Countries choose to engage in a Just Energy Transition to tackle climate change while addressing long-standing economic issues.
Transitioning away from fossil fuels has become a global need, not just an environmental goal. As international markets increasingly penalise carbon-heavy goods, nations that don’t reduce emissions risk becoming economically isolated, facing stranded assets and rising capital costs.
However, a “just” transition acknowledges that decarbonisation must involve social fairness. By focusing on affected workers, frontline communities and energy security, governments can lessen the socioeconomic shocks from closing coal-fired plants, turning a potential labour crisis into a chance for sustainable, local industrial growth.
As one of the world’s most carbon-intensive economies, dependent on a failing coal-fired power grid operated by Eskom, the situation is economically unsustainable. Moving to a modern grid powered by abundant, lower-cost renewable energy is the best way to end severe electricity shortages and attract international green investment.
The “just” framework is essential for South Africa, which struggles with the world’s highest unemployment rate and the effects of apartheid.
A poorly managed shift could devastate communities in the coal-dependent Mpumalanga province, worsening poverty and social unrest. By directing investments toward local manufacturing, worker retraining and economic diversity in the vulnerable areas, South Africa aims to ensure that the green economy fosters true socioeconomic inclusion instead of further marginalisation.
In mid-May 2026, during the department’s budget vote, Electricity and Energy Minister Dr Kgosientsho Ramokgopa reiterated South Africa’s commitment to a Just Energy Transition. He stressed that the country’s transition must be based on practical realities, not rigid policies.
To protect vulnerable communities during the shift, the department is reviewing the Energy Pricing Policy and the Free Basic Electricity policy. The effort aims to make the system affordable for low-income households while ensuring that large power users keep competitive tariffs. The political dynamics of South Africa’s Just Energy Transition highlight a conflict between global climate finance, corporate interests and local economic stability but the funding structure is predominantly debt-driven. Taxpayers and state finances are absorbing foreign currency debt to solve an international emissions problem.
The shift from a centralised, state-owned monopoly (Eskom) to a deregulated, multibuyer market has created clear corporate winners while raising concerns about green capture. Large consortiums are the primary beneficiaries of independent power producer contracts.
Financial institutions, legal advisors and international consultants earn substantial fees for structuring complex financing deals for utility-scale wind and solar projects. For towns that depend on coal, the repercussions are transforming from potential risks into real municipal crises.
Municipalities in coal regions, such as Steve Tshwete and Emalahleni local municipalities, are losing money. Historically, the municipalities depended on selling electricity to coal mines and industrial clients.
The macroeconomic transition changes how tax revenue flows into the national treasury, creating a structural challenge for public finances. The state has had to absorb R254 billion of Eskom’s debt.
As the utility shuts down older coal plants earlier than planned, the state is effectively discarding multibillion-rand assets before they have paid off.
The coal mining sector contributes significantly to corporate taxes and is a crucial source of freight rail revenue for state-owned Transnet. Moving rapidly away from coal could create a serious revenue shortfall.
In the vulnerable coal belt, protecting communities should shift to a coordinated, state-supported regional restructuring plan. As outlined in the Sector Jobs Resilience Plans, the transition aims to be sequenced carefully to ensure no coal facility closes before alternative economic anchors, retraining programmes and renewable energy projects are operational.
This requires creating a dedicated, regional development authority with the power to directly allocate international Just Energy Transition Partnership funds to Mpumalanga municipalities. The funding should help rebuild outdated electricity distribution networks, support local worker transitions and establish municipal-level green cooperatives. By empowering workers and municipalities to actively participate in the economy, South Africa can turn the transition into a true force for redistributive socioeconomic inclusion.
- Cengani is a Master’s graduate from Nelson Mandela University in Political Studies. He writes in his personal capacity.
- Countries are pursuing a Just Energy Transition to combat climate change while ensuring social fairness, particularly supporting workers and communities affected by the shift from fossil fuels.
- South Africa’s reliance on a carbon-intensive coal power grid is economically unsustainable, necessitating a transition to renewable energy to address electricity shortages and attract green investment.
- The transition must carefully manage socioeconomic impacts in coal-dependent regions like Mpumalanga, emphasizing investment in local manufacturing, retraining, and economic diversification to avoid worsening poverty and social unrest.
- South Africa faces financial challenges from Eskom’s debt, lost revenues in coal regions, and the risk of stranded assets, highlighting the need for coordinated regional development and dedicated funding structures.
- Effective transition requires a regional development authority to allocate Just Energy Transition Partnership funds, rebuild infrastructure, support worker transitions, and foster municipal green cooperatives for inclusive economic growth.
