Suren Naidoo and Melanie Gosling
THE government is set to use Durban’s hosting of the 17th Conference of the Parties of the UN Framework Convention on Climate Change to launch a renewable energy initiative aimed at putting South Africa firmly on a path to a low-carbon economy.
Dubbed the SA Renewables Initiative (SARi), the plan was announced by Trade and Industry Minister Rob Davies last week. The National Assembly’s energy committee was also briefed on the plan.
According to the Department of Trade and Industry, SARi is aimed at “catalysing the growth of a green industry” through the financing of large-scale renewable generation capacity.
“SARi presents a key element in ensuring that South Africa meets the emissions targets set by President Jacob Zuma. At COP15 in Copenhagen in 2009, the president committed South Africa to reducing its emissions trajectory to 34 percent below business as usual by 2020, and to 42 percent by 2025,” said Davies.
“The objective of SARi, which is an integral part of the Industrial Policy Action Plan, is to develop related industrial capabilities through the design of a financial solution for the roll-out of large-scale renewable generation capacity,” he said.
The department said the launch of SARi during the COP17 climate talks would be accompanied by the announcement of partnerships between the South African government and international governments and development finance institutions. They would work together to explore possibilities for developing enhanced financing arrangements needed to catalyse growth in the renewables industry.
Davies said an initial design for a financing mechanism had been developed, which combines low-cost loans, insurance and other financial instruments with climate funding on a pay-for-performance basis.
“Success in the large-scale development of renewables could realise direct economic benefits of up to 40 000 jobs; contribute up to 15 percent of South Africa’s Copenhagen commitment and de-carbonise exports by up to 30 percent,” he said.
Edwin Ritchken, the strategic projects adviser at the Department of Public Enterprises, told the National Assembly’s energy committee that if South Africa was going to build a renewables industry, it had to do so on a scale big enough for the manufacturing industry and the regulatory industry to be able take it seriously.
“To do so, we needed a new paradigm to frame the way we thought of economic strategy,” he said.
The focus of the SARi project, which is co-chaired by the Department of Public Enterprises and the Department of Energy, and involves input from the Department of Trade and Industry, was to enable a “critical mass of investment” in renewables in South Africa.
“The essence of SARi is: what will it take to reach this critical mass, so that we don’t have only renewable energy, but a whole cluster of industrial initiatives? We’re trying to embed a new logic into the heart of how we think of economic growth,” Ritchken said.
He said that if we did not reach this critical mass, renewables would always remain a small “add-on” to our industrial development.
That meant renewables would remain relatively expensive and the government would be inclined to choose cheaper options. This was the “single biggest threat” to the success of the renewable energy industry, he said. Because of this, one of the central aims of SARi was to bring down the cost of renewables.
“The focus is around financing arrangements, because renewable energy at the moment is more expensive. Annex 1 (developed) countries have said they will share the burdens of the emerging nations of adapting to low-carbon economies. We will call their bluff,” he said.
With international donor money, the renewable industry would not impose a burden on the consumer or on the fiscus. Britain, Norway, Germany and the European Industrial Bank had shown interest in becoming the founding partners in SARi.
“We hope to sign a memorandum of understanding with these global partners at COP17,” Ritchken said.
Agreement would have to be reached on how much funding would be borne by the international partners and how much by South Africa.
Ritchken said the degree to which SARi would succeed depended on the extent to which government departments could rise above “turf concerns” and adopt an intergovernmental view rather that a “turf-grabbing” view.
l The COP 17 climate conference takes place in Durban from November 28 to December 9. For more information about SARi, visit the website at www.sari.org.za