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Amplifying SA’s journey towards a green economy

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Greenshoots of a green economy show promise of a new life in SA

“Global climate crisis: inevitable, unprecedented and irreversible.” 

“Code red for humanity.” 

“A hotter future is certain, climate panel warns. But how hot is up to us.” 

These are just some of the stinging headlines from some of the world’s largest newspapers, as the United Nations Intergovernmental Panel on Climate Change’s recent report landed, on 9 August 2021. The report warned that humans have taken too long to respond to climate change, and that it is now an inevitability. But the world can still avoid the gravest consequences of global warming — if we act now. 

For South Africa, climate change is as much an economic question as it is an environmental, or existential one. How does the country decarbonise, and create jobs at the same time? How can we grow our economy while creating a cleaner environment? All over the country new ideas are brimming, and the shoots of a green economy are starting to emerge. It’s as much a question of partnership as it is a question of ideas. Many corporate citizens are taking up the challenge. 

Nedbank now offers sustainable financing solutions to its clients, incentivising sustainable development with hard benefits such as better interest rates. The bank is the country’s leading financier of renewable energy, and has ploughed millions of rands into over 3 500MW of renewable energy in the last decade. 

Nedbank has also decided not to fund any new coal or oil exploration projects in the future, and it will start closing its taps to more fossil fuel-related projects in the future. 

Nedbank isn’t the only company that invested in renewables early on. Mainstream SA, a leading builder of wind and solar farms in South Africa, has added over 800MW to the grid through renewable energy projects. While many renewable companies took their money elsewhere when the country’s renewable energy project stalled five years ago, Mainstream SA stayed, firmly believing there was a future for renewables here. And they were right. 

Mainstream Asset Management SA manages these renewable projects in a way that uplifts the rural communities around its wind farms. It’s about working with communities and the government to ensure that renewable energy brings about community development. 

A key consideration for policymakers is what a circular economy looks like for South Africa. This is an economy that eliminates waste by using and reusing resources when their life cycles have ended. It is something that Barbara Creecy, Minister of Environment, Forestry and Fisheries, says will be essential for the future of the country. 

As Professor Harro von Blottnitz from the University of Cape Town’s Faculty of Engineering and the Built Environment explains, it is ultimately about our relationship with nature.

“The first time you hear ‘circular economy’ you think of end-of-life and recycling. But the circular economy is all about the front-of-life and what we take from nature. And when we take from nature, we must take it with the intent to use it wisely and don’t take too much, because that damages nature and undermines what the environment does for us, and of course, also takes from the future generations’ opportunity to take from nature.”

Tackling waste and pollution are key components of such an economy. South Africa’s plastics industry is under pressure to make sure that packaging is recyclable. Carbon taxes are also a key component in incentivising industry and individuals alike to burn fewer fossil fuels. Experts are actively ironing out these legalities to lessen the greenhouse effect of our carbon-intensive world. 

Carbon credits will be a key feature of a green economy. Already, carbon credits can be earned from landfill gas extraction. Public-private partnerships will be critical if the country is to decarbonise quickly enough, as well as partnerships with the informal sector, such as Johannesburg’s waste pickers. 

Renewable energy sources also go further than providing clean energy: renewables are being linked to food security across Africa too. 

And, of course, the transition to a green economy must include women. South Africa has numerous women scientists at the forefront of climate and energy research. Their voices will be an essential part of our green economy. 

From wind farms in the rural hinterlands of the Northern Cape, to the glittering offices of the country’s corporate headquarters in Johannesburg, the green economy is taking shape. — Sarah Evans

Mainstream Renewable Power SA: Renewables is the only way forward for South Africa

The world is moving away from fossil fuels. South Africa, if it doesn’t want to be left behind, must take advantage of its solar and wind resources and invest in a mass rollout of renewable energy. This is according to Hein Reyneke, General Manager of Mainstream SA, which builds solar and wind farms in South Africa. 

Mainstream’s developed wind farms produce 750MW of wind power and 100MW of solar. “We regard ourselves as the biggest developer in the market. We’ve got a pipeline of over 8GW of wind and solar projects in development across the whole country,” says Reyneke. 

Hein Reyneke, General Manager, Africa – Mainstream Renewable Power

Mainstream was one of the first companies to take up the government’s call for renewable energy bidders in 2011, and has been at the forefront of developing clean energy in South Africa for over 10 years.

