Debating how fast South Africa should phase out coal-fired electricity generation
Adapted from a literature review assignment written by Marc Sherratt in the completion of a Master of Studies in Interdisciplinary Design for the Built Environment at the University of Cambridge, UK
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1. Introduction
This article aims to clarify at what rate South Africa could consider phasing out coal as its primary energy source for electricity generation. This article considers the two ends of the debate in terms of a fast or slow transition. In other words, should South Africa phase out coal use in electricity generation by 2050 (fast) or by 2060 (slow)?
Coal has been critically important to global industrial development for centuries. It remains important to this day – global coal demand reached record levels in 2022, with 36% of global electricity generation still based on coal (International Energy Agency, 2023, p. 13). As an energy source, however, it is the most polluting fossil fuel, both in terms of greenhouse gas (GHG) emissions and reduced air quality (Ritchie, 2020). This makes a coal phase-out a primary target to reduce climate change impacts and improve human health.?
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1.1. South Africa’s extreme coal dependency
South Africa’s dependency on coal is primarily due to its abundant coal reserves, which are calculated at an estimated 53 billion tons (Eskom, 2020). At current extraction rates, this reserve would be able to last another 200 years (Eskom, 2020). South Africa’s energy industry developed within an extractive colonial and oppressive apartheid historical context, which relied on cheap labour coupled with cheap coal to produce cheap electricity (Baker et al., 2015; Tyler & Hochstetler, 2021). South Africa’s mineral wealth has historically required energy-intensive extraction and processing. Approximately 40% of electricity is still used for industries centered around mineral extraction and beneficiation for export purposes (Baker et al., 2015). Electricity generation and mining were historically interlinked with powerful state and private actors that continue to dominate the industry today (Baker et al., 2015).
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1.2. South Africa’s current electricity crisis
Eskom, the state-owned national electricity provider, supplies 90% of South Africa’s electricity needs (Department of Energy, 2018). Eskom is in crisis, unable to meet current demand. Its aging fleet of coal-fired power stations have become increasingly unreliable, with the country plagued by power cuts. In 2023, power cuts resulted in a total of 72.6 days or 1?742 hours with no power, double the amount experienced in 2022 (Jordaan, 2023). Eskom has the largest debt in the South African financial system and a negative credit rating (Baker et al., 2015; Winkler et al., 2023). The current electricity crisis has led to the emergence of private generation through utility-scale renewables, with rooftop solar being rapidly installed across the country (Baker et al., 2015).
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1.3. Replacing coal is critical for decarbonisation
The latest data indicates that 82% of the country’s carbon emissions are produced by coal, with electricity production contributing just over half that total (Marquard et al., 2022). Ninety percent of South Africa’s electricity generation is based on coal and yet the country must reduce its use by 30% every decade to meet an IPCC 1.5 °C global warming target (Mirzania et al., 2023). Scholars agree decarbonisation in South Africa cannot be achieved without replacing coal with renewables in electricity generation (Baker et al., 2015; Marquard et al., 2022; Mirzania et al., 2023; Oyewo et al., 2019). The country holds one of the largest capacities for solar and wind power in Africa (Adenle, 2020). The literature, however, highlights a stubbornness to move away from coal from within current national policy (Baker et al., 2015; Mirzania et al., 2023; Oyewo et al., 2019; Winkler et al., 2023).
1.4. The contradiction of ambitious climate protection policy without a coal phase-out
Organisations such as Climate Action Tracker are encouraging South Africa to phase out coal by 2040, to meet a 1.5 °C “fair share” global warming target (Climate Action Tracker, 2022). In comparison, South Africa’s internal policies are vague on how fast the country should transition away from coal and are silent on a complete coal phase-out. Some of these policies include ambitious net zero carbon emission targets; for example, South Africa’s Nationally Determined Contribution (NDC), published in 2021, gives the goal of moving towards net zero carbon emissions by 2050 (Government of South Africa, 2021). However, the lack of a policy plan for a coal phase-out contradicts these ambitions and highlights factional rivalries within the South African political system (Baker et al., 2015). The 2023 Integrated Resource Plan (Department of Energy, 2024), released for public comment in January 2024, reveals the government’s most recent policy direction. It does not provide any clarification on a coal phase-out. This plan is discussed in detail in Chapter 2.1 – A slow coal phase-out scenario for South Africa.
