South Africa faces a major conflict between climate action and economic development. The government is prioritizing inclusive growth through infrastructure, skills, and industrialization; however, climate policies like carbon pricing and just transition funds aim to bridge this by leveraging green investment (renewable energy, hydrogen) to create jobs.  High-emitting sectors, such as coal-dependent industries, resist change, thereby slowing progress towards climate goals, including limiting the rise in emissions to below 1.5 degrees by 2030, and shifting policy priorities towards immediate economic relief over long-term climate targets. To bridge these gaps, South Africa needs to employ integrated green industrial policies and reinvest carbon tax revenue to support energy transition rather than hindering job creation and growth. South Africa should be able to repurpose all coal sites for renewable energy and green hydrogen. 

The major priorities for South Africa’s economy are to address high unemployment, poverty, inequality, and foster inclusive, sustainable economic growth. Although South Africa has climate change policies such as the Just Energy Transition (JET), the Carbon Tax, Green Hydrogen Exports, and Structural Reform, it is experiencing several conflicts and impacts on climate Policy. These conflicts.

• Limitation of climate goals due to economic development: South Africa’s carbon-intensive economy, driven by a coal-heavy energy sector. This means rapid industrialization for jobs often conflicts with emission cuts needed to meet 1.5°C targets by 2030.
• Huge cost of transition: Shifting from coal requires massive investment in renewable energy, creating significant upfront costs that compete with immediate needs for job creation and poverty alleviation, making it a challenging transition issue.
• There is a policy prioritization shift: The struggle to balance immediate economic needs, such as jobs and energy security, against long-term climate goals. This has led to the de-prioritization of climate mitigation in favor of perceived short-term economic fixes, whilst the climate impact worsens. 

South Africa should be able to bridge the following gaps: 

• Financing the decommissioning of coal power stations and repurposing sites for renewable energy (solar, wind) and new industries (e.g., green hydrogen), and creating green jobs while reducing emissions.
• Increasing carbon tax revenue to fund green infrastructure, skills development for affected workers, and support renewable energy projects, making the transition economically inclusive. 

The conflict between policy and cost is deeply embedded in a high-carbon economy; there is a need for inclusive growth by bridging solutions that focus on green industrialization and just transition frameworks. South Africa needs to make climate action an engine for economic development, not a barrier.  Achieving rapid emission reductions remains a major challenge in South Africa against competing development demands.

This post was submitted by Climate Scorecard South Africa Country Manager, Rugare Zhou.

List of reference

1. Ifeanyi Michael Smarte Anekwe, Darlington Ashiegbu, Yusuf Makarfi Isa & Herman Potgieter 2025, Circular economy and energy transition: a review of South Africa’s 5-year just energy transition investment plan (JET-IP) Open access Published: 23 July 2025 Volume 30, article number 48, (2025)
2. South Africa Executive Summary Africa Region World Bank Group Building a resilient, sustainable, and inclusive economy. Country Climate and Development Report, October 2022 © 2022 The World Bank Group 1818 H Street NW, Washington, DC 20433
3. Sustainable Growth. Trade And Climate Change: Policy And Economic Implications For South Africa. Peet Du Plooy and Meagn Jooste March 2011
4. Climate Change Adaptation Economics Adaptation Scenarios Factsheet Series, Factsheet 6 of 7
5. Enaifoghe, A.O., Aina, A.O. and Durokifa, A.A. (2021), “South Africa’s economic progress: challenges and opportunities for sustainable development”, International Journal of Development and Sustainability, Vol. 10 No. 9, pp. 340-357.