The company has a global footprint and at first, Mainstream relied on that international experience. But today, there are about 100 people employed by Mainstream, and all of them are South African. 

A wind farm can take up to  five years to develop, Reyneke says. The environmental approvals and studies that need to be conducted can be onerous: from about a year’s worth of bird and bat studies, to water usage licenses and archaeological and heritage studies, developing a wind farm is a “huge undertaking”, he says. 

A solar farm requires slightly fewer impact assessments and takes less time to develop.

Once the wind or solar farm has been developed, the electricity needs to make its way onto Eskom’s national electricity grid. Currently, the renewables sector builds a lot of its own infrastructure to make sure this happens, according to Reyneke. 

 “If you drive between Cape Town and Johannesburg, you will see these (power) lines running for thousands and thousands of kilometres. So, we break those lines, we build a new substation right next to it and bring those lines into the new substation. We bring our energy into the new substation, and it basically creates a multi-plug in the middle of nowhere,” he explains. 

It’s not cheap. Sub-stations like these can cost anywhere between R300-500 million, Reyneke says.

Once a project is developed, it needs a buyer. And once the tendering phase is over, construction begins. This takes anything from 12-18 months for solar, and about two years for wind. 

“Some of our projects started development in 2010 or 2011 and they are still in development. We’re just waiting for the opportunity to take them to the market and raise the finance for them.” 

It is nothing compared to the cost and time it takes to build a fossil fuel project such as a coal power station. And, of course, with zero greenhouse gas emissions.

Renewable energy is also a lot cheaper than energy produced by fossil fuels. Five years ago, in the last government procurement programme known as the expedited round, the price of electricity produced by wind and solar was 62 cents per kilowatt hour — cheaper than any other kind of electricity on the market. Reyneke says this number will continue to decline. 

The renewables sector’s development is being accelerated by changes to the law that will allow private companies to build their own power plants of up to 100MW, without a license. Mainstream has been engaging with large private energy consumers in South Africa for several years. The market is ready now to see a rapid expansion of industrial-scale private market energy sales from wind and solar plants. It is by far the most cost competitive for electricity consumers, with inflation or less cost increases guaranteed for the duration of the supply contract. This gives big users of electricity cheaper than market electricity with no risk of the above inflation increases we have seen the past decade. 

“There’s just no other choice but mass renewable energy rollout in South Africa for the next two decades. We’re not going to build more coal, we’re not going to build more nuclear; the government can’t finance it,” he says. 

“Europe is making very aggressive movements to be carbon neutral by 2050. As one of South Africa’s biggest export markets, the country will have to drastically cut down its carbon emissions,” Reyneke says. “As a longer-term future-proofing of our global positioning as a country in the export markets, we need to decarbonise rapidly.”

Reyneke isn’t optimistic about the prospects for gas here either. South Africa simply does not have the infrastructure for it, he says. “What we do have is world-class solar resources and world-class wind resources. We should just get going and use them.”  — Sarah Evans

Mainstream Asset Management SA: Uplifting communities through clean energy

From the outside, Noupoort, a rural town in the Northern Cape, is pretty unassuming. With a population of under 8 000 (at last census count), the town boasts stunning vistas and views, but little else. That was until five years ago, when Noupoort became the host of a cutting-edge wind farm, which now powers 90 000 South African homes. 

Mainstream Asset Management SA (MAMSA) manages this and other wind farms, and the company is firmly committed to uplifting communities such as Noupoort. 

Titania Stefanus-Zincke, General Manager, Mainstream Asset Management South Africa (MAMSA)

MAMSA manages five wind farms, contributing over 600MW of power to Eskom’s grid, on behalf of the project boards and shareholders. Titania Stefanus-Zincke, General Manager of MAMSA, spoke to the Mail & Guardian about the company’s work.

MAMSA started managing the Noupoort wind farm five years ago, followed by two wind farms in Loeriesfontein, both in the Northern Cape. Since then, the company has taken on two more wind farms. 

“Mainstream Renewable Power SA developed those assets, constructed the wind farms, and MAMSA, which is the asset manager, then took those into operation and continued managing the operations of these wind farms,” Stefanus-Zincke explained. 

MAMSA also oversees the regulatory and legal compliance issues including the sale of electricity to Eskom. “There’s a lot of regulatory reporting.”  

MAMSA’s work also includes managing operations and maintenance, which includes managing service providers and suppliers providing maintenance of the turbines and the balance of plant electrical work.    

