Demand-induced transition risks: A systemic approach applied to South Africa

When trying to assess the economic consequences of a transition to a low carbon economy, it might seem reasonable to concentrate on the sectors using carbon-intensive technologies and thus emitting important amounts of Greenhouse Gases. We however show in this study that non-emitting sectors might nonetheless be vulnerable to transition risks. To do so, we develop a simple methodology that combines Input-Output tables with sectoral financial data to assess the exposure and financial sensitivity of all sectors to simplified transition scenarios in the case of South Africa.