Beyond weak derisking examines how South Africa can finance an energy transition that addresses poverty, inequality, and unemployment while responding to the climate crisis. Written by Joan Stott, this case study assesses the country’s current approach and proposes a publicly financed, worker-centred alternative.
The paper explores South Africa’s Just Energy Transition Partnership (JETP) and Just Energy Transition Investment Plan (JET-IP) within the country’s wider economic policy framework. It traces how the historical dominance of mining, energy, and finance, alongside policies favouring private investment, has constrained economic diversification and reinforced persistent social and economic inequalities.
The limits of private sector-led transition finance
The report records R243.5 billion in pledged international JETP funding against an estimated investment requirement of R1.5 trillion under the JET-IP. Beyond this substantial financing gap, it questions the heavy reliance on loans and private sector participation, with limited grants and public investment.
It describes this approach as “weak derisking”: using public resources, guarantees, and policy measures to reduce risks for private investors without securing the structural changes needed for a just transition. The paper warns that this model risks placing transition infrastructure in private hands while leaving the state exposed to financial liabilities and households facing high user fees.
These arrangements could reinforce existing inequalities and increase public debt, while failing to deliver sufficient benefits for workers and communities. The central question is therefore how transition finance can support public priorities, democratic control, and lasting economic transformation.
A publicly financed, worker-centred alternative
Drawing on proposals from the Institute for Economic Justice (IEJ) and the Congress of South African Trade Unions (COSATU), the paper identifies three areas for reform:
- Expand public financing and ownership. Establish a Climate Response Fund to support transition infrastructure and public investment. Potential funding sources include carbon taxes, fuel levies, mineral and petroleum resource royalties, and progressive tax reforms.
- Align monetary policy with development and climate goals. Broaden its mandate to support inclusive growth, employment, and climate resilience. Coordinate monetary policy with fiscal and industrial policy, and use financial regulation to redirect investment towards cleaner industries while protecting workers.
- Reform development finance institutions. Strengthen public capitalisation, transparency, and stakeholder representation, enabling these institutions to prioritise long-term social and environmental benefits over commercial returns.
Together, these proposals outline a shift towards a “big green state” that actively directs investment and supports a more inclusive economy. The paper argues that public financing, policy coordination, and democratic oversight are essential to ensuring that decarbonisation advances social justice.
The report’s accompanying South African data set is available to download.
The South African report forms part of REDCAJU’s wider research into energy finance and development. Explore the full collection of country case studies to read the research on Ghana, Nigeria, Senegal, and South Africa.
Explore all country case studies
About the project
Reviving Developmentalism for Climate and Social Justice (REDCAJU) examines how public subsidies, guarantees, and regulations are used to attract private investment, and who benefits from these arrangements. Through research, comparative country case studies, and a derisking monitoring tool, the project develops alternative approaches to financing green industrial development and a socially just transition.