Mitigation costs and required investment in the energy transition

The OECD estimates suggest that cumulative mitigation costs of transitioning to a low-carbon energy economy by 2050 will amount to 11% of GDP for G20 emerging-market economies (in terms of the level
difference in GDP relative to business-as-usual). The costs for South Africa are estimated to be higher, at almost 15% of GDP, on account of our more energy-intensive industry structure and higher carbon intensity of energy production. The OECD estimates that substantial investment in electricity generation will be needed to shift away from fossil fuel-based primary energy sources to low-carbon sources. Investment in new low-carbon electrical capacity of almost 4% of GDP will be required to be maintained through 2050 in South Africa, compared to around 2.5% in G20 emerging-market economies. The OECD note that these costs would add to fiscal pressures if predominantly financed by the public sector.


The Baseline scenario assumes that trend real GDP growth for the OECD+ G20 area gradually declines from around 3% pre-COVID 19 to 1.7% by 2060.

Codera Blog Newsletter

Sign up to receive a weekly summary of our blog posts