/ 25 November 2011

Don’t forget jobs at climate change talks

Don't Forget Jobs At Climate Change Talks

Triage is the process of determining the priority of treatment when resources are scarce. Should South Africa Inc. be admitted to an emergency room the priority areas for treatment would undoubtedly be: employment and sustainable economic development, inequality and poverty, education and healthcare.

Unfortunately as the hosts of COP17 in Durban South Africa have chosen to add emissions to the list of the pressing issues facing the country. While climate change does represent a real and growing threat, threats to the national wellbeing need to be assessed relative to each other to allow some perspective on prioritisation for dealing with those threats.

South Africa has high aspirations for sustainable economic development, but several specific policy priorities still remain unclear government has set several ambitious national targets (e.g. adding 5 million jobs by 2020; sustaining real GDP growth of 4-7%; and reducing greenhouse gas emissions by 34% and 42% by 2020 and 2025 respectively).

No doubt many will argue that all these issues have equal importance since we live in increasingly complex economic systems, but as Patrick Lencioni said: “If everything is important, then nothing is”, and this is potentially why national policy imperatives are so often poorly executed — resources are inadequately directed to achieve the greatest impact.

While government has a demonstrated track record of ambitious policy development, there are still several unresolved obstacles to reaching these targets (e.g. unemployment, inequality of wealth and long-life carbon-intensive assets).

Furthermore, several important policy documents appear to present conflicting messages regarding national priorities and in almost all cases fail to address implementation of these ambitions adequately. South Africa is one of the world’s most carbon-intense economies, but in absolute terms emits only 1% of total global emissions.

Our carbon intensity therefore doesn’t indicate the level of contribution we need to make to addressing climate change, rather it indicates the complexity of the task to transition to a low-carbon economy. To address the rising average global temperatures, total global emission volumes need to decline — discussing the relative carbon intensities (kg CO2/unit of GDP) of national economies is therefore unhelpful.

South Africa’s Copenhagen Pledge of a 34% reduction in emissions from the Business as Usual trajectory is an absolute reduction in emissions while both India and China have committed to intensity reductions (i.e. their absolute emissions will increase over the period approximately 300% and 500% respectively) this means that South Africa’s total emission savings in 2020 will be replaced into the atmosphere by China in approximately 60 hours. South Africa is endowed with immense mineral wealth.

According to the American banking group Citigroup, South Africa is the world’s richest country in terms of its mineral reserves — worth approximately $2.5-trillion, but over the period between 2001 and 2008 mining contribution to national GDP from South Africa’s competitors grew between 7% (Brazil) and up to 19% in China, over the same period mining’s contribution to South Africa’s GDP was -1%. So while global mining grew by more than 5% South Africa was in decline — had we had similar growth an additional 45 000 jobs woud have been created and an additional value of $8 billion added to the local economy.

Mining and minerals benefication is also the labour absorbative growth South Africa needs to combat its growing and increasingly restless unemployed. Despite government’s New Growth Path Plan that targets minerals beneficiation as a cornerstone for economic growth, South Africa is losing this capacity to, particularly, China. Without this primary beneficiation sector we cannot build viable and sustainable secondary and tertiary sectors with their exponential job creation and skills creation multipliers.

An analysis of the ferrochrome Industry provides the stark evidence of flight of capacity to China. In 2001 South Africa accounted for over 50% of global FerroChrome production at the current rate of capacity flight, by 2015 our forecast share will have declined to 40% while China will have grown from less than 5% in 2001 to over 50% in 2015. This massive productive capacity gives China greater price-making strength and further pressure local competitiveness.

Several organisations continue to counter that the green economy will create thousands of jobs but these claims have not been borne out in either Spain (often quoted as an example of the success of low carbon tranisitions) or in the United States where high profile bankruptcies of renewable energy companies continue, despite the massive support and subsidy packages the Obama Administration have provided.

We need to ensure that the debate is clearly articulated — our goal is not a low carbon economy — our goals should be employment and poverty reduction in a carbon constrained environment. We also must not underestimate South Africa’s successes in addressing Climate Change.

A recent study by the World Bank, BP and PWC on G20 decarbonisation efforts shows South Africa is one of only five countries decarbonising their economies. The Wold average is a 5.8% growth in emissions while South Africa’s growth is only 1.6%. Climate change must be a global effort.

Without a global agreement we doom ourselves to economic stagnation, social unrest and the added burden of adapting to the inevitable climate change impacts without the resources to do so.

Mike Rossouw is the chairperson of the Energy Intensive User Group and an executive director at Xstrata Alloys

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