Operating a wind farm is complex enough, but the proper management of the health and safety of employees and contractors is crucial. It also includes bird and bat monitoring and environmental and safety audits — all undertaken by MAMSA. 

 MAMSA is committed to the communities around these wind farms. “It obviously involves a lot of stakeholder engagement with the community and liaising with government departments on how we can collaborate on projects,” she said. 

Stefanus-Zincke firmly believes that community development should happen with communities, not to them. This philosophy is central to MAMSA’s asset-based community development methodology, which the company has rolled out to all the communities surrounding the wind farms it manages. 

“We ran workshops in the communities — we have assisted them to identify the assets, strengths and skills that they have,” she said. 

MAMSA has a wide range of community development initiatives. There are grants available to community members who qualify. 

“The criteria is quite simple. If you are doing any socioeconomic activities that benefit the broader community, or generating jobs in your community, and you’re already doing it yourself, then you can apply and access funds from us.” 

MAMSA has also worked with the department of education in the Northern Cape on school infrastructure projects, and with the department of health, to provide PPE and medical equipment to hospitals and clinics. 

“In fact, as recently as this month, we’ve donated an x-ray machine to a clinic in our Noupoort community,” she said. The list goes on. 

MAMSA recently donated smartboards to a local school, and funded teachers’ salaries in science, technology, engineering and mathematics subjects in rural towns. 

Key to this effort is ensuring that the project officers working with these communities are based in these communities. MAMSA gives its employees a great deal of support to incentivise them to stay in these rural towns. 

This includes an employee assistance programme, which includes financial and legal assistance, as well as trauma counselling and employee wellness support. This has been particularly important during Covid-19, Stefanus-Zincke said. MAMSA’s support has been practical, too: the company has provided all of its employees with desks and chairs to ensure that their home environments are conducive to working. 

Stefanus-Zincke believes in working with government in uplifting communities, to maximise resources and align policies. 

“I do believe that there needs to be a more collaborative approach to development, that you should do it as a sector or with the government, and not as an individual company,” she said. “And, that collective impact is greater than a company-specific approach.”  — Sarah Evans

Green finance needed to help feed Africa’s poor

Food security across Sub-Saharan Africa is an enormous and ongoing concern. Last year, 250.3-million Africans — nearly a fifth of the population — went hungry. This is an increase of 47.9-million since 2014. 

In its 2020 report, Africa Regional Overview of Food Security and Nutrition, the UN’s Food and Agriculture Organisation (FAO) said the combined impacts of conflict and climate change have made it necessary to build communities’ resilience and to find peaceful solutions to strengthen food security. Drought and changing weather patterns have poured oil on the flames, as have disease and the lack of access to finance. Limited infrastructure, especially transport, and the failure of economies to keep up with population growth have added additional dimensions to the problem. The report warns that food security will continue to get worse because of the Covid-19 pandemic.

Employing and maintaining environmentally sustainable practices are critical for planetary and human health. (Photo: David Harrison)

“In addition to hunger, across all countries in Africa, millions of people suffer from widespread micronutrient deficiencies, and overweight and obesity are emerging as significant health concerns in many countries … the food system in Africa does not provide food at a cost that makes nutritious food affordable to a majority of the population, and this is reflected in the high disease burden associated with maternal and child malnutrition, high body-mass, micronutrient deficiencies, and dietary risk factors.” — Food and Agriculture Organisation 

The report says it is important to change food systems to ensure people have access to affordable and healthy diets that are sustainably produced.

Why green is the new black for the financial services sector 

In the context of food security, renewable energy is an attractive branch of investment within the overall economy.  As far as South Africa is concerned, renewables are an important part of the economy and investment in it is aligned with the country’s commitment to the 2015 Paris Agreement on Climate Change.

Most, if not all, major financial institutions have moved — to greater or lesser degrees — to align with government’s undertakings in terms of the Paris Agreement as well as the Sustainable Development Goals. It makes sense for the financial services sector to work towards increasing financing for renewable energy projects. South Africa, like the rest of the world, simply has no option but to move towards cleaner forms of power and reduce greenhouse gas emissions. An added bonus is that this shift will also bring about job creation in the growing renewables sector.

Making finance available to invest in renewables is no longer simply an option. It has become an imperative.

Why renewables?

Renewable energy, especially solar power, can make a significant contribution to the green economy. Clean technologies are known to improve people’s general quality of life; their access to water, technology and information; education; food preparation options, and employment, while reducing transport-related emissions by shortening the value chain between harvest and table.

