.

We rate South Africa’s current policies and actions as “Insufficient”. The “Insufficient” rating indicates that South Africa’s climate policies and action in 2030 need substantial improvements to be consistent with the 1.5°C temperature limit. If all countries were to follow South Africa’s approach, warming would reach over 2°C and up to 3°C.

Under current policies, South Africa will not reduce emissions enough to meet its NDC target range for 2030.

Despite a range of measures announced in July 2022, the energy crisis has persisted in South Africa with load-shedding reaching record highs. Additional measures are being taken to reform the power sector, including the government taking over some of Eskom’s debt, and procurement processes for renewables and controversial fossil gas capacity are ongoing.

The Just Energy Transition Investment Plan (JET IP), presented in November 2022, indicates the power sector will receive the bulk of the USD 8.5 bn investment package from donor countries. However, the Governments of South Africa and the donor countries have expressed concerns that the plans under the agreement to retire coal plants may be delayed amid the ongoing energy crisis.

An update to the Integrated Resources Plan (IRP) is expected this year but has already faced delays. However, this has not stopped the private sector from investing in renewables – the country hit a new solar investment record in 2023, importing over USD 650m in solar cells, panels and modules in the first half of 2023, up from USD 345m in all of 2022. The pending IRP update could build on this momentum from the private sector to accelerate renewables.

To take advantage of increasing domestic and international demand for renewable and storage technologies, the government released the South African Renewable Energy Masterplan (SAREM) for public comment in July 2023. The plan aims to develop industrial value chains for these technologies to drive development and create inclusive jobs.

If considering South Africa’s planned but not yet implemented policies, our rating of policies and actions would go up to “1.5°C compatible”. The stringent implementation of proposed economy-wide and sector-specific policy measures would enable South Africa to achieve at least the top end of its NDC target range, falling within the current range.

The full policies and action analysis can be found here.

We rate the updated 2030 reduction target levels as “Almost sufficient” when compared to modelled emissions pathways. The “Almost sufficient” rating indicates that South Africa’s NDC in 2030 is not yet consistent with the 1.5°C temperature limit but could be with moderate improvements. If all countries were to follow South Africa’s approach, warming could be held at—but not well below—2°C.

The CAT rates South Africa’s reduction target based on the upper range of its target, which falls in the “Almost sufficient” range, even if close to the limit to “1.5°C compatible”. If South Africa were to meet the lower end of the range it would be 1.5°C compatible when compared to modelled emissions pathways; however, it would still fall short of its fair-share contribution.

South Africa currently relies on foreign investments and international finance support to implement a large percentage of its climate change programmes, and the government also emphasises in its updated NDC that the implementation of its NDC will be enabled by financial support as specified in the Paris Agreement.

We rate South Africa’s 2030 NDC target as “Insufficient” when compared with its fair-share contribution to climate action. The “Insufficient” rating indicates that South Africa’s target needs substantial improvements to be consistent with limiting warming to 1.5°C. The target is at the least stringent end of what would be a fair share of global effort, and is not consistent with the 1.5°C limit, unless other countries make much deeper reductions and comparably greater effort. If all countries were to follow South Africa’s approach, warming would reach over 2°C and up to 3°C.

CAT interprets the full NDC target as unconditional. As South Africa only needs to reach the upper end of the target range to fulfil the NDC, we rate that emissions level. If South Africa committed to meeting the lower end of its target range, the rating would change to “Almost sufficient” when compared to the fair share contribution.

The CAT currently does not evaluate South Africa’s net zero target given its preliminary nature and a lack of more detailed information. The CAT will do so once further information is communicated by the government.