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1.5. Methodology and aim
South Africa’s current slow pace of transition will be compared with the United Kingdom’s fast move away from coal. This article will conclude with a suggested pace of change for South Africa. The United Kingdom (UK) was chosen for comparison due to its population being of similar size to South Africa’s. In addition, South Africa was previously colonised by Great Britain, which had a significant economic, political and technological influence on the country’s original energy infrastructure.
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The aim of this article is to use academic literature to understand what a realistic pace could be for South Africa to phase out coal, including what would need to be in place to achieve such a pace. Though the focus of this essay is on pace, the implementational consequences of how a transition may affect aspects such as the built environment, energy security, decarbonisation, social justice and affordability will be briefly commented on.
2. Fast or slow
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2.1. A slow coal phase-out scenario for South Africa
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Government’s current policy direction ?
The recently released Integrated Resource Plan (IRP) of 2023 reveals the South African government’s current policy direction for transitional electricity generation. Graph 1 shows that the proposed IRP energy mix by 2030 stabilises energy supply with a combination of new natural gas (13%) and renewable generation (35%), coal sits at 46% of the mix (Department of Energy, 2024).
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The lowest cost scenario in the IRP’s five scenarios modelled for the 2031–2050 timeline is shown in Graph 2, with coal decreasing to 21% of the energy mix while natural gas and renewables increases to 23% and 47% respectively (Department of Energy, 2024). The scenario in the IRP with the lowest carbon emissions that also ensures supply security is a renewables and coal scenario, which includes building new coal-fired power plants after 2030 (Department of Energy, 2024). However, this energy system would still be producing approximately 50 Mt carbon dioxide equivalent (CO2e) by 2050 (Department of Energy, 2024), which is incompatible with the country’s current NDC goal of net zero carbon by 2050. The IRP states that renewable energy only transitional pathways (including nuclear) do not provide security of supply and are the most expensive generation options (Department of Energy, 2024). The IRP therefore supports a slow coal phase-out, where security of supply and energy affordability appear the most important priorities.? ?
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?2.2. A fast coal phase-out scenario for South Africa
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A cost-driven transition scenario
The 2023 IRP is contrasted with work done by academics, who have argued that the overall aim of the electricity generation transition must be achieving net zero carbon by 2050, balanced with a just transition (Marquard et al., 2022; Mirzania et al., 2023; Oyewo et al., 2019). Scholars have contradicted the 2023 IRP, stating that new coal is not cost competitive with other generation technologies, and therefore current capacity should be retired at end of life (Marquard et al., 2022; Oyewo et al., 2019).
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Graph 3 shows the lowest cost transition scenario modelled by Marquard et al. (2022), which matched projected demand for 2050. This can be compared with the IRP 2023’s lowest cost scenario shown in Graph 2. The graphs show similar shares of renewable energy generation, with natural gas forming a significant percentage of what replaces coal. This highlights the problem of an unconstrained market economy dictating the lowest cost technology in a transition. The potential addiction to affordable natural gas would lead to the country missing its target of net zero carbon by 2050. This illustrates the importance of national policy guiding the transition, to avoid a fossil fuel “lock-in” (Brauers et al., 2020).
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Not all literature agrees that including fossil fuels in the 2050 energy mix will be the cheapest scenario. Oyewo et al. (2019) argue that a 96% renewable energy mix by 2050 ensures energy security and is the most cost-effective energy mix. This is due to projected cost decreases of renewable energy technologies (Oyewo et al., 2019). This highlights the fact that financial assumptions in academic modelling need further investigation to improve accuracy and agreement.
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?A pathway to a fast phase-out of coal in South Africa
Marquard et al. (2022) modelled a transition based on a net zero carbon pathway achievement by 2050. Coal is phased out completely between 2040 and 2050 and the use of natural gas is deliberately constrained by a carbon budget, to no more than 10% of the energy mix, as shown in Graph 4. This scenario highlights a pathway to a fast coal phase-out that would put net zero carbon by 2050 within reach for South Africa. ?
