Simulating Low-Emission Development Pathways for South Africa
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A new report applies the Millennium Institute's iSD (Integrated Sustainable Development) model to South Africa to assess development scenarios towards net-zero CO2 emissions by 2050 while confronting poverty, inequality and unemployment. Two findings stand out:
Inequality remains high even under the integrated scenario, suggesting that the benefits of growth and transition are insufficiently redistributed, and pointing to the need to broaden economic participation.
The analysis highlights the importance of enabling systems: some interventions have far broader effects than others, with electricity, food systems, basic service infrastructure and transport emerging as high-leverage policy areas.
South Africa has committed, under the Paris Agreement, to reach net-zero carbon dioxide emissions by mid-century. As the world's 20th largest emitter and a fossil-fuel dependent economy, it faces the imperative demand to decarbonise, while addressing the daunting reality of the triple challenge: persistently high poverty, inequality and unemployment.
The assessment, conducted for South Africa's Department of Forestry, Fisheries and the Environment in partnership with the Association for Water and Rural Development and funded by the World Resources Institute, was designed to inform the latest update of the country's Long-Term Low-Emission Development Strategy (LT-LEDS). Its central question: can climate action and development reinforce each other — and under what conditions?
What was tested, and how
The iSD model is a simulation tool that allows users to evaluate future scenarios under different conditions and policies, and to trace how a change in one part of the system ripples through the rest. The South African model integrates 24 sectors of the economy — including energy, transport,agriculture,health, education and government finance — each calibrated against f the country's historical data.
The study compares two scenarios. The first is business-as-usual: the scenario in which current trends continue and no additional climate or development policies are introduced. The second is a holistic scenario, in which South Africa invests an additional 6.4% of GDP — roughly 266 billion rand in 2019 prices — across 23 interventions spanning solar and hydropower capacity, rail and roads, agricultural training, water, sanitation, education, health and social housing, implemented between 2025 and 2050.
What the simulation shows
Relative to business-as-usual, the holistic scenario performs better across economic, social and environmental indicators. By 2050, the simulations show GDP growth reaching 3.5% per year, poverty falling by roughly 10%, and carbon dioxide emissions landing about 19% lower, within reach of South Africa's international commitments. Undernourishment declines, air quality improves, access to electricity, water and sanitation expands, and more young people find their way into education or work.
The message is that climate action and national development need not be treated as competing agendas. Pursued together, through coordinated investment, they can be mutually reinforcing.
Electricity: The enabling factor
The study's synergy analysis, which isolates each group of interventions to measure its individual contribution, reveals a striking pattern. Across nearly every indicator, electricity plays an underlying positive effect.
Investments in clean, reliable electricity emerge as the dominant driver of GDP growth and the largest single contributor to poverty reduction. They also shape outcomes far from the power grid, including nutrition, education enrolment, youth employment, and reductions in violence against women. Electricity functions as a key enabler, the foundation on which service delivery, economic activity and household well-being depend.
Food systems play a similar, though smaller, enabling role, shaping poverty, health and resilience well beyond agriculture itself. The practical implication is that the highest-leverage investments are those whose benefits spill across many goals simultaneously.
Greener, but not yet fairer
The holistic scenario, as configured, does not deliver a fair transition. By 2050, South Africa's Gini coefficient, a standard measure of income inequality where higher values mean a more unequal society, improves by less than 1%. The economy is larger, cleaner and more productive, but its gains are not evenly shared.
The simulations also capture only partial economic decoupling, as material consumption continues to rise alongside economic growth, with efficiency gains gradually moderating the trend. Growth-led investment, even when green and broad-based, does not automatically redistribute its benefits. A just transition requires explicitly distributive measures: broader economic participation, support for workers and communities affected by structural change, and sustained investment in services that markets alone will not fund.
Why isolated policies fall short
When the interventions are simulated separately, each moves only the indicators closest to it. Combined, they interact: the integrated scenario outperforms the sum of its parts on poverty, unemployment and economic growth alike.
The analysis also highlights the importance of institutional capability and policy coherence. Achieving the gains simulated here will depend not only on choosing the right interventions, but also on improving institutional alignment, implementation capacity, and the quality of long-term planning across the state.
Isolated sectoral interventions are unlikely to be sufficient. Coordinated planning, policy coherence, and integrated investment across systems will be essential if South Africa is to move toward net-zero while improving social and development outcomes. The country's net-zero pathway is most plausible — and most beneficial — when framed not as a technical decarbonisation exercise, but as an integrated developmental transition.
This project was implemented by the Millennium Institute in partnership with the Association for Water and Rural Development (AWARD), with funding from the World Resources Institute, for South Africa's Department of Forestry, Fisheries and the Environment.
Source: Miltz, E., Nunez Pawlowsky, V. & Clifford-Holmes, J. (2026). Assessment of Development Scenarios to Reach Net-Zero by Mid-Century: A System Dynamics Modelling Approach for South Africa. Millennium Institute.
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