Opportunities for investment in these technologies are abundant and promising. Investing in solar power, in particular, could see progress in at least four areas of agriculture that will modernise the sector. These are: 

Irrigation systems

Desalination plants

Refrigeration capabilities, and 

Environmentally friendly practices to improve food quality.

Modernising African Agriculture 

Irrigation systems

Only seven percent of African agriculture is under irrigation. The rest is rain-fed and subject to erratic rainfall patterns. Solar-powered irrigation provides a cost-effective, time-saving and environmentally friendly solution to producing crops all year round. Solar-powered drip irrigation offers specific advantages, including an increase in crop yields, improved soil moisture conditions and reduced labour. The latter will improve the quality of life for women and children, who are usually responsible for fetching and carrying water. 

Desalination plants 

Desalination facilities require significant amounts of electricity to function. Energy supply accounts for nearly 15% of global freshwater withdrawals each year. As a consequence, the availability of water resources to extract fuel and generate power determines energy security.

In many water-scarce regions, desalination is one of the solutions available to meet water shortages. However, it usually relies on fossil fuel-based, energy-intensive processes to meet its water needs. In other words, fresh water is used to supply the electricity needed to run the desalination plant to supplement fresh water sources.

Renewable energy-based desalination technologies could play an increasing role in bridging the water gap. Although still expensive, it is a more sustainable solution and contributes to food security, since the agriculture and food supply chain make up 30% of the world’s energy consumption — it is the largest consumer of water resources, using about 70% of all freshwater.

Refrigeration capabilities

A significant percentage of food produced today spoils before it can be consumed or even reach consumers. Post-harvest losses are estimated at 30% of global food production, while less than 10% of perishable foodstuffs are refrigerated.

Rising temperatures, growing populations and increased urbanisation further complicate the issue. Most developing countries lack the basic infrastructure and management skills to develop integrated cold chains for the distribution of perishable foods. In rural areas the handling, storage, transport, sale and consumption of perishable food commodities often take place entirely outside temperature-controlled environments.

Environmentally friendly practices to improve food quality

The degradation and destruction of natural ecosystems are major threats to crop diversity and the stability of food systems. Climate change, in particular, has been identified as a major determinant of damage to or destruction of ecosystems. Many experts agree that continuing with unsustainable agricultural practices will, in the long term, increase global food insecurity. Employing and maintaining environmentally sustainable practices are critical to planetary and human health — action in this regard cannot be deferred, whether food or non-food related. 

Distributing affordable sustainable technologies for agriculture is a clear step in the right direction, one that brings with it an abundance of investment opportunities. 

Challenges to investing in renewables

While investing in and rolling out renewables is the obvious way forward for both the public and private sectors, daunting barriers exist. These need to be examined and tested to build robust and high-yielding investment environments.  

Capital constraints and economic challenges

These include high installation, maintenance and repair costs, compared with the low costs of competing sources of energy. Mistaken perceptions of costs further muddy the waters, as do uncertainties about funding processes, inadequate government subsidies, and an unwillingness on the part of banks to fund medium- to long-term investments in shrinking economies. 

Solar projects will become more economically viable only if adoption rates are scaled up, solid public-private partnerships are formed, governments come on board, and clear regulatory frameworks are put in place.

Trade restrictions and economic regulation

Utilities across the continent have invested heavily in the traditional energy technologies of coal, gas and oil, all of which are mature and well understood, wielding enormous market power. These present a formidable barrier to renewable energy, which needs to compete with existing infrastructure, expertise and policy. Scaling renewable technologies will require clarity of policy, long-term price certainty and regional co-operation.

Access to finance

The market for renewable energy technologies is relatively new. This can lead to higher volatility and thus greater risk for lenders. Since most renewable technologies are still relatively young, they entail added risk.

Lack of consumer education

A strategic market barrier to solar technology uptake is a lack of clear messaging and limited consumer awareness about the technology. This often generates negative perceptions based on a poor understanding of the costs or how a technology works in practice. 

A kettle boiled twice a day in the UK uses five times the electricity that most people in Mali use in a year.

Creating sound investment vehicles

To roll out renewable technologies at scale in Africa would require the dedicated development of targeted investment incentives. Subsidies and other forms of support given to fossil fuels must be eliminated, while efforts to support innovative new technologies should be thoroughly strategised and accurately directed. 

