South Africa stands at a critical juncture in its energy transition. Coal-fired power stations currently produce 85% of the country’s electricity, making South Africa the largest emitter of greenhouse gases in Africa. However, with a commitment to reaching net-zero emissions by 2050, the country must significantly increase its renewable energy production. The challenge lies in balancing economic growth with this transition.
Recent research by economics professor Andrew Phiri, along with student Tsepiso Sesoai, examined whether renewable energy can replace non-renewables as the primary driver of economic growth. Their study found that while coal consumption has historically supported long-term economic development, renewable energy has only demonstrated short-term economic benefits. This presents a significant policy challenge: how can South Africa transition to clean energy while ensuring sustained economic growth?
For decades, South Africa’s economic expansion has been closely tied to coal consumption. Coal has powered industries, created jobs, and kept electricity relatively cheap. However, this dependence has come at a cost—rising carbon emissions, environmental degradation, and frequent power cuts due to the instability of the aging coal-based energy infrastructure.
Government efforts to shift toward renewables began in 2003 with the White Paper on Renewable Energy. The most significant push came in 2010 with the launch of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which allowed private companies to generate renewable energy. Despite these initiatives, coal remains dominant, largely because renewable energy has not been fully integrated into the national grid.
Phiri’s research indicates that renewable energy has provided short-term economic boosts, particularly during periods of increased investment, such as the 2010s. However, these effects have not been sustained over long economic cycles of 10-15 years. One major reason is the government’s failure to implement strong policies, subsidies, and infrastructure investments needed for renewables to become a stable energy source.
In contrast, the decline in coal consumption—particularly after the introduction of carbon taxes in 2019 and the economic slowdown during the COVID-19 pandemic—has directly impacted GDP growth. Reduced coal use has led to lower national income levels, making it difficult for households to afford renewable energy systems like solar panels.
For South Africa to successfully transition to renewable energy while maintaining economic growth, policymakers must take decisive action. The study highlights that treating renewables as a “nice-to-have” rather than a key economic driver has resulted in weak policies and underinvestment. Without significant reforms, renewable energy will continue to play only a supplementary role rather than serving as the backbone of the economy.
South Africa has immense renewable energy potential, particularly in solar and wind power. However, without strong policy support, better infrastructure, and integration into the national grid, renewables will struggle to replace coal as a reliable energy source. The government must act swiftly to embrace this transition, ensuring that economic development and environmental sustainability go hand in hand.
The global shift toward clean energy is inevitable, and South Africa must position itself as a leader rather than a follower. A well-managed energy transition could not only safeguard the environment but also unlock new economic opportunities, drive industrialization, and create jobs. If policymakers fail to act now, the country risks falling behind in the global clean energy race.
