CHAPTERCHAPTERJUSTJUSTTRANSITIONANDCLIMATEPATHWAYSSTUDYFORSOUTHAFRICADECARBONISINGTHEAGRICULTURE,FORESTRYANDLANDUSESECTORINSOUTHAFRICAINPARTNERSHIPWITHACKNOWLEDGEMENTSRESEARCHSUPPORTEDBYSupportedby:oftheFederalRepublicofGermanyUKPACTSouthAfrica:UKPACThaspartneredwithSouthAfricatosupportactiononJustTransitionpathwaysandalow-carboneconomicrecovery.AsthethirdlargesteconomyinAfrica,SouthAfricaplaysacriticalroleineconomicandpolicyprioritysettingatacontinentallevelandacrosstheSouthernAfricaregion.SouthAfrica’slong-standingparticipationintheUnitedNationsFrameworkConventiononClimateChange(UNFCCC)processescreatesasolidplatformforanimpactfulandtransformationalUKPACTpartnership.Moreover,UKPACTseekstosupportclimateactionthatwillcontributetotherealisationofotherdevelopmentimperativesinSouthAfrica,suchasjobcreationandpovertyalleviation.PriorityareasoffocusforUKPACTinSouthAfricaarealignedwithkeynationalprioritiesinthejustenergytransition,renewableenergy,energyefficiency,sustainabletransport,andsustainablefinance.UKPACTprojectscancontributetoaddressingindustry-wideconstraints,commonmetropolitanchallenges,andbringingcity,provincialandnationallevelpublicandprivatepartnerstogethertoaddressclimatepriorities.WeMeanBusiness:Thisisaglobalcoalitionofnonprofitorganisationsworkingwiththeworld’smostinfluentialbusinessestotakeactiononclimatechange.Thecoalitionbringstogethersevenorganisations:BSR,CDP,Ceres,TheBTeam,TheClimateGroup,ThePrinceofWales’sCorporateLeadersGroupandtheWorldBusinessCouncilforSustainableDevelopment.Togetherwecatalyzebusinessactiontodrivepolicyambitionandacceleratethetransitiontoazero-carboneconomy.NBIhasbeenaregionalnetworkpartnertoWMBsincethebeginningof2015.StrategicPartnershipsfortheImplementationoftheParisAgreement(SPIPA):Climatechangeisaglobalthreatthatrequiresadecisiveandconfidentresponsefromallcommunities,particularlyfrommajoreconomiesthatrepresentroughly80%ofglobalgreenhousegasemissions.The2015ParisAgreementcomplementedbythe2018Katowiceclimatepackage,providestheessentialframeworkgoverningglobalactiontodealwithclimatechangeandsteeringtheworldwidetransitiontowardsclimate-neutralityandclimate-resilience.Inthiscontext,policypractitionersarekeentousevariousplatformstolearnfromoneanotherandacceleratethedisseminationofgoodpractices.Toimproveageopoliticallandscapethathasbecomemoreturbulent,theEUsetoutin2017toredoubleitsclimatediplomacyeffortsandpolicycollaborationswithmajoremittersoutsideEuropeinordertopromotetheimplementationoftheParisAgreement.ThisresultedintheestablishmentoftheSPIPAprogrammeinordertomobiliseEuropeanknow-howtosupportpeer-to-peerlearning.TheprogrammebuildsuponandcomplementsclimatepolicydialoguesandcooperationwithmajorEUeconomies.ThispublicationwasproducedwiththefinancialsupportoftheEuropeanUnion’sPartnershipInstrumentandtheGermanFederalMinistryfortheEnvironment,NatureConservation,andNuclearSafety(BMU)inthecontextoftheInternationalClimateInitiative(IKI).ThecontentsofthispublicationarethesoleresponsibilityofNationalBusinessInitiative(NBI)anddonotnecessarilyreflecttheviewsofthefunders.TheAfricanClimateFoundation:TheACFisthefirstAfrican-ledstrategicclimatechangegrant-makingfoundationonthecontinent.BuildingonthesuccessofpartnerorganisationsliketheEuropeanClimateFoundationandClimateWorksFoundation,theACFwasestablishedtoprovideamechanismthroughwhichphilanthropiescancontributetoAfrica’seffortstoaddressclimatechange.AsanAfrican-ledandAfrican-basedfoundation,wearecommittedtosupportingAfricansolutionstotheclimatechangechallengesfacingthecontinent.2JUSTTRANSITIONANDCLIMATEPATHWAYSSTUDYFORSOUTHAFRICAPARTNERSNationalBusinessInitiativeAttheNationalBusinessInitiative(NBI),webelieveincollectiveactionandcollaborationtoeffectchange;buildingaSouthAfricansocietyandeconomythatisinclusive,resilient,sustainableandbasedontrust.Weareanindependent,businessmovementofaround80ofSouthAfrica’slargestcompaniesandinstitutionscommittedtothevisionofathrivingcountryandsociety.TheNBIworkswithourmemberstoenhancetheircapacityforchange,leveragethepowerofourcollective,buildtrustintheroleofbusinessinsociety,enableactionbybusinesstotransformsocietyandcreateinvestmentopportunities.BusinessUnitySouthAfricaBUSA,formedinOctober2003,isthefirstrepresentativeandunifiedorganisationforbusinessinSouthAfrica.Throughitsextensivemembershipbase,BUSArepresentstheprivatesector,beingthelargestfederationofbusinessorganisationsintermsofGDPandemploymentcontribution.BUSA’sworkislargelyfocusedaroundinfluencingpolicyandlegislativedevelopmentforanenablingenvironmentforinclusivegrowthandemployment.BostonConsultingGroupBCGpartnerswithleadersinbusinessandsocietytotackletheirmostimportantchallengesandcapturetheirgreatestopportunities.BCG,thepioneerinbusinessstrategywhenitwasfoundedin1963,todayworkscloselywithclientstoembraceatransformationalapproachaimedatbenefittingallstakeholders—empoweringorganisationstogrow,buildsustainablecompetitiveadvantage,anddrivepositivesocietalimpact.Theirdiverseglobalteamsarepassionateaboutunlockingpotentialandmakingchangehappen,anddeliveringintegratedsolutions.CHAPTER5:DECARBONISINGTHEAGRICULTURE,FORESTRYANDLANDUSESECTORINSOUTHAFRICA3AFOLUAFOLUAgriculture,ForestryandOtherLandUseBaseloadPermanentminimumloadapowersupplysystemisrequiredtodeliverBAUbusiness-as-usualBEVBatteryelectricvehicleBFAPBureauforFoodandAgriculturePolicybnBillionC&IConstruction&InstallationCAIAChemicals&AlliedIndustries‘AssociationCAPEXCapitalexpenditureCCGTCombinedCycleGasTurbineCCUCarbonCaptureandUtilisationCCUSCarbonCaptureUtilisation&StorageCDPAdisclosureplatformforcompaniesandcitiestoreportontheircarbonemissions,waterusage,forestmanagementandclimate-relatedfinancialdisclosuresCGEComputableGeneralEquilibrium(usedinsocio-economicmodelling)COP26UnitedNationsConferenceofthePartiesCO2eCarbondioxideequivalentCPIConsumerPriceIndexCSIRCouncilforScientificandIndustrialResearchCTLCoal-to-LiquidDACCSDirectAirCarbonCaptureandStorageDFFEDepartmentofForestry,FisheriesandtheEnvironmentDGDistributedGenerationisanapproachthatemployssmall-scaletechnologiestoproduceelectricityclosetotheendusersofpowerDMREDepartmentofMineralResources&EnergyEGEmbeddedGenerationiselectricitygenerationwhichisconnectedtothedistributionnetworkratherthantothehighvoltageNationalGridEPRIElectronicPowerResearchInstituteEUEuropeanUnionEVElectricvehicleEWSEarlyWarningSystemFAOFoodandAgricultureOrganisationoftheUNOECDOrganisationforEconomicCo-operationandDevelopmentOPEXOperatingexpenditureP2XPower-to-XPeak-loadMaximumofelectricaldemandpowerPGMPlatinumGroupMetalsPMParticularMatterPublic-PrivatePartnershipPSPPumped-storageplantVPhotovoltaicsolarenergyQESQuarterlyEmploymentSurveyQLFSQuarterlyLabourForceSurveyRCPRepresentativeConcentrationPathwaysERenewableEnergyREIPPPPRenewableEnergyIndependentPowerProducerProcurementProgrammeSASouthAfricaSAMSocialAccountingMatrixSAREMSouthAfricanRenewableEnergyMasterplanScope1emissionsAlldirectemissionsfromactivitiesofanorganisationundertheircontrol,includingprocessemissions,fuelcombustiononsite,suchasgasboilers,fleetvehiclesandair-conditioningleaksScope2emissionsIndirectemissionsfromelectricityandsteampurchasedandusedbytheorganisation.EmissionsarecreatedduringtheproductionoftheelectricityandsteamthatisusedbytheorganisationSMRSmallModularReactorsSSASub-SaharanAfricaSSPSectorSkillsPlanSynfuelsSyntheticFuelTCFDTask-ForceonClimate-RelatedFinancialDisclosuresTHITemperatureHumidityIndexTWhTerawatt-hourUCTUniversityofCapeTownUNUnitedNationsUNFCCCUnitedNationsFrameworkConventiononClimateChangeWACCWeightedAverageCostofCapitalWS#Workshop(#)TERMINOLOGIESFCEVFuelcellelectricvehicleFeedstockRawmaterialtosupplyorfuelamachineorindustrialprocessFSCForestryStewardshipCouncilGDPGrossDomesticProductGHGIGreenhouseGasInventoryGreenhydrogenHydrogenproducedfromrenewableenergysourcesGJGigajouleGtGigatonne(1thousandmilliontonnes)GTPGas-to-PowerGWGigawattIAMIntegratedAssessmentModellingI-OInputOutputmodel(usedinsocio-economicmodelling)IDDRIInstituteforSustainableDevelopmentandInternationalRelationsIEAInternationalEnergyAgencyIGUAIndustrialGasUsersAssociationofSouthernAfricaIRENAInternationalRenewableEnergyAgencyIPCCIntergovernmentalPanelonClimateChangeIndependentPowerProducerRPIntegratedResourcePlankcalkilocalorieskgKilogramLCOELevelisedcostofenergyLCOHLevelisedcostofHMATMeanAverageTemperatureMhaMillionhectaresMQAMiningQualificationsAuthorityMtMegatonne(1milliontonnes)MtpaMegatonnesperannumNAMCNationalAgriculturalMarketingCouncilNDCNationallyDeterminedContributionNDPNationalDevelopmentPlanNGNaturalGasNGONon-governmentalorganisationNedlacNationalEconomicDevelopmentandLabourCouncilNPVNetPresentValuen/aNotapplicableO&MOperation&MaintenanceOCGTOpenCycleGasTurbineOEOxfordEconomics4JUSTTRANSITIONANDCLIMATEPATHWAYSSTUDYFORSOUTHAFRICAJUSTJUSTTRANSITIONANDCLIMATEPATHWAYSSTUDYFORSOUTHAFRICASERIESINCLUDES: 01DecarbonisingSouthAfrica’spowersystem02DecarbonisingtheSouthAfricanpetrochemicalsandchemicalssector 03TheroleofgasinSouthAfrica’s decarbonisationjourney04DecarbonisingtheSouthAfricanminingsector05DecarbonisingtheAgriculture,ForestryandOtherLandUsesectorinSouthAfrica06DecarbonisingtheSouthAfricantransportsector07SouthAfrica’sgreenhydrogenopportunity08ChallengesandopportunitiesforaJustTransition CONTENTSAcknowledgements2Terminologies4OverviewofCEOChampions61.FOREWORD82.INTRODUCTION102.1Thepurposeofthisreport102.2Thecaseforchange102.3Objectiveandapproach143.KEYFINDINGSOFTHEAGRICULTURE,FORESTRYANDOTHERLANDUSE(AFOLU)SECTORANALYSIS183.1ScopeandapproachoftheAFOLUsectoranalysis203.2Towardsaclimate-resilientAFOLUsectorinSouthAfrica213.3Howtodevelopaclimate-resilientAFOLUsectorinSouthAfrica634.OUTLOOK66CHAPTER5:DECARBONISINGTHEAGRICULTURE,FORESTRYANDLANDUSESECTORINSOUTHAFRICA5JoanneYawitchNBICEOMxolisiMgojoExxaroCEOJoanneYawitchNBICEOMxolisiMgojoExxaroCEOOVERVIEWOFCEOCHAMPIONSCEOsongoingOnboardingofCEOsongoingAndrédeAndrédeRuyterEskomCEOSasolCEOAlanPullingerFirstAlanPullingerFirstRandCEOAngloAmericanSAChairpersonLungisaFuzileStandardLungisaFuzileStandardBankSouthAfricaCEOAgBizCEOHloniphizweMtoloShellSACEOPaulHanrattySanlamCEOCasCoovadiaBUSACEOLeilaFourieJSEGroupCEOPortiaDerbyTransnetCEODeidréPenfoldCAIAExecDirector6JUSTTRANSITIONANDCLIMATEPATHWAYSSTUDYFORSOUTHAFRICAVivienMcMenaminMondiSACEOGavinHudsonTongaatHulettCEOAlexThielSAPPICEOStuartMckensieEthosCEOTaeloMojapeloBPSouthernAfricaCEOVikeshRamsunderClicksGroupCEOMohammedAkoojeeCEOImperialLogisticsMarelisevanderWesthuizenNortonRoseFulbrightCEORolandvanWijnenPPCAfricaCEONyimpiniMabundaGESACEOYusaHassanEngenMDandCEOIshmaelPooloCentralEnergyFundCEONjomboNjomboLekulaPPCMDSACementandMaterialsMarkDytorAECICEOTshokoloTPNchochoIDCCEOCHAPTER5:DECARBONISINGTHEAGRICULTURE,FORESTRYANDLANDUSESECTORINSOUTHAFRICA7FOREWORDJUSTTRANSITIONANDCLIMATEPATHWAYSSTUDYFORSOUTHAFRICASouthAfricaisasignatorytotheUnitedNationsFrameworkConventiononClimateChange(UNFCCC)andtotheParisAgreement.Asanenergyandemissionsintensivemiddle-incomedevelopingcountry,itrecognisestheneedforittocontributeitsfairsharetotheglobalefforttomovetowardsnet-zerocarbonemissionsby2050,takingintoaccounttheprincipleofcommonbutdifferentiatedresponsibilitiesandtheneedforrecognitionofitscapabilitiesandnationalcircumstances.SouthAfricaishighlyvulnerabletotheimpactsofclimatechangeandwillneedsignificantinternationalsupporttotransitionitseconomyandtodecarbonise.Furthermore,giventhecountry’shighrateofinequality,povertyandunemploymentandtheextentofdependenceonafossilfuel-basedenergysystemandeconomy,thistransitionmusttakeplaceinawaythatisjust,thatleavesno-onebehindandthatsetsthecountryontoanew,moreequitableandsustainabledevelopmentpath;onewhichbuildsnewlocalindustriesandvaluechains.Inresponsetotheaboveimperatives,theNationalBusinessInitiative,togetherwithBusinessUnitySouthAfricaandtheBostonConsultingGrouphasworkedwithcorporateleaderstoassesswhetherthepathwaysexistforthecountry’seconomicsectorstodecarboniseby2050,andwhetherthiscanbedoneinsuchawayastobuildresiliencetotheimpactsofclimatechangeandtoputthecountryontoanew,lowemissionsdevelopmentpath.Theworkdonebythebusinesscommunityhasinterrogatedtheenergy,liquidfuels,mining,chemicals,AFOLU(agriculture,forestryandotherlanduse),transportandheavyindustrialsectors.Theresultsofthemodellingandanalyticalworkhavebeeninformedbynumerousindustryexperts,academicsandscientists.Theresultsdemonstratethatthesepathwaysdoexistandthatevenacountrywithaneconomythatisstructurallyembeddedinanenergy-intensiveproductionsystemcanshift.Theresultsofthisworktodatehaveshownthatthiscanbedone,andthattorealisethesepathways,effortsmustbeginnow.Timingisoftheessenceandthebusinesscommunityisoftheviewthatthereisnotimelikethepresenttocreatetheregulatoryandpolicyenvironmentthatwouldsupporttransitioningtheeconomy.Accordingly,businesscancommitunequivocallytosupportingSouthAfrica’scommitmenttofindwaystotransitiontoanet-zeroemissionseconomyby2050.Furthermore,inNovember,SouthAfricawilltableitsrevisedNationallyDeterminedContribution(NDC)totheUNFCCC.Businessrecognisestheneedforgreaterambitiontopositionthecountryasanattractiveinvestmentdestinationandincreasethechancesofaccessinggreeneconomicstimulusandfundingpackages.Specifically,businesswouldsupportalevelofambitionthatwouldseethecountrycommittingtoarangeof420–350MtCO2eby2030.Thisissignificantly8JUSTTRANSITIONANDCLIMATEPATHWAYSSTUDYFORSOUTHAFRICAUpington,NorthernCape.Photo:/locations/south-africamoreambitiousthantheNDCputoutforpubliccommentandwouldrequiregreaterlevelsofsupportwithregardtomeansofimplementationfromtheinternationalcommunitythaniscurrentlythecase.ItisalsoconsistentwithinternationalassessmentsofSouthAfrica’sfairsharecontributiontotheglobaleffort,anditwouldalsoensurethattheno-regretdecisions,thatwouldputSouthAfricaontoanet-zero2050emissionstrajectory,wouldbeimplementedsooner.WhileSouthAfricahasleveragedadegreeofclimatefinancefromtheinternationalcommunity,thescaleanddepthofthetransitionenvisagedwillrequiresubstantialinvestmentsoveranextendedperiodoftime.Critically,socialcostsandJustTransitioncostsmustbefactoredin.Significantfinancial,technological,andcapacitysupportwillberequiredtosupportthedecarbonisationofhardtoabatesectors.Earlyinterventionsinthesesectorswillbecritical.Businessseesthesupportoftheinternationalcommunityasessentialforthecountrytoachieveitsclimateobjectives.Forthisreason,businessbelievesthatamoreambitiousNDC,andonethatwouldplacethecountryfirmlyonanet-zeroemissionsby2050trajectory,wouldhavetobeconditionalontheprovisionoftherequisitemeansofsupportbytheinternationalcommunity.Inthislightthebusinesscommunitywillplayitsparttodevelopaportfoliooffundableadaptationandmitigationprojectsthatwouldbuildresilienceandachievedeepdecarbonisation.Despitethedepthofthechallenge,SouthAfricanbusinessstandsreadytoplayitspartinthishistoricalendeavour.Businessiscommittedtoworkwithgovernmentandothersocialpartners,withouremployees,ourstakeholders,andtheinternationalcommunity,toembarkonadeepdecarbonisationpathtowardsnet-zeroandtobuildtheresiliencetotheimpactsofclimatechangethatwillensurethatourcountrycontributesitsfairsharetotheglobalclimateeffort.CHAPTER5:DECARBONISINGTHEAGRICULTURE,FORESTRYANDLANDUSESECTORINSOUTHAFRICA9INTRODUCTION2.1THEPURPOSEOFTHISREPORTThisreport,focusingonthedecarbonisationofSouthAfrica’sAgriculture,ForestryandLandUse(AFOLU)sector,isthefifthinaseriesbeingreleasedtoillustratethefindingsofthisproject.Thesereportsareintendedtoleveragefurtherengagementwithsectorexpertsandkeystakeholders,beyondtheextensivestakeholderengagementthathasbeenundertakenfromAugust2020toJune2021withintherespectivetechnicalworkinggroupsofthisproject.Wehopethiswillfostercontinueddialogueduringtheprojectasweworktowardsafinalreportthatwillcollatetheindividualsectorfindingsandprovidecollectiveinsight.2.2THECASEFORCHANGE2.2.1CLIMATECHANGEANDTHERACETOGLOBALNET-ZEROEMISSIONSBY2050Climatechangeisthedefiningchallengeofourtime.Anthropogenicclimatechangeposesanexistentialthreattohumanity.Toavoidcatastrophicclimatechangeandirreversible‘tippingpoints’,theIntergovernmentalPanelonClimateChange(IPCC)stressestheneedtostabiliseglobalwarmingat1.5oCabovepre-industriallevels.Fora66%chanceoflimitingwarmingby2100to1.5°C,thiswouldrequiretheworldtostaywithinatotalcarbonbudgetestimatedbytheIPCCtobebetween420to570gigatonnes(Gt)ofCO2,toreducenetanthropogenicemissionofCO2by~45%of2010levelsby2030,andtothenreachnet-zeroaround2050.1Hence,mitigatingtheworstimpactsofclimatechangerequiresallcountriestodecarbonisetheireconomies.Inthe2019WorldMeteorologicalOrganizationreport,‘StatementontheStateoftheGlobalClimate‘,theUnitedNations(UN)Secretary-Generalurged:“Timeisfastrunningoutforustoaverttheworstimpactsofclimatedisruptionandprotectoursocietiesfromtheinevitableimpactstocome.”SouthAfrica,inordertocontributeitsfairsharetotheglobaldecarbonisationdrive,bearinginmindtheprincipleof‘commonbutdifferentiatedresponsibilitiesandrespectivecapabilities’,shouldsimilarlysetatargetofreachingnet-zeroemissionsby2050,andalsokeepitestimatedtobebetween7and9GtCO2e.2Evenifglobalwarmingislimitedto1.5°C,theworldwillfacesignificantlyincreasedriskstonaturalandhumansystems.Forexample,2019wasalready1.1°Cwarmerthanpre-industrialtemperatures,andwithextremeweathereventsthathaveincreasedinfrequencyoverthe1IPCC.2018.SpecialReportonGlobalWarmingof1.5°C.2ExtrapolationofthemediansofvariousmethodologiesdescribedbyClimateActionTracker.Thefullrangeis4–11GtCOe.10JUSTTRANSITIONANDCLIMATEPATHWAYSSTUDYFORSOUTHAFRICAioGuterresionsSecretaryGeneralpastdecades,theconsequencesarealreadyapparent.3Moresevereandfrequentfloods,droughtsandtropicalstorms,dangerousheatwaves,runawayfires,andrisingsealevelsarealreadythreateninglivesandlivelihoodsacrosstheplanet.SouthAfricawillbeamongthecountriesatgreatestphysicalriskfromclimatechange.SouthAfricaisalreadyasemi-aridcountryandaglobalaveragetemperatureincreaseof1.5°Cabovepre-industriallevelstranslatestoanaverage3°CincreaseforSouthernAfrica,withthecentralinteriorandnorth-easternperipheryregionsofSouthAfricalikelytoexperiencesomeofthehighestincreases.4Researchshowsthataregionalaveragetemperatureincreaseofover1.5°CforSouthAfricatranslatestoagreatervariabilityinrainfallpatterns.Modelsshowthecentralandwesterninteriorsofthecountrytrendingtowardswarmeranddryerconditions,andtheeasterncoastalandescarpmentregionsofthecountryexperiencinggreatervariabilityinrainfallaswellasanincreasedriskofextremeweatherevents.RisingtemperaturesandincreasedaridityandrainfallvariabilitymayhavesevereconsequencesforSouthAfrica’sagriculturalsystems,particularlyonthecountry’sabilitytoirrigate,growandensurethequalityoffruitandgraincrops;andonthehealthoflivestock,suchassheepandcattle,whichwillseedecreasedproductivityanddeclininghealthattemperaturethresholds.Parasitestendtoflourishinwarmerconditions,threateningpeopleaswellaslivestockandcrops.IncreasingtemperaturesandrainfallvariabilitythreatenSouthAfrica’sstatusasamegabiodiversecountry.Severeclimatechangeandtemperatureincreasescouldshiftbiomedistribution,resultinginlanddegradationanderosion.Themostnotableriskistheimpactonthegrasslandbiome,essentialforthehealthofSouthAfrica’swatercatchments,combinedwiththeriskofprolongeddrought.3WorldMeteorologicalOrganization.2019.‘StatementontheStateoftheGlobalClimate’.4FormerDepartmentofEnvironmentalAffairs,RepublicofSouthAfrica.2018.SouthAfrica’sThirdNationalCommunicationUndertheUnitedNationsFrameworkConventiononClimateChange.CHAPTER5:DECARBONISINGTHEAGRICULTURE,FORESTRYANDLANDUSESECTORINSOUTHAFRICA11WORLDAFRICANCOUNTRIESEUROPEANUNIONCHINAUNITEDSTATESUNITEDKWORLDAFRICANCOUNTRIESEUROPEANUNIONCHINAUNITEDSTATESUNITEDKINGDOMJAPANINDIAREPUBLICOFKOREAUNITEDARABEMIRATESHONGKONGOTHERFinally,risingambienttemperaturesduetoclimatechangeandtheurbanheateffect,threatenthehealthofpeople,particularlythoselivingincrampedurbanconditionsandengaginginhardmanuallabour,ashighertemperaturesresultinincreasedriskofheatstressandareductioninproductivity.Therefore,limitingglobalclimatechangeandadaptingtoinevitablechangesinthelocalclimatewillbecriticaltolimitthedirect,physicalriskstoSouthAfrica.Likemanydevelopingcountries,SouthAfricahasthetaskofbalancingtheurgentneedforajusteconomictransitionandgrowth,whileensuringenvironmentalresourcesaresustainablyusedandconsumed,andrespondingtothelocalphysicalimpactsofclimatechange.5WhileSouthAfricaishighlyvulnerabletothephysicalimpactsofclimatechange,itseconomyisalsovulnerabletoarangeoftransitionrisksposedbytheglobaleconomictrendtowardalow-carbonfuture.SouthAfricaisalsofacingasignificanttraderisk.SouthAfricaranksinthetop20mostcarbon-intensiveglobaleconomiesonanemissionsperGrossDomesticProduct(GDP)basis,andinthetopfiveamongstcountrieswithGDPinexcessofUS$100billion(bn)perannum.TheSouthAfricaneconomywillfacemountingtradepressure,astradepartnersimplementtheirlow-carboncommitments.SouthAfricahaspredominantlycoal-basedpowergeneration,thecoal-to-liquid(CTL)processintheliquid