Nompumelelo Magwaza
South African businesses emitting large amounts of carbon dioxide should be encouraged to reduce emissions by receiving incentives instead of penalties, Elias Masilela, the chief executive of the Public Investment Corporation (PIC), said at the Green Business Generation session of the World Climate Summit in Durban over the weekend.
Masilela, who was part of the panel discussion on capital for low carbon growth, said the PIC, which manages the Government Employees Pension Fund (GEPF), had for the first time engaged in robust talks about investments in a green economy.
The summit focuses on the contributions by business towards reducing greenhouse gas emissions and it runs parallel to the COP17 climate talks also being hosted in Durban.
The PIC, which manages about R900 billion for the GEPF, has put aside about R45bn to invest in sustainable development and particularly a green economy. Masilela said the fund would be set up at the beginning of the new financial year and would focus on social infrastructure, economic infrastructure, the promotion of small, medium and micro enterprises and a green economy.
“Of the R900bn assets under management, about 5 percent will be dedicated to these four pillars of development with the special focus on economic infrastructure and green economy.”
Speaking about the current debate on a carbon tax, which could be imposed on high-energy users such as smelters and manufacturing companies, Masilela said companies found ways of avoiding such penalties and this would force the government to come up with new ways of regulation.
“I believe incentives are better because companies will be encouraged to meet certain targets, and an example could be if they comply, then they would qualify for a tax break.”
He said the idea of decreasing carbon emissions was not to wipe out the existing sources of energy, but to make sure that companies found a balance in the way they emitted greenhouse gases. He said companies should be transparent about the amount of carbon they were emitting as this would encourage investors.
Wolfgang Engshuber, the chairman of UN Principles for Responsible Investment, echoed Masilela’s sentiments.
He said investors would only be interested in financing green energy programmes if they were taken into confidence on the amount of greenhouse gases being emitted.
Engshuber said investors required an economic environment in which low-carbon investments offered risk-adjusted returns that were truly competitive with other investment opportunities, and that this required strong and stable policy frameworks.
He said according to reports by the World Economic Forum and Bloomberg News Energy Finance, it was estimated that moving to a low-carbon energy infrastructure and restricting warming to below 2ºC would require a global investment of roughly $500bn (R4 trillion) a year by 2020.