Research Projects

South Africa considers an energy transition characterised by massive uptake of low-carbon technologies at the centre of its decarbonisation strategy. As the country continues to navigate the energy transition landscape, it is clear that this undertaking will restructure the productive nature of industries within the economy as some industries will decline and some increase their output. Both global and national empirical research has outlined sunrise and sunset industries in the context of an energy transition. However, macroeconomic impacts beyond the gross domestic product and employment induced by a transition towards low-carbon technologies remain understudied and unspecified.

As a result, we cannot identify macroeconomic vulnerabilities and possible economically-sound transition pathways without triggering economic instability. This prevents policymakers from understanding and assessing the risks, constraints, vulnerabilities, and opportunities of a low-carbon transition. In contrast to the current modelling tools, a team of researchers led by French Development Bank (AFD) and partner institutions (Centre for Sustainability Transition (Stellenbosch University); Energy Systems Group (University of Cape Town); National Treasury; Development Bank for Southern Africa) are developing a novel hybrid-model that will enhance our understanding of trade-offs, impacts, implications with how energy, climate change, and the economy interact with each other. Unlike many similar international initiatives, the AFD’s approach is open source and focused on capacity building meaning that South African institutions will have access to the model post-project where they are able recalibrate the model as new data, assumptions and conditions emerge.