by Anil Sooklal
South Africa took over as the chair of BRICS on Jan. 1, 2023, during a challenging economic period, both domestically and globally. The ongoing conflict in Ukraine and the West's sanctions have worsened the impact of the COVID-19 pandemic on economies globally, leading to soaring energy and food prices, which have had a disproportionate effect on the global South.
To address the energy crisis, South Africa has developed the Economic Reconstruction and Recovery Plan. The plan aims to fundamentally transform the electricity sector, achieve long-term energy security and accelerate investment in the energy sector. As South Africa cannot achieve this goal alone, it has thus called on BRICS partners to assist in its recovery efforts.
As BRICS countries account for almost half of the world's population and 40 percent of its energy consumption, they are uniquely positioned to support South Africa's energy recovery. Although only 16 percent of BRICS countries' energy consumption is renewable, this percentage has grown annually due to a commitment to mitigating climate change.
BRICS countries are not only consumers of energy but also have substantial fossil fuel and available renewable energy resources, with 40 percent of the world's coal reserves, 25 percent of the world's natural gas reserves and 8 percent of the world's oil reserves.
With abundant natural resources, BRICS countries play an essential role in the global energy supply. And they have developed similar policies to manage energy risks and have the expertise and technologies to enhance energy security and cooperation.
BRICS recognized the potential for complementarity among its member countries. The bloc in 2020 adopted a road map for energy cooperation up to 2025 to build a strategic partnership in the energy sector. The road map is being implemented in phases.
The first phase, initiated under South Africa's chairship of BRICS in 2018, was focused on research. The BRICS Energy Research Cooperation Platform was built to bring together experts, companies, and research institutes to coordinate the common interests of BRICS in developing innovative technology and policies. Seven studies have been released at BRICS Ministers of Energy meetings. Last year, China presented another study on developing renewable energy and smart grids in the BRICS countries. This year, Russia has been leading a study on energy security. The road map also established the publication of the annual BRICS Energy Report.
The second phase will involve identifying energy security needs and challenges and determining where BRICS cooperation can provide solutions.
Finally, the third phase aims to advance mutually beneficial cooperation, including exchanging best practices, using advanced BRICS technology, and trade and investment opportunities in each other's economies. It should be noted that the BRICS nations are already collaborating on energy solutions.
South Africa's biggest coal export market is India, providing almost half of the country's total coal revenue. And China is reopening opportunities for coal imports from South Africa.
Moreover, China has substantial oil and gas trade with Russia, oil and gas cooperation with Brazil, a joint natural gas pipeline project with India and renewable energy trade with South Africa. At the same time, South Africa is a pioneer in clean coal, an area in which India and China are interested. Russia's State Atomic Energy Corporation Rosatom has signed an agreement with South Africa to construct small hydropower plants in Mpumalanga, a key component of South Africa's energy security strategy.
Part of South Africa's response to the energy crisis involves implementing a "just transition" plan to a low-carbon economy, as climate change also poses significant risks to jobs, businesses and the economy. South Africa is among the most water-scarce countries in the world. Recent events in KwaZulu Natal have shown that extreme weather events, such as floods, are occurring more often, devastating infrastructure.
The "just transition" plan aims to significantly reduce greenhouse gases emission and harness investments in new energy technologies, electric vehicles, and energy-efficient appliances. South Africa's Integrated Resource Plan envisions renewable solar and wind energy generating almost 25 percent of the country's electricity by 2030. Coal, which accounts for 85 percent of South Africa's electricity generation, will drop below 60 percent in less than a decade.
During South Africa's chairship of BRICS in 2013, we established the BRICS Business Council to strengthen and promote economic, trade, business and investment ties among the business communities of the member countries. The BRICS Business Council also identifies problems and bottlenecks and recommends solutions to BRICS. This year, under South Africa's chairship, the council's energy and green economy working group is focusing on concrete outputs on the just transition.
Establishing a BRICS African Center of Excellence on the Just Energy Transition is also being discussed. The center would support a network of researchers focusing on technology, socio-economic, environmental, financial and other aspects of the just transition. Then it would inform policymaking in BRICS countries in collaboration with the BRICS Energy Research Cooperation Platform.
The question is how to identify investment in renewable energy. There is a lot of money available globally for renewable energy projects, with National Treasury estimating that there are 12 trillion U.S. dollars available from sources such as the Green Climate Fund. But developing countries need to help access these funds because of the perceived risk of investing in a developing country. Policy uncertainty and regulatory challenges have been cited as obstacles to South Africa's investment opportunities. Other funders also ban financing and investment in coal for energy, even clean coal.
India and China can source their own international finance for renewable energy by offering their own-currency green bonds known as Green Masala Bonds and Green Panda Bonds. The Green Panda Bond is issued by the BRICS New Development Bank (NDB).
The NDB is a multilateral development bank established by the BRICS countries to mobilize resources for infrastructure and sustainable development projects. Sustainability is fundamental to the founding principles of the bank. The NDB aims to deliver a transformative impact to BRICS member countries with a target of 40 percent of its total volume of approvals to projects contributing to climate change mitigation and adaptation.
South Africa and China have so far been the leading beneficiaries of sustainable financing from the NDB concerning clean and renewable energy. South Africa is the beneficiary of 12 projects financed by the bank to the value of 5.4 billion dollars.
The opportunities for BRICS to support transformative change in our economy are apparent. As Chair of BRICS this year, South Africa's strategic vision is to harness our existing mutually beneficial BRICS cooperation to address issues of national interest and national concern in a holistic and multidisciplinary way.
The depth and strength of our BRICS partnership allow us to bring multiple solutions to the table, including financing, trade, investment, industrialization, skills development and training, research, development and innovation, as well as a partnership with African countries and leading countries of the Global South.
Professor Anil Sooklal is Ambassador-at-Large for Asia and BRICS and is South Africa's BRICS Sherpa.