South Africa’s transition to a greener economy will require private and public partnerships (PPPs) pivoted around sustainable funding of programmes and removing bureaucracy in approval of renewable energy programmes for mining companies.
The Presidential Climate Commission, which, together with the JSE, this week held a symposium on the Just Transition Framework setting out the parameters for South Africa’s transition to a greener economy.
“Funding of a just transition to a greener economy will be the greatest public/private sector partnerships that the country has ever seen,” group chief executive for the JSE, Leila Fourie, said.
“Transition bonds will enable a smooth transition while frameworks for green bonds have been set-up to allow issuers to factor in the green economy.”
With emissions of 471.6 million metric tons of carbon (MtC) in 2019, South Africa is the continent’s biggest air polluter. Carbon emissions contribute to climate change and the southern Africa region – frequently hit by droughts, cyclones and other disasters – has been one of the most affected by changing climate patterns.
Now South Africa is mapping a way forward to transition towards a greener and sustainable energy solution after inking an $8.5 billion (R128bn) energy transition funding partnership with the European Union and other western countries last year.
Financial services company, Investec this week amassed R1bn under its Domestic Medium-Term Note bond programme, a green financing instrument that was 3.8 times oversubscribed. This reflected investors’ eagerness to invest in a cleaner South African economy, with Nedbank also placing a green bond earlier this year.
There is greater recognition of the financial sector as a key component of South Africa’s efforts to transition to a greener economy.
Daniele Mminele, head of the Presidential Climate Finance Taskforce said: “The financial sector is an invaluable role player in the transition process to a low carbon economy.”
As much as 30 000MW of South Africa’s electricity requirements is generated from labour intensive coal-fired stations. A transition from fossil powered energy will also have to factor in concerns of unemployment from the coal thermal stations, participants at the symposium have said.
“As we transition the economy to a low carbon economy, significant investments will be required and this presents economic opportunities. We also need to ensure that there is equitable distribution of risk and opportunity and responsibility among social parties,” Mminele said.
While there is general acceptance that South Africa needs to transition away from fossil fuels to curb its carbon emissions, there is no generally accepted solution to the means of dealing with emissions from agriculture and forestry sectors. Experts say livestock is a top emitter of carbon.
Dr Crispen Olver, an executive director of the Presidential Climate Commission, has acknowledged that agriculture and forestry is a difficult area to approach. Averting carbon emissions from the sector is also the “hardest” of all contributing areas.
“We are going to have to eat a lot less meat. There are ways we can deal with emissions from livestock though, and this includes changing feedstock and agricultural practices,” he said.
It is imperative, Olver says, for South Africa to up its game on battery technology and on hydrogen as a sustainable power alternative.
“Hydrogen is moving despite the very slow pace of battery technology. Government is in full support of hydrogen and a lot of banks are still looking at it though.”
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