More than $833.6bn needed to support SA’s transition to net zero - report

JOHANNESBURG - South Africa needs $833.6 billion (R12.3 trillion) to fund its transition to net-zero emissions, and assistance from developed markets is critical, according to a report by Standard Chartered.

The report, “Just in Time: Financing a fair transition to net-zero,” considers the transition finance gap for emerging markets - which is $94.8 trillion. This is over and above the capital already allocated by governments in their climate policies, according to Standard Chartered.

Greenhouse gas emissions contribute to global warming - which results in severe climate impacts. Under the Paris Agreement, signatories have committed to limit global temperature rise to 1.5°C. To do so involves reducing emissions to net zero by 2050.

If South Africa’s transition to net-zero is self-funded, it will eat into household spending. Standard Chartered expects South African household spending to drop by $281.8 billion between 2021 and 2060. Self-financing means higher taxes and an increase in government borrowing - which means households will have less to spend on daily needs, Standard Chartered explained. However, if developed markets support the transition - either through grants or loans - South African household spending could increase by $311.1 billion over the same period. Similar trends are seen in emerging markets - self-funding will result in household consumption falling five percent on average. “Self-financing a net-zero transition would take a significant sum away from emerging market households,” the report read.