By aligning a broad investment community and mobilising private finance, renewable electricity infrastructure offers an attractive return profile for long-term investors. Today, an increasing number of institutional investors are recognising the potential for infrastructure investment to deliver inflation-linked, long-term and stable cash flows. — Linda Cilliers

What is green finance?

Green finance refers to financial investments in sustainable development, the environment, and policies to develop more sustainable economies. It includes (but is not limited to) climate finance, and also covers a wider range of objectives such as water sanitation and biodiversity protection (among others). The G7 considers green finance pivotal to achieving environmental and climate goals. 

Globally, green finance is driven by governments, the UN, NGOs and large corporations motivated by the realisation that fossil fuel resources are limited and traditional energy is expensive, and that sustainable energy solutions are essential to save the planet.

Water security: A woman’s work is never done

Gisela Kaiser is soft-spoken, reserved and measured — self-effacing even. But what comes out of her mouth and flows from her pen certainly packs a punch. And she has a  big story to tell. One that could serve as a cheat-sheet for anyone tasked with building water security globally. It’s the story of how she spearheaded the management of the worst drought any city in the country had ever seen. The drought that threatened to devastate Cape Town in the late 2010s was the worst in the city’s history, with the dreaded Day Zero hanging over the entire citizenry like the Sword of Damocles. 

Kaiser’s soon-to-be-published book about the experience sketches the political ups and downs as the crisis unfolded month after month. More importantly, she methodically picks apart the technical challenges and victories — not to mention the many lessons learned — in the long, traumatic days that preceded the winter of 2018 when the rains finally came to break that terrible drought.

Gisela Kaiser, Executive Director for Utility Services at the City of Cape Town

The book, Parched: The Cape Town Drought Story, looks at the history of water management in the Western Cape, the political shenanigans that ensued as the crisis deepened, and very specifically, at the various interventions considered and tried. It details some of the economic impacts of various attempts to alleviate water scarcity and the levels of success or failure of each. This is a book that will be valuable for water scientists and other role players in water-scarce cities in many parts of the world.

Going global

As a civil engineer with an MBA and PhD, Kaiser moved into executive management of the City of Cape Town about 10 years ago. As Executive Director for Utility Services, she felt fortunate to be the technical lead on the drought response. This position garnered her the opportunity to take a deep dive into water supply and demand, especially under crisis conditions.

Today, after closing the chapter on her position as executive director as soon as the drought was broken, Kaiser consults on sustainable water management, a field that encompasses all aspects of water supply and demand. One of her clients is Water Globe Consultants LLC, a small US-based company specialising in water management, supply and treatment. She heads up its sustainable water management portfolio.

“Covid-19 has put a bit of a stop to my travel and work plans. But my current work is still on desalination plants worldwide. I am also working on projects in two other metros in South Africa on better water demand management,” she says. 

Green agenda

Kaiser studied civil engineering in the late 1980s, at a time when few women were doing so.

“When the environment took centre stage in the mid-2000s, I found the argument for sustainable development compelling,” she says. “Ever since, I have always had a green agenda and aimed to advocate widely through my staff, project development and implementation. In a country with so many competing priorities, in the face of poverty and inequality, it is hardly ever easy to find balance, but with climate change accelerating, no one can afford to ignore the risks.”

Pains and gains in a time of drought

Managing the Cape Town drought created an inordinate amount of anxiety and trauma, she says. 

“But it was also an extremely exhilarating experience. During this time, I had the opportunity to engage with top international water specialists and apply best practice in the development of a water strategy aimed at ensuring a resilient water future for Cape Town. 

Gisela Kaiser’s book about the Cape Town drought

“I have been lucky in my career. People have taken a chance on me when I had the right qualifications but not necessarily the right experience. Growing up when and where I did perhaps resulted in my being more tolerant of sexism, and choosing my battles carefully. It is still true that women often need to work harder to be accepted in traditionally male fields of expertise. But once you have the respect of your staff or colleagues, it is easy to actualise and be authentic, bringing skills to the table that would have been joked about two or three decades ago.”

Future water security

The water space is fraught with problems and people don’t always consider the impact of their behaviour on themselves and future generations. Future water security is one of these pressing problems. 

Approximately 41% of the potable water produced by municipalities is lost through leaks, or is water that is used but not measured. Kaiser believes the cheapest way to increase water security is through water demand management. 

“In the worst-case scenario, climate migration may accelerate, but South Africa is fortunate to have a vast coastline, and although expensive and environmentally complicated, desalination offers a virtually limitless supply of potable water to coastal regions.”

