South Africa’s Treasury has published a framework to guide the use of green, social and sustainability-linked financial instruments as the country looks to raise R3.7 trillion ($228 billion) over the next decade to address climate-related costs.

The plan outlines how the government will structure the issuance of green bonds, loans and other sustainable finance tools to support both new and existing projects with environmental and social outcomes. It also sets criteria for how funding decisions will be assessed, according to a statement published on the National Treasury’s website.

The initiative is intended to better align public financing with South Africa’s long-term climate and development goals, the Treasury said, adding that it aims to support a “just and inclusive” transition as the economy shifts away from heavy reliance on coal.

Energy shift and infrastructure focus

The framework highlights a range of eligible projects, including hydrogen production, hydropower, geothermal energy and bioenergy. It also covers investment in electricity transmission infrastructure, distribution systems for low-carbon gases, and technologies designed to improve energy efficiency in homes and industries.

South Africa’s financing needs under international climate commitments, including the Paris Agreement, are estimated at about R250 billion ($15.4 billion) for implementation and R3.47 trillion ($213.8 billion) for mitigation between 2026 and 2035. That averages roughly R372 billion ($23 billion) a year.

To help meet that gap, the government plans to raise around R160 billion ($9.8 billion) annually from international climate finance institutions by 2030, with additional funding expected from private investors and domestic spending.

The framework comes more than five years after the government first signaled plans to formalize its green bond strategy.

Funding risks and coal dependence

Despite the scale of the plan, analysts note structural challenges. S&P Global Ratings, in an assessment released alongside the framework, said South Africa’s continued dependence on coal for power generation could limit the environmental impact of some projects.

The ratings firm added that while the inclusion of projects tied to healthcare, education, employment and food security could support broader development outcomes, the wide scope of eligible spending may create uncertainty over the precise environmental and climate benefits of individual investments.

Still, the Treasury maintains that the framework is designed to improve access to sustainable finance while supporting long-term economic and social priorities as the country manages its energy transition.