Regional employment and economic growth effects of South Africa’s transition to low-carbon energy supply mix

Abstract

This paper examines the long-run regional economic effects within South Africa of changing the electricity-generation mix towards less coal. To do so, a regional Computable General Equilibrium (CGE) model of South Africa is employed for the analysis. The overall result stemmed from all scenarios suggest that the effect of a transition to an energy supply mix with smaller share of coal generation is sensitive to other economic and policy conditions, in particular the reaction of the global coal market and hence, South Africa’s coal exports. Under conditions in which surplus coal resulting from lower domestic demand cannot be readily exported, the economies of coal-producing regions in South Africa such as the Mpumalanga province are the most severely affected. The subsequent migration of semi-skilled labour from that province to others within the country require appropriate and timeous planning by energy policymakers and urban planners.