Women’s role in the climate economy

Kaiser says the amount of women who rise to senior positions in the arena of climate change is growing.

“Women’s role in society is enormous. Although the status quo has transformed significantly during my lifetime, it is still largely a man’s world. Institutions and the economic fabric still tend to undervalue conventional women’s work, generally involving caring for people. 

“The climate economy provides an opportunity for easier entry, and is likely to appeal to women who are naturally attuned to the needs of people and of the planet. The integration and care, which mostly comes naturally to women, could add significant benefits in this field.”

Kaiser’s advice for women who want to enter this space is to believe in themselves, to find allies, and to support other women or anyone who is struggling.  — Linda Cilliers

Nedbank CIB pioneers the market in Sustainable Finance Solutions

The global race to stave off irreversible climate change is well and truly on, and with it is increasing pressure on financial institutions to stop funding greenhouse gas emitting fossil fuel projects, and rather use their immense power and resources to make the world a cleaner, more sustainable place. 

South Africa is no exception. Building a new, cleaner world, with less greenhouse gas emissions, requires investing in the green economy. For that, the country needs financial institutions to be ambitious, and progressive. 

Arvana Singh – Head of Sustainable Finance Solutions, Nedbank Corporate & Investment Banking

Enter Nedbank, which has been at the forefront of investing in renewable energy for over 10 years — long before the rest of the world’s financial institutions started to feel the heat from climate activists. 

Nedbank’s Head of Sustainable Finance Solutions, Arvana Singh, told the Mail & Guardian that Nedbank’s progressive stance on sustainable development is helping to move South Africa forward towards a greener economy. 

Nedbank has helped to add more than 3 500MW to the national grid, by financing renewable energy projects, since 2012. As an early investor in renewables, the bank saw opportunities when many financial institutions were still ploughing money into fossil fuels.

“Nedbank first funded wind projects in India in order to develop our expertise in the financing of renewable energy, well before the launch of South Africa’s Renewable Energy Independent Power Producer Program,” says Singh.  

 Nedbank has a “strong sustainability inclination” built into its outlook, she says, therefore when opportunities came along to fund renewable energy, the bank was well positioned as an organisation to respond to this. 

Nedbank released its energy policy in April this year. It is an ambitious document that shows the bank’s ambitions to disinvest from fossil fuels over time. In terms of this policy, Nedbank will not finance any new coal-fired power stations; will not finance any new oil exploration projects; and will not project finance any new coal mines, regardless of jurisdiction, from 1 January 2025. 

Sustainable financing

But banks surely have more to offer society than just funding renewable energy projects. Nedbank knows this, Singh says, and has introduced a range of sustainable finance solutions which enables us to partner with our clients and incentivise key sustainability outcomes.

The bank started off by taking a hard look at the United Nations Sustainable Development Goals, and finding practical ways to thread these throughout its operations and products.

Nedbank came up with a range of innovative offerings, including bonds and loans that have intentional “use of proceeds” and sustainability-linked performance targets embedded  into them to help drive and incentivise change.

As a result of its innovative “use of proceeds” SDG-linked bond issue, Nedbank was recognised as the Best Bank for Sustainable Finance in Africa by the prestigious financial magazine, Euromoney, in July 2021. 

“We pioneered a number of firsts in this market,” Singh says. The bank is also exploring sustainable finance offerings related to infrastructure, and  in particular offers a unique value proposition  to consumers buying into green certified developments. 

The green economy

“The green economy is low-carbon and resource efficient, and should aspire to be socially inclusive. It’s an economy that should aim at reducing environmental risks and at the same time, aim to progress sustainable development outcomes,” says Singh.

“As high-carbon industries look to transition to low-carbon status this creates opportunities, because you now need bespoke manufacturing across the supply chain, you need installation of these technologies, clean engineering and green design. This gives rise to an economy that is built around the greening aspects.”

A number of green growth nodes arise from this shift. For example, there’s a growing need for healthier and greener building spaces, Singh says. 

“This is becoming a factor, particularly when you have multinational companies looking to lease in South Africa. This could have positive impacts for developers or building owners who are looking to sell or rent out their spaces, due to higher potential probability of lettings. If developers and landlords continue to develop in a manner that’s green, that’s a growth node for that particular part of the economy.”

There are also opportunities in the residential market, particularly residential developments. “There’s a lot of uncertainty around higher utility bills emanating from coal reliant energy sources. That’s playing a role in shifting some consumer patterns and trends and behaviours,” she said. 

