Green structural transformation in South Africa

South Africa faces complex tensions between its aspirations to achieve green structural transformation, its ambitious energy transition commitments, and the structural economic conditions that constrain their realization. We argue that emissions reductions achieved to date have been driven at least as much by economic stagnation, deindustrialization and energy system dysfunction as by policies aimed at decarbonization, factors which have also deepened the country’s structural dependence on an exceptionally carbon-intensive production system entrenched in the apartheid era. The zero-sum dynamic arising from this context has constrained the country’s efforts to change course and kept it on the back foot in the increasingly intense global competition over the value generated in the energy transition. The South African case suggests that strategies failing to balance of decarbonization, structural transformation, and effective response to social crisis are unlikely to succeed, as policies aimed at diffuse, long-run benefits are resisted by constituencies upon which concentrated, short-run costs are imposed. If distributional issues are ignored or mishandled, ‘green’ policies are likely to become strongly associated with threats to existing jobs and incomes. Industrial policies that enable growth in green industries will have a key role to play in demonstrating that the existing zero-sum dynamic can be overcome. Indications are that the country’s proposed new industrial policy framework will seek to make decarbonization more central to its efforts, but in doing so there will be a need to overcome many challenges on the path to building a comprehensive strategy for green structural transformation.