South Africa has a big opportunity

South Africa is well-positioned to advance its green ambitions and become a critical player in the global renewables market through its role in BRICS, the G20, and African trade blocs.

Momentum Investments’ chief economist, Sanisha Packirisamy, explained that geopolitical developments over the past few decades have led to a surge in support for nationalism.

This has disrupted global commitments, including the reshaping of ESG priorities, which Packirisamy believes presents South Africa with a challenging backdrop but creates new opportunities to advance its sustainable development goals.

She explained that geopolitical tensions, notably US-China trade rivalries and Russia’s 2022 invasion of Ukraine, have strained international cooperation and deepened trade fragmentation.

This has led to global trade policy uncertainty indices reaching record highs, which affects green technology supply chains worldwide.

Concerningly, the World Trade Organisation projects a 0.2% contraction in global merchandise trade this year.

Packirisamy said that rising nationalism and protectionism, such as the US doubling its tariffs on Chinese solar cells to 50% in 2024 and India imposing 40% duties on electronics like lithium-ion batteries and inverters, also threaten multilateral frameworks.

“These policies undermine global climate cooperation, essential for ESG objectives, as countries prioritise national interests over collective action,” she explained.

South Africa’s largest trading partner, China, is also the world’s largest CO₂ emitter, accounting for over 30% of global emissions.

However, China also leads in renewable energy with over 40% of global solar and wind capacity in 2024. 

Other BRICS members, including India and Brazil, exhibit similar dynamics, characterised by high emissions but ambitious renewable energy targets.

“These dynamics reshape global ESG priorities, creating opportunities and challenges for South Africa to align strategically, particularly given that the country positions itself as a key player in the Global South and the BRICS alliance, while remaining a member of the G20”, Packirisamy said. 

This leaves South Africa in a difficult position, as it must navigate this complex landscape to advance its ESG objectives while preserving its international interests.

However, it also presents significant opportunities for South Africa in the global ESG space.

How South Africa can benefit

Packirisamy explained that recent developments in geopolitics, like the US withdrawing from the Paris Climate Agreement, India’s “Make in India” initiative, and Argentina’s Javier Milei’s nationalist economic policies, have jeopardised global climate cooperation.

These developments could prove to be a significant blow for South Africa’s green energy ambitions, particularly its US$13.8 billion Just Energy Transition Investment Plan.

However, they have also created a vacuum that China and other countries could fill. 

For example, she noted that China’s Belt and Road Initiative, which aims to invest $1 trillion across 150 countries, offers South Africa significant opportunities in the renewable energy market.

This includes access to renewable energy technologies, funding for energy and transport infrastructure upgrades, higher export revenues to new green technology markets and strengthened trade and investment opportunities. 

In addition, South Africa’s position in the African Continental Free Trade Area Agreement offers a platform to enhance intra-African trade in green technologies, reducing the country’s dependence on geopolitically distant partners. 

“South Africa can position itself as a regional hub for renewable energy innovation, leveraging its mining sector’s critical minerals like platinum and cobalt, essential for green technologies,” she said.

“South Africa’s non-aligned stance allows flexibility in navigating multipolar dynamics, but it must strategically align to advance its ESG goals amid funding shortfalls and geopolitical realignment across the globe.”

Packirisamy said South Africa should maintain strong ties with the European Union to secure funding and green technology partnerships, as the countries in this union prioritise climate action and open markets. 

At the same time, South Africa should diversify its Western partnerships, including with Canada and the UK, to counter US policy shifts under Trump.

“To safeguard its interests, South Africa should adopt a multi-alignment strategy, engaging both Western and non-Western powers without committing exclusively to any bloc,” she said. 

“This approach maximises access to ESG financial resources while mitigating risks from geopolitical fragmentation.”