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2.3. Lessons from the UK’s fast coal phase-out
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The UK will phase out coal by 2024 and it is the world’s first major industrialised country to do so for climate reasons (Isoaho & Markard, 2020; Walk & Stognief, 2022). Similar to South Africa’s projected 2030 energy mix (Department of Energy, 2024), coal made up 40% of the UK’s energy mix in 2012 but by 2020 this was 1.8% (Walk & Stognief, 2022). It was specifically after a 2015 coal phase-out announcement by government that coal experienced a sharp decline (Walk & Stognief, 2022).
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Literature attributes the beginning of rapid coal reduction in the UK with Margaret Thatcher’s conservative government that defeated unions during the 1984–5 miners strikes (Brauers et al., 2020; Walk & Stognief, 2022). This left the coal lobby weak to the UK’s privatisation of electricity in 1989, which allowed market forces to prioritise the more efficient, quicker to build and cheaper to run combined-cycle gas turbines (CCGT) over new coal power plants (Walk & Stognief, 2022).
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The UK’s coal phase-out was driven by cost efficiencies but also by policy. A carbon price floor, European Union air pollution regulation, an aging coal fleet and increasing renewable energy are credited to have accelerated the coal phase-out (Walk & Stognief, 2022). Public opinion on climate and health issues led to political consensus that developed ambitious climate protection policy (Brauers et al., 2020). This policy was based on the output of scientific-led committees such as the Committee on Climate Change (CCC), the advice of which politicians took seriously (Walk & Stognief, 2022). The potential for a phase-out of gas will be far more challenging for the UK, noting the employment dependencies within this industry (Bang et al., 2022).
3. Discussion
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3.1. Comparative differences between South Africa and the UK
?Abundant coal reserves
South Africa has significantly larger coal reserves than the UK; however, the country appears unable to process this coal competitively, with scholars arguing that the era of cheap coal is coming to an end (Baker et al., 2015). The ending of long-term coal contracts between Eskom and coal mines, substantial cost overruns on new coal power plants and international pressure to decarbonise place coal on the back foot in South Africa (Baker et al., 2015; Oyewo et al., 2019). Additionally, South Africa’s export-orientated economy without decarbonisation will likely lead to the country’s exports becoming increasingly uncompetitive in the global market (Baker et al., 2015).
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Rapid renewable energy growth
Coal is now being challenged by a rapid growth in utility-scale renewables, through private sector investment in programmes such as the internationally celebrated REI4P (Renewable Energy Independent Power Producers Procurement Programme) launched in 2011, which highlights solar photovoltaics (PV) and wind as cost-comparable with new build coal in South Africa (Baker et al., 2015).
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A just transition
Perhaps the most significant difference between the UK and South Africa is socio-economic inequality. South Africa’s historic colonial and apartheid legacy has resulted in significant poverty and inequality; therefore, any energy transition must incorporate issues of economic upliftment, which have been captured in terms of a “just transition” (Baker et al., 2015; Mirzania et al., 2023). This has been placed as a central component of the energy transition by the government in their Just Transition Framework published in June 2022 (Presidential Climate Commission, 2022). As coal is becoming increasingly uncompetitive, scholars argue that investment in renewables holds the richest job creation potential for the energy industry (Msimango et al., 2023; Oyewo et al., 2019). This investment must initially be targeted regionally, where job losses are at their most extreme (Mirzania et al., 2023; Winkler et al., 2023).
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Policy clarity and a liberalised electricity generation market
The UK’s example highlights that a fast coal phase-out requires policy clarity developed by politically strong, science-led committees. The economic context of the transition was a liberal, market-driven electricity generation industry. In contrast, insulated by international isolation during apartheid, Eskom survived the 1980–1990’s period of electricity market liberalisation which proved state-owned monopolies were no longer a suitable model to provide affordable electricity generation in industrialised countries (Msimango et al., 2023).
In South Africa, the electricity sector remains highly politicised, with disagreement over which technologies should be prioritised (Baker et al., 2015). This has limited greater investment in renewable energy (Baker et al., 2015). Additionally, climate institutions, renewable energy proponents, environmental NGOs and anti-coal lobby groups have failed to form a coherent opposition to challenge the status quo (Baker et al., 2015; Tyler & Hochstetler, 2021). In the UK, political pressure for change was created by mass protest and media campaigns focused on health and climate protection (Walk & Stognief, 2022). This large-scale civic movement appears to be weak in the South African public consciousness, as are the politically powerful, science-led committees that were the basis of policy development in the UK.
