Debt for Climate Opportunities in South Africa

The pace of energy transitions in middle-income countries such as China, India, and Indonesia will determine whether the world meets its Paris Agreement target of limiting temperature rise to «well below two degrees». This South African case, which is based on

Meridian Economics’ Just Transition Transaction concept (Meridian Economics, 2020),

suggests that Debt-for-Climate Initiatives (DCIs) are likely to play a valuable role in enabling

and supporting a just transition by contributing towards overcoming political, institutional,

and other barriers in such countries.

The paper proceeds by setting out pertinent aspects of the South African context and the

key role of its electricity sector in contributing to the country’s worsening debt profile. That

an ambitious renewable energy build programme is the most attractive techno-economic

trajectory for the sector going forward – with significant social benefits – is argued on the

basis of system modelling. However, significant political, institutional, and regulatory

barriers still remain for South Africa as it embarks on this path, regardless of pace.

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