Document summary
Delivering climate security will require South Africa’s capital markets to make a strategic transition from a high-carbon to a low-carbon pathway. This report highlights the range of potential implications of a South African Carbon Budget for the stewardship of assets in the coal sector. An analysis of companies listed in South Africa indicates they have coal reserves equivalent to 38.9 GtCO2 emissions, half of which are located in South Africa. The South African government's Long-Term Mitigation Scenario suggests a ‘required by science’ option which equates to a carbon budget of 16.4GtCO2e from 2010 to 2050 for all sectors, not just coal-based activities. Carbon Tracker calculations indicate that current reserves earmarked for the domestic market are equivalent to 19.2GtCO2e, with 17.7GtCO2e attributable to companies listed on the Johannesburg Stock Exchange (JSX). If coal extraction and use is given a generous carbon budget of 12 GtCO2e, this results in 38.5% of reserves set for domestic use no longer being needed. This report argues that South Africa will have no room within its carbon budget for the development and combustion of new coal reserves through to 2050. This has profound implications for national economic strategy, business plans, as well as investment allocation and stewardship.