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3.2. A suggested pace of change for South Africa?
A fast transition would hold the greatest economic value for the country, in terms of increased employment and international export competitiveness. Clear policy and substantial investments must be implemented in the decade before 2035 to drive the possibility of achieving net zero carbon as a country by 2050 (Marquard et al., 2022). This transition should be guided by policy that places energy security, employment, and net zero carbon by 2050 at its core (Mirzania et al., 2023; Msimango et al., 2023). The primary driver of change in South Africa will likely be security of supply and cost competitiveness, not climate change protection policy (Baker et al., 2015). South Africa, therefore, like the UK, must continue to liberalise its electricity generation industry, increasing market participation and competition that will lead to the most cost-efficient technology being scaled (Msimango et al., 2023). Government will also have an important role to play in developing policy to control electricity price increases and a carbon budget that does not allow South Africa to become as dependent on natural gas as it has been on coal.
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Accelerating a coal phase-out in South Africa
Various instruments that would accelerate a coal phase-out are discussed in the literature. Scholars stress that government must prioritise research and policy that places renewable energy (RE) at the centre of the transition (Oyewo et al., 2019). Industrial investment should help establish RE products and services that are locally manufactured, based on coordinated research and development programmes (Oyewo et al., 2019). Policy lessons should be learnt from feed-in tariffs, incentive programmes and renewable energy laws that have been used in Europe, the USA and China to support the scaled implementation of utility and embedded renewable energy systems (Adenle, 2020).
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Reducing total energy demand using the built environment
The built environment is specifically mentioned in literature for its potential in significantly reducing demand through cost-effective, energy-efficient retrofits within buildings (Baker et al., 2015). This, coupled with the rapid installation of embedded renewable energy on buildings, like rooftop solar, will greatly aid the transition.
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Eskom’s debt and how to finance a fast transition
The greatest challenge to a fast transition is arguably how to finance it. Though electricity generation and even distribution can be provided through more liberal market participation, this will take time to structure and implement. Eskom will remain critical in transmission and must be capacitated with the necessary skills to manage the transition while also dealing with its debt. Winkler et al. (2023) propose a blended finance model as a solution, merging international concessionary and domestic commercial finance. This innovative “just transition transaction” fund is based on ambitious decarbonisation and transparent compliance principles that specifically fund an accelerated coal phase-out by not paying off Eskom’s legacy debt on existing coal power stations but rather their phasing out (Winkler et al., 2023).
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4. Conclusion
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The relevance of this literature review relates to arguably the most pressing challenge facing South Africa: its failing electricity system. When to phase out coal in electricity generation has been highlighted as the most important aspect of the country's decarbonisation plan, yet within government policy there is a lack of clarity regarding a timeline for a coal phase-out.?
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After considering South Africa’s future energy mix scenarios and reviewing the UK’s fast coal phase-out, the overarching aim for the electricity industry should be energy security, balanced with employment and net zero carbon by 2050. A coal phase-out by 2050 would hold the greatest economic value for the country in terms of increased employment and international export competitiveness. This transition would require accelerating a coal phase-out with policy that further liberalises generation, balanced with controlling electricity prices and carbon emissions.
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To help resolve the debate on the pace of coal phase-out, further research should be done on a profitable, alternative use of the country’s existing coal reserves and greater agreement of future cost variables relating to demand and renewable technology cost.
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?5. List of references
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Adenle, A. A. (2020). Assessment of solar energy technologies in Africa – opportunities and challenges in meeting the 2030 agenda and sustainable development goals. Energy Policy, 137, 111180. https://doi.org/10.1016/j.enpol.2019.111180
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Baker, L., Burton, J., Godinho, C., & Trollip, H. (2015). The political economy of decarbonisation: Exploring the dynamics of South Africa’s electricity sector. Energy Research Centre, University of Cape Town, Cape Town.
