Assessing investment needed to achieve South Africa’s 2035 Nationally Determined Contribution mitigation target and associated just transition investments

Abstract

This report assesses the investment needed to achieve the lower end of South Africa’s Second Nationally Determined Contribution (NDC) mitigation target range for 2035, including infrastructure and just transition investments. The analysis estimates cumulative investment requirements of R3.47 trillion, in 2022 ZAR, over 2026–2035 for the interventions that can be costed, or around R350 billion per year on average. Compared with existing financial flows, the annual investment required for most interventions needs to increase significantly. New electricity generation capacity is an exception: the necessary annual average investment has been achieved in recent years. This level of investment will nevertheless need to be sustained while investment in other mitigation and just transition interventions increases. Many of the investments identified are common across pathways within the communicated 2035 range of 320–380 Mt. These include investments associated with Mpumalanga’s just transition, particularly for assets reaching the end of their lives. Investments in the closure and repurposing of coal plants and mines are therefore no-regret investments: they are required across many futures, regardless of the level of mitigation ambition. Similarly, investments in automotive manufacturing transition and modal shifts are consistent across a range of future pathways.The investment assessment includes support to address socioeconomic transition challenges in affected sectors, as well as investment in new opportunities. It also highlights persistent gaps in many sectors between mitigation and development potential, sector policy and real-world implementation. Closing these gaps will require institutional strengthening, greater resources, including capacity and capability, and increased financial mobilisation.