The green economy

If you’ve been around for half a century or so, you’ll know that the world periodically goes through scares. I moved to London in the early 1980s for a while to get away from apartheid only to find that I faced possible extinction when the Soviets and the West blasted each other with sufficient nuclear arsenals to destroy the world many times over.

Now we face global warming. But this does not over-exercise me. I am more afraid of the near-term threats from Eskom and Sasol than rising sea levels and other climate change dislocations some time in the future.

Let me explain. There is a growing body of evidence, which suggests that continuing population growth coupled with rapid economic development in countries such as India and China are putting natural resources under increasing strain.

Where peak oil—the idea that demand for oil would at some point outstrip production—was until recently seen as a theory, it is becoming part of mainstream thinking and increasingly accepted as truth. Policymakers find it harder and harder to plan for future energy requirements, while the lead times of mega-projects get longer and longer. Yesterday’s cheap electricity is today’s financial nightmare. Just ask Jacob Maroga.

Of course, government could make sure that it gets out of the way so that individuals and companies can find their own solutions, but governments generally are not good at this and ours seems to excel at getting in the way.

There is evidence that the current global all-fall-down was closely associated with the recessionary conditions brought about by oil prices at $150 a barrel rather than the sub-prime crisis. Homeowners started defaulting on their home payments in droves as energy costs sucked up larger and larger shares of their disposable income.

So I don’t want to be relying on Bobby Godsell, or Maroga, or Pat Davies to be able to meet my energy needs. Or, to be more precise, I want to ensure that I do not depend on them more than is necessary.

That broad statement of principles out of the way, let me proceed.

One of the smartest things on green technology I read recently said that with just about everything we buy we do not stop to calculate how long it will take to pay for itself. It may be a new car, an electrical geyser, an upscale kitchen, a tank of petrol, a pair of shoes or a haircut. But if we’re investing in green technology, this is the first question we want answered. The question itself may be wrong. Take my electric bike.

Our house can resemble a train station. It can be quiet with just two inhabitants, but it can grow quickly as our offspring return from places as far flung as Cape Town, Tokyo, Dubai or Shanghai.

Our transport needs therefore quickly double only to halve again. Determined not to end up owning a surfeit of cars, we expanded our fleet of three vehicles to four by buying an electric bicycle for me to use in my daily commute.

My Ezeebike cost R15 000. I could have bought a Vuka petrol-powered bike for less than half of this. Vukas are highly fuel efficient compared with cars, but will require more maintenance than an electric bike and presumably will depreciate faster as the electric bike has few moving parts.

The Ezeebike, set to go no more than 25kph using the battery, does not have to be licensed and does not have indicators and stop lights. It has pedals, but no exhaust pipe. Because it uses electricity, it is not emission-free.

Bikes are not the solution for many commuters. There is just too much traffic and crazy driving to contend with. Jo’burg has a non-motorised transport policy in development, but it is extremely early days and you won’t find a cycle lane anywhere in the city.

In my case, though, I live a 6km leisurely leafy cycle from where I work. I use the bike for errands too, averaging about 20km a day. So why not use a normal bike? There is a one-word answer to that: sweat.

As the bike is green, we have to ask, how long before it pays for itself?

First, the cost. It takes about three or four hours to charge the lithium ion battery at a cost of 4c or 5c an hour, say 20c a day. Although the Ezee is said to have a range of 40km, I have not cycled that far. My daily commute costs 20c.

Even if Eskom gets its 35-35-35 price hike, my commute will still cost only 50c in three years.

How much am I saving? My 400km a month at 10 litres/100km translates into 40 litres of fuel saved a month. This is R300 at about R7,50 a litre.

But total running costs based on Automobile Association rates exceed R2 a kilometre, suggesting my monthly savings are in the order of R800 a month or R9 600 a year.

How much do you have to invest to get a R9 600 return? You’d have to put R134 000 into a fixed deposit account at a bank to get R9 600 paid to you in interest.

At current mortgage rates you’d have to put R96 000 into your bond to save R9 600 on repayments.

You could have made much more off the rollicking stock market, of course, but these days it is a pretty speculative play where you can make a fortune or lose your shirt.

My electric bike is giving me a return equivalent to having invested about R100 000, yet it cost me only R15 000. So I’m quite happy with putting my money in electric bike futures.

Kevin Davie

Kevin Davie

Kevin Davie is M&G's business editor. A journalist for more than 30 years, he has worked in senior positions at most major titles in the country. Davie is a Nieman Fellow (1995-1996) and cyberspace innovator, having co-founded SA's first online-only news portal, Woza, and the first online stockbroking operation. He is a lecturer at Wits Journalism. In his spare time he can be found riding a bicycle, usually somewhere remote. Read more from Kevin Davie

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