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Bang, G., Rosendahl, K. E., & B?hringer, C. (2022). Balancing cost and justice concerns in the energy transition: Comparing coal phase-out policies in Germany and the UK. Climate Policy, 22(8), 1000–1015. https://doi.org/10.1080/14693062.2022.2052788
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Brauers, H., Oei, P.-Y., & Walk, P. (2020). Comparing coal phase-out pathways: The United Kingdom’s and Germany’s diverging transitions. Environmental Innovation and Societal Transitions, 37, 238–253. https://doi.org/10.1016/j.eist.2020.09.001
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Climate Action Tracker. (2022). South Africa – Policies and actions - Energy supply. Climate Action Tracker. https://climateactiontracker.org/countries/south-africa/policies-action/. Accessed 12th April 2024.
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Department of Energy. (2018). South African State of Energy Report 2018. Department of Energy. https://www.energy.gov.za/files/media/explained/2018-south-african-energy-sector-report.pdf
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Department of Energy. (2024). Integrated Resource Plan 2023. Department of Energy.
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Eskom. (2020). Coal in South Africa – Fact Sheet. Eskom.
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Government of South Africa. (2021). South Africa – First Nationally Determined Contribution under the Paris Agreement, Updated September 2011. Government of South Africa. https://unfccc.int/sites/default/files/NDC/2022-06/South%20Africa%20updated%20first%20NDC%20September%202021.pdf
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International Energy Agency. (2023). Coal 2023 – Analysis and forecast to 2026. International Energy Agency. ?https://iea.blob.core.windows.net/assets/a72a7ffa-c5f2-4ed8-a2bf-eb035931d95c/Coal_2023.pdf
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Isoaho & Markard (2020). The politics of technology decline: Discursive struggles over coal phase-out in the UK. Review of Policy Research. 342 – 368.
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Jordaan, P. (2023). Load shedding and blackout warning for 2024. Businesstech. 2 January 2024. https://businesstech.co.za/news/energy/739825/load-shedding-and-blackout-warning-for-2024/. Accessed 7th March 2024.
Marquard, A., Ahjum, F., Bergh, C., von Blottnitz, H., Burton, J., Cohen, B., et al. (2022) Exploring net zero pathways for South Africa – An initial study. Energy Systems Research Group. University of Cape Town. South Africa
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Mirzania, P., Gordon, J. A., Balta-Ozkan, N., Sayan, R. C., & Marais, L. (2023). Barriers to powering past coal: Implications for a just energy transition in South Africa. Energy Research & Social Science, 101, 103122. https://doi.org/10.1016/j.erss.2023.103122
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Msimango, N., Orffer, C., & Inglesi-Lotz, R. (2023). South Africa’s energy policy: Prioritizing competition and climate change for decarbonisation. Energy Policy, 183, 113815. https://doi.org/10.1016/j.enpol.2023.113815
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Oyewo, A. S., Aghahosseini, A., Ram, M., Lohrmann, A., & Breyer, C. (2019). Pathway towards achieving 100% renewable electricity by 2050 for South Africa. Solar Energy, 191, 549–565. https://doi.org/10.1016/j.solener.2019.09.039
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Presidential Climate Commission. (2022). A Framework for a Just Transition in South Africa. Presidential Climate Commission. https://pccommissionflo.imgix.net/uploads/images/22_PAPER_Framework-for-a-Just-Transition_revised_242.pdf
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Ritchie, H. (2020, February 10). What are the safest and cleanest sources of energy?. Our World in Data. https://ourworldindata.org/safest-sources-of-energy. Accessed 23rd February 2024.
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Tyler, E., & Hochstetler, K. (2021). Institutionalising decarbonisation in South Africa: Navigating climate mitigation and socio-economic transformation. Environmental Politics, 30(sup1), 184–205. https://doi.org/10.1080/09644016.2021.1947635
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Walk, P., & Stognief, N. (2022). From coal phase-out to net zero: Driving factors of UK climate policy. Environmental Science & Policy, 138, 76–84. https://doi.org/10.1016/j.envsci.2022.09.019
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Winkler, H., Tyler, E., Keen, S., & Marquard, A. (2023). Just transition transaction in South Africa: An innovative way to finance accelerated phase out of coal and fund social justice. Journal of Sustainable Finance & Investment, 13(3), 1228–1251. https://doi.org/10.1080/20430795.2021.1972678
Director of Environmental Sustainability at University of Cape Town
8 个月Harro von Blottnitz you might be interested in reading Marc’s review, since your work is cited ??