Countering the climate crisis: How South Africa’s response is hotting up

South Africa is already experiencing extreme weather events attributable to climate change. With these effects expected to increase rapidly in the next decade, the government has set ambitious climate action goals — and is starting to galvanise the effort required to meet them.

Judging from the intense work taking place behind the scenes by local climate researchers and economists, the National Treasury, the Reserve Bank, and many other public and private entities, South Africa is stepping up its response to global warming.

The problem is that while the country is strongly committed to tackling climate change and facilitating a just transition, progress has not been made at the pace and scale required to tackle a crisis of such magnitude.

For each readiness indicator, large gaps exist between South Africa’s historical trajectory and its future targets, according to the Presidential Climate Commission’s (PCC’s) recently published State of Climate Action report.

South Africa’s has stepped up its response to climate change but while concerted action is under way, much more is needed

—  What it means:

“South Africa is often generally described as a policy-rich, implementation-poor country — and this is equally true for climate action,” states the report.

For example, it notes that only 28 of the 95 actions outlined in the country’s National Climate Change Adaptation Strategy are fully or currently being implemented.

South Africa’s nationally determined contribution (NDC) commits it to cutting its greenhouse gas (GHG) emissions to 350Mt-420Mt of CO2 equivalent (MtCO2e) by 2030 (compared to roughly 479MtCO2e currently), which broadly aligns with meeting the Paris Agreement’s 1.5°C global warming goal. In addition, South Africa has set an aspirational goal of reaching net zero CO2 emissions by 2050.

However, to meet this, South Africa would have to increase the use of electric vehicles from 0.5% of cars on the road now to 6% by 2030 and 100% by 2050, accelerate the adoption of renewable energy six- to 14-fold while closing all its coal-fired power stations, and double or even quadruple the amount of available climate finance each year.

The PCC report identifies three key barriers hindering progress: contradictory public policies and positions, weak state capacity and governance, and insufficient finance.

Inconsistent policy is particularly apparent in the energy sector as government wrestles with short-run trade-offs between its climate commitments and achieving energy security, economic growth and protecting jobs.

Take, for instance, Eskom’s recent decision to further delay the decommissioning of three of its oldest coal-fired power plants, Camden, Grootvlei and Hendrina, or the department of forestry, fisheries & the environment’s (DFFE’s) recent reprieve to Sasol’s Secunda synfuels facility for how stringently it may measure sulphur dioxide emissions.

The report warns that South Africa may not achieve its 2030 NDC target if key green energy policies and coal decommissioning schedules are not achieved. The bottom line, it says, is that “more ambitious action” in the area of energy and transport is required.

Another big worry is local government dysfunction, given that municipalities are supposed to be the frontline responders when it comes to implementing climate adaptation projects to improve communities’ resilience to extreme weather-related disasters.

“Addressing climate change means strengthening adaptation measures to improve the resilience to immediate events as well as to long-term climatic shifts that [affect] water availability, food security and human health,” notes the report.

But here’s the rub: “The scale of the challenge demands an effective and well-equipped state that enables trust and action among all stakeholders.”

Trust is especially important when it comes to raising climate finance. The report says tracked annual climate finance reached R131bn a year on average between 2019 and 2021, a record high for South Africa and almost double the previous two years, but still far from the estimated need of R334bn-R535bn a year.

Moreover, about 88% of climate finance is currently going on climate change mitigation (reducing GHG emissions) and only about 12% towards adaptation (preparing for future impacts), the latter mainly to projects in the Western Cape and KwaZulu-Natal.

This is why it was highly significant that the Treasury hosted a three-day conference on climate change in Pretoria last month in which its own officials participated in every session.

This was likely unprecedented in the global south, according to Mark Swilling, who co-directs the Centre for Sustainability Transitions at the University of Stellenbosch. He is encouraged because “it means that climate-change science is getting through to government”.

Apparently after the 2022 KZN floods, in which 544 people died and about 7,000 homes were destroyed, finance minister Enoch Godongwana had a Damascene conversion and issued instructions to his officials to take climate change much more seriously.

PCC executive director Crispian Olver agrees that there are a couple of really big shifts taking place — including in the way the Treasury and the Bank have stepped up to the plate.

Olver praises the way the Treasury is integrating climate-transition thinking across all its functions, from budget planning to tax and macroeconomic policy and even in asset and liability management.

“We’re seeing a similar thing from the Bank,” he adds. “It’s now paying big attention to climate risks and how that could affect the various balance sheets across the financial industry it regulates.”

Then there is the progressive Climate Change Act, which sets up a comprehensive mitigation, adaptation and just transition planning system for the country. It also gives the DFFE minister regulatory powers to set carbon budgets and emission targets and require that companies put climate mitigation plans in place.

There has also been a coming together on the energy policy side.

 “We’ve got all the work that the National Energy Crisis Committee (Necom) has done; we’ve got a minister of electricity & energy who combines the politics with a proper technical understanding of the sector; and we’re seeing big regulatory reforms like the setting up of the National Transmission Company,” says Olver.

“All of that gives me great hope.”

