South Africa stands at a critical juncture in its fight against climate change. The nation must balance the urgent need for climate action with the socio-economic well-being of its workers. A worker-centric climate response is essential to ensure that the transition to a green economy is both equitable and sustainable. This approach prioritizes state-led financing, equitable funding mechanisms, and a robust climate response fund to address the dual challenges of climate change and socio-economic inequality.
The Case for State-Led Climate Financing
Market failures have long hindered effective climate action. Private companies often fail to account for externalities, lack the incentive to invest in green industries, and may prioritize short-term gains over long-term sustainability. To address these gaps, South Africa must adopt a more worker-centric climate response that emphasizes state-led financing. This includes the creation of a climate response fund, supported by earmarked revenues from carbon taxes, fuel levies, and mineral royalties.
Key Recommendations for a Just Transition
- Government-Issued Climate Bonds: To finance renewable energy infrastructure, South Africa should issue climate bonds. This would provide a predictable and credible funding mechanism for green energy projects, ensuring long-term sustainability.
- Carbon Tax Pathway: A progressive carbon tax, aligned with Paris Agreement targets, could generate significant revenue. Half of this revenue should be allocated to green industrial policies, while the other half supports the climate response fund.
- General Fuel Levy Allocation: With an estimated revenue of R93 billion in 2023/24, 30% of the General Fuel Levy should be directed toward the climate response fund, ensuring a steady stream of funding for climate priorities.
- Mineral and Petroleum Royalties: All revenues from mineral and petroleum royalties, estimated at R15 billion annually, should be earmarked for the climate response fund, compensating for the loss of non-renewable resources.
Addressing Equity and Adaptation
A worker-centric climate response must prioritize equity and adaptation. The climate response fund would support vulnerable workers in regions like Mpumalanga, where coal-dependent economies face significant disruption. Additionally, the fund would address inequities in climate impacts, ensuring that poorer households are not disproportionately affected by the transition.
The Role of Fiscal Reforms
Fiscal reforms, including restructuring government departments and reducing regressive retirement deductions, could generate significant savings. These savings should be allocated to climate priorities, further bolstering the climate response fund. For example, capping retirement contributions could yield R20 billion annually, which could be redirected to support climate action.
Conclusion: A Strategic Lead in Climate Action
South Africa’s worker-centric climate response demonstrates a commitment to equitable and sustainable climate action. By mobilizing domestic resources, issuing climate bonds, and creating a dedicated climate response fund, the nation can take a strategic lead in addressing climate change. This approach not only protects workers and vulnerable communities but also positions South Africa as a global leader in the just transition to a green economy.
With an estimated R100 billion annually allocated to climate priorities, South Africa is poised to make significant strides in mitigating climate risks and seizing the opportunities presented by a green economy. This worker-centric climate response ensures that no one is left behind in the transition to a sustainable future.
Amaarah is a Junior Programme Officer in the Rethinking Economics for Africa project. She is currently studying towards her Masters in Applied Development Economics at Wits University. 
Dr James Musonda is the Senior Researcher on the Just Energy Transition at the IEJ. He is also the Principal Investigator for the Just Energy Transition: Localisation, Decent Work, SMMEs, and Sustainable Livelihoods project, covering South Africa, Ghana, and Kenya.
Dr Basani Baloyi is a Co-Programme Director at the IEJ. She is a feminist, development economist and activist. She gained her research experience while working on industrial policy issues in academia, at the Centre For Competition, Regulation and Economic Development (CCRED) and Corporate Strategy and Industrial Development (CSID) Unit.
Dr Andrew Bennie is Senior Researcher in Climate Policy and Food Systems at the IEJ. He has extensive background in academic and civil society research, organising, and activism. Andrew has an MA in Development and Environmental Sociology, and a PhD in Sociology on food politics, the agrarian question, and collective action in South Africa, both from the University of the Witwatersrand.
Juhi holds a Bachelor of Arts degree in International Relations and Sociology from Wits University and an Honours degree in Development Studies from the University of Cape Town. Her current research focus is on social care regimes in the South African context, with a particular focus on state responses to Early Childhood Development and Long-Term Care for older persons during the COVID-19 pandemic. Her other research areas include feminist economics, worlds of work and the care economy.
Bandile Ngidi is the Programme Officer for Rethinking Economics for Africa. Bandile has previously worked at the National Minimum Wage Research Initiative and Oxfam South Africa. He holds a Masters in Development Theory and Policy from Wits University. He joined the IEJ in August 2018. Bandile is currently working on incubating the Rethinking Economics for Africa movement (working with students, academics and broader civil society). 
Liso Mdutyana has a BCom in Philosophy and Economics, an Honours in Applied Development Economics, and a Masters in Applied Development Economics from Wits University. His areas of interest include political economy, labour markets, technology and work, and industrial policy. Through his work Liso aims to show the possibility and necessity of economic development that prioritises human wellbeing for everyone.
Joan Stott holds a Bachelor of Business Science in Economics and a Master’s in Economics from Rhodes University. She brings to the IEJ a wealth of experience in public finance management, policy development, institutional capacity-building, and advancing socioeconomic and fiscal justice.
Siyanda Baduza is a Junior Basic Income Researcher at IEJ. He holds a BSc in Economics and Mathematics, an Honours degree in Applied Development Economics, and is currently completing a Master’s degree in Applied Development Economics at the University of the Witwatersrand. Siyanda’s research focuses on the impacts of social grants on wellbeing, with a particular focus on the gendered dynamics of this impact. His interests include applied micro-economics, policy impact evaluation, labour markets, gender economics, and political economy. He is passionate about translating economic research into impactful policy.
Shikwane is a Junior Programme Officer at IEJ focusing on civil society support and global governance in the G20. He has a background in legal compliance, IT contracting and student activism. He holds degrees in Political Studies and International Relations, as well as an LLB, from the University of the Witwatersrand.
Dr Tsega is a Senior Researcher focusing on Women’s Economic Empowerment within the G20. She examines gender equity in economic policy, with expertise in food systems and small enterprise development. She holds a PhD in development studies from the University of the Western Cape, an MA in Development Economics, and degrees in Development Studies and Economics from UNISA and Addis Ababa University.
Nerissa is a G20 Junior Researcher at IEJ, focusing on advancing civil society priorities within the G20 framework. She bridges data, research, and policy to advance inclusive economic frameworks. She is completing a Master’s in Data Science (e-Science) at the University of the Witwatersrand, and holds Honours and Bachelor’s Degrees in International Relations with distinction. She has worked as a Research Fellow at SAIIA and a Visiting Research Fellow at Ipea in Brazil.
Dr Mzwanele is a Senior Researcher supporting South Africa’s G20 Sherpa with policy research. He holds a PhD in Economics from the University of Birmingham and an MSc from the University of the Witwatersrand. His work covers open macroeconomics, trade, finance, and higher education policy, and he has published widely on inequality, unemployment, household debt and higher education curriculum reform.
Kamal is the Project Lead for IEJ’s G20 work, focusing on sovereign debt and development finance. He holds a BComm (Hons) in Applied Development Economics from the University of the Witwatersrand and an Erasmus Mundus Joint Masters in Economic Policies for the Global Transition. He has worked with SCIS, UNCTAD and co-founded Rethinking Economics for Africa.