The Moderating Role of Governance in South Africa's Renewable Energy Transition: Impacts on Social Inclusion

Abstract

This study examines the role of governance in South Africa's transition to renewable energy and its impact on social inclusion, contributing to the existing literature by situating this relationship within the theoretical framework of Transition Management Theory (TMT). Annual time-series data for the period 1990–2025 are analysed using the Autoregressive Distributed Lag (ARDL) approach to estimate both short-run and long-run dynamics. Results suggest that the transition to renewable energy has an insignificant but positive impact on social inclusion in the short run. The long-run estimates, however, indicate a negative impact, as coal-mining towns, communities dependent on natural gas and other fossil-fuel extraction, and workers employed in fossil-fuel-related industries face disproportionate socioeconomic costs from the phase-out of fossil fuels. Without proper governance measures — such as just transition frameworks, skills-transition programmes, social protection policies and targeted job-creation policies — the shift to renewable energy risks deepening existing inequalities. These findings provide empirical evidence that governance significantly moderates this relationship by improving institutional capacity, coordination, stakeholder engagement and the equitable distribution of renewable energy rents. Policymakers should therefore prioritise governance systems — supported by well-designed transition policies — that steer the renewable energy transition in ways that are environmentally sustainable, economically transformative and socially inclusive. In particular, the findings offer practical guidance for policymakers engaged in the Just Energy Transition (JET) Partnership on strengthening institutional capacity so that decarbonisation does not deepen existing socio-economic inequalities. Overall, the study offers new insights into the relationship between governance, renewable energy and social inclusion in South Africa, and concludes that strong institutions are critical to managing the social risks of the transition to green energy while securing its benefits for inclusive development.