Without international and private finance, South Africa’s path towards building a low-carbon, climate-resilient economy will be “very limited”, according to the chief executive of the National Business Initiative (NBI), Joanne Yawitch.
This is a result of the poor state of the economy, worsened by the fallout from the Covid-19 pandemic, Yawitch said at the launch of the Just Transition Finance Roadmaps in South Africa and India project. Both are coal-dependent countries.
Yawitch said South Africa’s just transition to a low-carbon, climate resilient economy cannot be left to chance because of its technical and social complexities.
“You need a carefully managed approach that maps the various sources of finance for key transition projects. Financial institutions need to both understand the opportunities and support them.
“But without an understanding of what to invest in, who to partner with, what other enabling conditions will be needed, these opportunities will simply pass us by.”
The initiative is driven by the CDC Group — a development finance institution in the United Kingdom — together with Trade & Industrial Policy Strategies (Tips), the NBI, the Observer Research Foundation, the LSE Grantham Research Institute on Climate Change and the Environment, the Harvard Kennedy School’s Initiative for Responsible Investment and India’s National Institute of Public Finance and Policy.
Last month President Cyril Ramaphosa appointed members of the Presidential Climate Change Coordinating Commission to ensure the shift from fossil fuels protects workers and communities’ rights and livelihoods.
Professor Nick Robins, of the LSE Grantham Institute, said a just transition was an essential factor for tackling climate change. He said that workers interests must be placed at the heart of decision-making so that the benefits and costs of climate action are shared equitably.
“This is a whole-economy priority, covering high-risk, high carbon sectors that will need to transition out.”
Most of the financial response to date has focused on industrialised countries in Europe, North America and Australia. “But if the world is to be successful in changing, more focus should be on key emerging economies, especially as they have problems such as poverty, inequality and poor livelihood development.”
Yawitch said South Africa is being heavily affected by climate change, has an energy-intensive economy and is a high greenhouse gas emitter.
“We need to ensure our resilience is built into the economy to the impacts of climate change and that vulnerability is reduced.
“And in that context, the notion of a just transition goes far beyond the energy sector and includes workers in agriculture, the biodiversity economy and the people who work around our water resources.”
South Africa needs to innovate and build new industries that can absorb people and find new paths and opportunities for those who would lose their livelihoods and income because of the impacts of climate change, said Yawitch.
Emerging opportunities for financial investment were in the local manufacture of electric vehicles, wind and solar components, platinum and green hydrogen, she said.
Rudi Dicks, the Tips board member and head of the project management office in the presidency, said the conversations about South Africa’s just transition were difficult.
“[We’ve had] 10 years of renewables but we’ve not seen the kind of jobs many had promised. There are certainly three or four power stations [in Mpumalanga] that are coming to the end of life in the next three or four years. What happens to those communities and the thousands of workers who are dependent on them?”
He said that, “If we are to develop the turbine industry, or a specialist glass manufacturing sector to support renewable energy, then a value chain approach that is fairly labour intensive and pays decent wages should be used.
The task of finance is not just energy for consumption but for what is consumed, said Rathin Roy, of the Overseas Development Institute based in London.
“If you think about it this way, then the flows of finance would not just be to automobiles, energy and renewable infrastructure. There would be far more to agriculture, the built environment, urbanisation, pollution, water conservation and biodiversity.”
Roy said that this energy transition would create employment and improve the welfare of people who are not benefiting from the state of ubiquitous consumption that has landed us in this problem in the first place.