Another important factor is the European Union carbon border adjustment mechanism, which is set to encourage traders in the EU to trade with partners that have a low-carbon trajectory. 

“This could potentially have impacts for the cement, iron, steel and aluminium industries. This means that these industries need to think about how they can transition their carbon footprints. This calls  for greener design and cleaner engineering techniques,” says Singh.  — Sarah Evans

Averda creating a cleaner and better society

Averda, a leading waste management and recycling company, is dedicating significant resources to creating value from waste in a bid to support the circular economy in South Africa. The company is developing new solutions, using high-end technology, and prioritising collaboration with its customers to achieve this. 

Averda provides a broad range of services in the country, including general waste collection, medical waste management, and the operation of general and hazardous waste landfill sites. The company is moving towards a model where waste is reused and recycled instead of going to landfill sites. “In South Africa, 90% of the waste that’s generated is dumped,” says Justice Tootla, Averda’s Managing Director in South Africa. “We are shifting the way we look at waste. We want to make sure that we take almost no waste materials to landfill, to create a better environment.

Justice Tootla, Managing Director, Averda

“The traditional collect and dispose model is not the way to go. That’s why we want to move away from being just your waste collections company, to becoming a solutions-orientated company,” he adds. As part of the restructuring process, the company is redirecting its sales efforts, making changes to its back end, and rethinking the waste value chain. 

Tootla says they are aligning themselves with customers who want to reduce their carbon footprint. A key element of what Averda does is identifying problems that need to be solved in the fields of waste and recycling. The company avoids being prescriptive towards its customers, preferring to find ways to work together with them to come up with efficient and sustainable solutions. “We partner with industry to find out what the pain points are and then work towards fixing the problem to create a cleaner and better society,” says Tootla. 

Averda will soon treat hazardous liquid and sludge waste and convert it to energy using a new blending platform at its Vlakfontein landfill site. “We are trying to really move into a different echelon on the waste strategy, to create a circular economy and use waste as an energy source for our generation going forward.” Regulations introduced in South Africa in 2019 mean that this type of waste can no longer be dumped. The alternative fuel produced by the blending platform will be used by various industries. The facility is expected to be launched soon.

“We are very reliant on fossil fuel as a country and that’s not sustainable,” says Tootla. “That’s why we’re finding smart ways to replace the current fossil fuel energy footprint and developing strategic partnerships with businesses who need that energy.” The company is also hoping to introduce new alternative technologies in line with the green economy. 

Averda uses its vast body of experience — operating in five countries in emerging markets — to help develop the technology and strategies needed to improve the waste and recycling arena in South Africa. In the Middle East, Averda converts used cooking oil into biofuels. It is also working on a strategy to recycle used material, eliminating the need for landfill. “I believe that South Africans value what Averda does, because we bring international knowledge to a local problem and work with you to create value,” says Tootla. 

He hopes that the strides that Averda is making towards zero waste solutions will inspire other companies to do the same. “We’re looking to add value in this area, and we will hopefully also influence other players in the market to go this route as well.”  — Gabi Falanga

Waste picking: Why it’s here to stay

About 62 000 people in South Africa collect recyclables on an informal basis. Waste pickers work in an unregulated environment where conditions are often dangerous and the financial rewards meagre. The most a waste picker can expect is to eke out a marginal livelihood. 

Yet waste pickers save municipalities up to R700-million a year in waste collection and disposal expenses. 

Metros must integrate waste pickers into their programmes. (Photo: Paul Botes)

The 2020 National Waste Management Strategy for South Africa (NWMS) calls for waste pickers to be formally integrated into the recycling sector value chain. Ideally, the government wants waste picking to happen at source within the waste management system and recycling economy — in other words, from waste left outside for collection, whether from bins or black bags. 

Government also wants markets for separated recyclables to enjoy widespread support.  This would require greater collaboration between waste pickers, the private sector and local authorities.

Metros are expected to initiate integration programmes for waste pickers by the end of this year, and the packaging industry needs to come to the party by actively implementing schemes to get pickers integrated into the economy. This is a stipulation of the Extended Producer Responsibility Regulations gazetted last year, but to what extent this is happening remains to be seen.

Producers of consumables are under strict instruction to comply, failing which they could face serious consequences, including fines, imprisonment and loss of registration with the department. Organisations responsible for producing consumables in the various sectors have to co-operate with municipalities to collect more recyclables from municipal waste within three years of implementing their “producer responsibility schemes”.

