WHILE the financial sector globally has also been under immense pressure to move away from financing those activities that are harmful to the planet, it remains important that this is done in the spirit of a phased just transition especially in the continent and countries such as South Africa which still contend with energy poverty, says economist, entrepreneur and writer Trudi Makhaya.
The economic advisor to President Cyril Ramaphosa said preserving the planet was a universal aspiration that touched every life. “The existential challenges we face in the form of climate change, loss of biodiversity and pollution call for a collective solution. All segments of society and all sectors of the economy have a role to play,” Makhaya said.
Speaking at the Trialogue Business in Society Conference hybrid event on the theme of inclusive growth in the green economy on Tuesday, Makhaya said the private sector had already taken interest, with leading mining and chemicals companies developing applications for heavy-duty mobility and green power fuels using hydrogen. She said concessional resources could be deployed here to fund feasibility studies that would pave the way for commercial projects.
“Over the past four years of the investment-led drive by President Ramaphosa we have seen companies make investments in the Green Economy. The most pronounced investments have been in renewable energy. We have also seen investments in the green hydrogen value chain, mining, battery minerals, fuel cell components to name just a few,” Makhaya said.
Ramaphosa’s economic advisor said the recent floods in KwaZulu-Natal and the Eastern Cape served not only as an illustration of the devastating impact of unusually heavy rain, but a need to build resilient infrastructure.
She said South Africa presented one of the best opportunities in the world for climate impact, if afforded the right kind of support. At COP26, one of the most important outcomes was the partnership crafted by South Africa and a group of partners the UK, EU, France, Germany and USA. “The resources mobilised under this partnership could help accelerate the transition to a low emissions economy which would include the transition out of the heavy reliance on coal in line with national circumstances. It will also fund efforts to increase the country’s climate resilience and adaptive capacity. The transition of the energy sector could also result in a significant nett job creation.”
Government sees three focal areas for the $8.5 billion package which is under negotiation. The first area is the electricity sector and its value chains. Energy generation underpins the emissions profile of an economy. In Souoth Africa, electricity generation contributes 41 percent of the country’s greenhouse gas emissions. This financing could be deployed to support Eskom’s efforts which have already began. Eskom has commenced with the unbundling process towards a transparent electricity supply industry with a fair playing field for all sources of electricity generation. It is also scheduled to decommission at least 8 000MW of aged coal fired power stations in the next 10 years. This will lead to the reduction of emissions alongside work to repurpose and re-power these assets with sustainable technologies. Investments will also be required in the transmission network. A whole new set of economic activities can emerge from the decarbonisation of our energy system.
The second focal point of the just transition partnership was to ensure that SA moved its automotive sector to manufacture hybrid and electric vehicles. Makhaya warned the country would lose its most important markets including the European Union if it does not effect this transition. “Much of this will depend on the investments of the automotive sector itself, but there is catalytic work that needs its concessional finance. This includes support for the transition period to build domestic demand for electric and hybrid vehicles, the development of supportive infrastructure for the usage of electric vehicles and the development of a battery manufacturing industry,” Makhaya said.
“The third focal point is to exploit our significant endowment to develop a Green Hydrogen value-chain for domestic consumption and for the export market. Over the past decade or so, the hydrogen South Africa programme has generated intellectual property that can be elevated and supported to create a world leading Green Hydrogen Sector.”
Nedbank Group group executive for marketing and corporate affairs Khensani Nobanda said the bank believed it was imperative to avoid focusing so much on the challenges and hurdles associated with achieving South Africa’s green economy aspirations and start getting excited about the numerous opportunities that it presented, not only once the country reached that green destination, but also as an integral part of the process of getting there. “We recognise the green economy as the only viable way of achieving sustainable development that ensures the diverse needs of the current population are met, without jeopardising the ability of future generations to also meet their needs and, very importantly, without putting our vital natural resources at risk,” Nobanda said.
She said that a truly green economy was one that balanced low carbon emissions, resource efficiency and human wellbeing, while reducing risks to, and impacts on, the environment and scarce ecological assets.
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