South Africa Needs $151 Billion for Green Transition, McKinsey Says
South Africa Needs $151 Billion for Green Transition, McKinsey Says
Transitioning South Africa’s coal-dependent economy to green energy could cost 2.3 trillion rand ($151 billion) by 2050, McKinsey & Co. said, citing the expenditure as just one example of what the continent needs to do to help mitigate climate change.
Such a shift would see coal accounting for just 4% of the country’s energy generation, down from more than 80% currently, wind and solar providing two thirds and the rest coming mainly from hydrogen and storage, the consultancy said in a report on Friday. A net 65,000 jobs could be created.
While Africa, if agricultural emissions are included, accounts for about 10% of global greenhouse emissions, it is likely to be the hardest hit continent by climate change, McKinsey said. As many as 900 million Africans could be exposed to climate hazards by 2050 if the average global temperature rises by 2 degrees celsius, it said.
It also warned that global warming could potentially:
- Expose 640 million Africans to heat stress
- Place 175 at risk of regular drought
- Expose 130 million to flooding
- Put 20 million urban Africans at risk of getting enough water
Hotspots
“Exposure to climate hazards is not evenly distributed,” the consultancy said. There are “major hotspots of exposed populations in Sahelian West Africa, North Africa and East Africa,” it said.
As temperatures rise and some developed countries impose tariffs on goods that involve significant greenhouse gas emissions in their production, $20 billion of commodity exports from the continent are under threat as are 200,000 jobs, McKinsey said.
Still, if sufficient capital is invested in making the continent’s economies more climate friendly a $35 billion-per-annum hydrogen and carbon credit export industry could be developed by 2050 and 800,000 jobs could be created in green industries by 2030, it said.
The continent’s abundant sunlight and, in some areas, wind could make it a competitive producer of so-called green hydrogen, which is produced using renewable energy and electrolysis, with costs falling to as low as $1.10 per kilogram by 2040, McKinsey said.
Heavily forested countries such as the Democratic Republic of Congo and other nations across the Congo basin could earn significant amounts of money by protecting forests, which absorb fossil fuels, and get paid for it by selling carbon credits, it said.
Still, significant funds are needed. Currently Africa needs about $200 billion a year to fund climate adaptation and mitigation and it is only receiving $20 billion, McKinsey said.
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