Prof Francois Engelbrecht, who heads the Global Change Institute at Wits University, is more aware than most of the risks posed by climate change — and the country’s lack of preparedness to meet them. Yet he remains hopeful.

“I am positive that we will reach a political and societal tipping point in South Africa where international investments (grants and cheap loans) in the new renewable energy sector will become so substantial that the benefits to economic growth and job creation will become clear, to the extent that there will be broad support for the transition,” he says.

But to achieve this, South Africa must demonstrate real action towards a just transition, he adds.

For instance, while he agrees that the Climate Change Act is an important step, he argues that a transparent plan of phasing out the use of coal needs to follow in return for substantial international investment (while safeguarding the communities currently heavily dependent on the coal sector).

Swilling is also upbeat. In his view, the demise of state capture has made space for a new generation of skilled public servants who have created “overlapping knowledge networks” through groupings such as the PCC and Necom.

These are working so successfully with each other and the private sector that Swilling believes South Africa is actually very well placed to respond to the global “polycrisis” of slow growth and rising inequality combined with the environmental crisis caused by climate change.

He points out that South Africa is the first country to have a just energy transition (JET) plan — something which many countries are now following; the first to include the notion of a just transition in our NDC; and the first to include socio-development criteria in the way we procure renewable energy through the independent power producer programme.

A ‘massive gap’ in modelling

Swilling heads the modelling team that is building South Africa’s first non-equilibrium climate model to understand the macroeconomic implications of investing in the energy transition (in the process of decarbonisation).

The model will seek to quantify the long-term impact on the country’s GDP, taking into account a higher carbon price, the shift to renewable energy, as well as ever-increasing physical climate-related damage and shocks.

The work is being done by a consortium of leading academics and researchers from the Treasury, the Development Bank of Southern Africa (DBSA), and Stellenbosch University. They are being assisted by the French Development Bank (AFD), which houses the leading non-equilibrium modelling unit in the world. The first results will be available in October.

“There is a massive gap between most economists’ models and climate scientists’ predictions,” says Swilling, “It’s not a case of underestimation — economists completely ignore climate change not because they’re climate denialists but because they don’t know how to put climate damage factors into the mix.”

Global investment manager Schroders has been grappling with exactly this problem. New research from its London-based climate economists suggests that economies and financial markets likely face greater downside risks from climate change than previously thought.

While there is a strong consensus that a warmer world means a poorer global economy, Schroders has been struck by the fact that climate scientists are forecasting that things will get a lot worse a lot sooner than most mainstream economic models predict.

Even one of the most pessimistic economic forecasts by Stanford University’s Marshall Burke et al, which predicts a 23% total loss in global GDP by the year 2100 if the planet warms by 4°C, still translates into an annual economic cost of less than 0.4% a year.

This, says Schroders environmental economist Irene Lauro, is in sharp contrast with the expectations of climate scientists, who are forecasting mass extinction if temperatures rise more than 5°C from preindustrial levels.

Numerous significant and alarming records have been broken over the past year in relation to greenhouse gas levels, sea levels, the extent of Antarctic Sea ice cover, and glacier retreat. In fact, the period from June 2023 to May 2024 was the warmest 12 months on record, with the global temperature averaging 1.63°C above pre-industrial times.

This doesn’t mean the world has already breached the Paris Agreement’s 1.5°C goal, which measures temperature changes in decades not months or years, but it does mean “we are getting perilously close”, according to the UN.

A group of international scientists from the Potsdam Institute for Climate Impact Research and the Stockholm Resilience Centre warn that even if economic models incorporate global warming of 1.5°C they are overlooking the true degree of risk.

This is because there is a significant likelihood at these temperatures of passing multiple climate “tipping points”, explains Lauro. This occurs when large parts of the climate system cross a warming threshold and start to change by themselves. It can lead to serious consequences, such as a significant rise in sea levels from melting ice sheets or further carbon emissions from frozen ground that thaws. 

Concerned that its own economic models, including those it uses in its 30-year investment return forecasts, were underestimating the real risks of climate change, Schroders undertook joint research with Oxford Economics resulting in a new Climate Downside scenario.

Unlike the “damage functions” used by many policymakers to quantify the likely economic impact of climate change that look only at potential changes to global average surface temperatures, their new downside scenario incorporates the impact of higher temperature volatility as this directly affects the frequency and severity of extreme weather events.

This brings Schroders’s worst-case scenario more in line with the predictions of climate scientists.

It shows that the global GDP loss by 2050 could be 21% worse than Schroders had previously expected in its Current Policies scenario. (The latter is based on the world’s current climate change policies and pledges and, as this implies a negligible rise in carbon pricing, it assumes the global average temperature averages 1.9°C by 2050.)

In the Climate Downside scenario, Schroders assumes that governments take even less remedial action, with the world remaining heavily dependent on fossil fuels until 2050. The upshot is that temperatures rise by about 2.2°C by 2050. So, while the transition costs related to decarbonising are low, the physical damage costs are more severe.

While it may seem unduly bleak to assume such an inadequate policy response, Lauro says other key risks that will have profound economic impacts, such as the potential release of greenhouse gases from carbon sinks, have not been included in the Climate Downside scenario.

Under Schroders’s Current Policies scenario, global growth averages about 2% annually between 2024 and 2053. Under the Climate Downside scenario it drops just about 1% — against a global average of 3.15% over the decade to 2019.

Lauro hopes her analysis serves as a wake-up call to policymakers.

“Our analysis offers a more nuanced understanding of climate downside risks, suggesting that we may be underestimating the potential for damage and, by extension, are underhedged against these risks,” she says.

“This has profound implications for investment decisions, underscoring the need for a recalibration of risk assessments and asset allocations in light of these emerging threats.”

Day Zero

Engelbrecht thinks the biggest climate risk South Africa faces in the next 20 years is the danger that Gauteng reaches Day Zero — when a multiyear drought causes the Vaal Dam to drop below 20%, rendering it unable to supply the province with water.

Gauteng came close in October 2016 when the dam’s levels dropped below 26% after three very dry summers.

Engelbrecht’s Global Change Institute is working with national and international partners to generate probabilistic projections of this risk, but he feels it is certain to grow as long as global warming continues.

Another risk the institute is researching is whether a tropical cyclone could make landfall as far south as Maputo, Richards Bay and the Mpumalanga Lowveld during the next 20 years.

This has never happened before partly because sea-surface temperatures in the southern Mozambique Channel are too low to sustain a hurricane of this intensity, explains Engelbrecht. However, due to climate change, sea-surface temperatures in this part of the ocean are increasing, making it possible for the first time.

“Right now, South Africa is not prepared for such an event,” he warns. “We have no [experience] in evacuating tens of thousands of people out of the path of a potentially catastrophic intense tropical cyclone.”

Swilling’s centre co-ordinates a range of other climate-related research projects involving the National Planning Commission, the DBSA, the Treasury and the PCC.

The first cluster of projects seeks to determine the amount of additional capital and operational investment needed per year for South Africa to achieve energy and water security as well as net zero carbon emissions.

So far only the water one is finished. It finds that if South Africa adopts a business-as-usual stance, not improving water use, maintenance or addressing infrastructure inefficiencies, it will have to invest R91bn more a year to achieve water security on top of the R150bn currently being spent.

But even in the best-case scenario, where the country practises much better water conservation management, it will still have to spend R75bn more a year than current budgets allow.

Another research project is analysing the county’s financial architecture to identify sources of capital within the economy that can be unlocked without having to lean on the national budget.

The most dramatic example is how South African households and corporates have invested R75bn in 5.8GW worth of rooftop solar over the past three years, facilitated by bank lending and government tax incentives.

“If we had 10 of this type of example, we would solve our [energy-security] problem without having to increase the budget,” says Swilling.

Given South Africa’s fiscal constraints, the Treasury is working on a range of innovative financing models to crowd in private sector investment to support climate action. For example, it is working with officials in the department of water & sanitation to set up the Water Partnerships Office to drive innovative financing and delivery models for water infrastructure delivery.

It has also worked with the International Finance Corp to develop options for off-balance-sheet financing to accelerate private sector investment in expanding the transmission grid and is on track to implement a pilot project during the course of this year.

Expanding the transmission grid to accommodate the renewable energy needed to meet the country’s emissions targets is one of the most pressing infrastructure investments needed, as Eskom’s current build rate on transmission lines is only 10% of what is required.

To help co-ordinate the raising and matching of climate grant funds to just transition projects, and to bolster the project pipeline, the PCC has recommended that a Just Transition Financing Mechanism be established, initially within the existing JET-Investment Plan project management unit in the presidency.

In addition, the PCC has proposed a broader “blending facility” be set up at the DBSA as South Africa will need to mobilise not only additional grant funding but soft loans as well as private sector lending in support of the country’s just transition efforts.

For all that, a gulf exists between South Africa’s climate pledges and the reality on the ground. This is probably also true for all countries.

What is encouraging in South Africa’s case is that stakeholders are co-ordinating their efforts and stepping up their response with a strong focus on raising finance, aligning policy, and accelerating project and infrastructure delivery.

It may still have a long way to go, but South Africa’s climate response has certainly entered an important new phase. The future is not without hope.

Hot as Hades

• June 2023 to May 2024 was the warmest 12 months on record, with the global temperature averaging 1.63°C above pre-industrial times
• The Southern Africa interior is warming at twice the global rate
• We can expect more long-lasting droughts with heatwaves of unprecedented intensity
• Over eastern Southern Africa more extreme rainfall events are projected
• South Africa’s biggest climate change risk in the next 20 years is Gauteng reaching Day Zero when it can no longer pump water from the Vaal Dam due to drought
• It is also possible that an intense tropical cyclone could reach Maputo, Richards Bay, the Mpumalanga Lowveld or the Limpopo River valley
• But there is still hope that with strong climate change mitigation the Earth can avoid the 2°C threshold of global warming
• Climate change science is helping us to foresee the key risks. In South Africa, the government has a track record of listening to and valuing climate science

Source: Prof Francois Engelbrecht, Global Change Institute, Wits University