The government’s message could not be clearer: waste pickers are here to stay, and the various stakeholders need to figure out ways to work with them so that everyone benefits.  — Linda Cilliers

How the waste-picking business operates

Waste pickers in Cape Town contribute significantly to the recycling industry. They sell the recyclables they collect to one of the more than 120 known buy-back centres in the city. These recyclables are then sold to recyclers, where they are repurposed into useful commodities.  

Although the number of waste pickers in the city is not known, a recent study showed that 70 of the buy-back centres were buying recyclables from more than 4 450 waste pickers — a significant percentage of the 6 450 collectors who sell recyclables to the centres. 

The 70 buy-back centres process approximately 17 000 tonnes of recyclables a month, a percentage of which is contributed by the waste pickers. 

This is a significant contribution to the recycling value chain in anyone’s language.

Partnerships to get the waste ball rolling

The informal recycling sector is a vast and complex space that needs a multi-layered approach to integrate waste pickers into the recycling value chain. 

GreenCape is an organisation with the objective of helping stimulate the green economy in Cape Town. One of its roles is to facilitate waste repurposing by setting up symbiotic relationships within business and industry. GreenCape, in partnership with the City of Cape Town, has focused on research to gain as much insight as possible before launching any large-scale programmes to formally integrate waste pickers.

Practical assistance to waste pickers needs to be offered in a carefully planned, participatory manner. Experience elsewhere in South Africa has shown that well-intentioned support trials and programmes have, in some cases, left the waste pickers worse off. 

It is clear that formal integration will not happen overnight.  

Learning from experience

In Cape Town, a multi-disciplinary task team is being established to look into integrating waste pickers into a formal waste economy in a participatory manner. A key part of the process is to learn from existing and proposed localised trial programmes working with the waste pickers. The trials will provide further insight to guide the team on practices that will benefit all stakeholders. The overriding approach is that any and all action must be guided by evidence-based research.

Along with the social benefits of formally recognising a generally marginalised community, establishing relationships between waste pickers, local authorities and residents will allow for open lines of communication. Not least of the items on the agenda will be the clear and present message that bins must be left in a tidy state and that no loose rubbish will be tolerated on the streets.

The public-private partnership

The Green Up Project was launched in June 2019. It empowers local waste pickers in various communities, via entrepreneurship development, towards greater prosperity through recycling. It is jointly co-ordinated by the two local authorities (City of Cape Town and the Western Cape Provincial Government) and industry stakeholder Distell. The project won PETCO’s* (The South African PET Recycling Company) Recycling Partnership Game-changer Award in 2021. 

The Carbon Tax Act: What does the law say?

South Africa’s carbon emissions are disproportionately high when compared with total global emissions, primarily because of our reliance on coal to generate energy. In an effort to minimise our footprint, our government has made a number of international and national commitments to reduce greenhouse gas (GHG) emissions.

Among other pledges, the government has ratified the 2015 Paris Agreement. This agreement asks each country to outline and communicate their post-2020 climate actions, known as their Nationally Determined Contributions (NDCs). South Africa’s NDC aims to achieve the absolute decline of GHGs from 2040 onwards. Under this national commitment, GHG emissions are expected to peak between 2020 and 2025, plateau between 2025 and 2035, and decline thereafter.

The Darling Wind Farm in the Western Cape was one of the first of its kind, and serves as a national demonstration project. Its four wind turbines feed 8-million kWh of green electricity into the grid. (Photo: David Harrison)

To achieve the reduction of GHGs from 2040, various policies and measures have been and will continue to be introduced. Measures include: 

a carbon tax

sector-specific desired emission reduction outcomes

sector, subsector and company carbon budgets and regulatory standards and controls for specifically identified GHGs and GHG emitters.

Carbon Pricing

One of the measures identified is carbon pricing. This is regulated through the Carbon Tax Act of 2019, which taxes CO2 equivalent emissions generated by certain activities (R120 per ton of CO2 equivalent). However, this tax rate is subject to a number of allowances, which is divided into:

Allowances for emissions resulting from fossil fuel combustion, industrial processes or fugitive emissions, respectively:

  • A trade exposure allowance
  • A performance allowance
  • A carbon budget allowance, and
  • An offset allowance

Offset Allowance

The offset allowance mentioned above is a method by which a taxpayer can reduce the amount of carbon tax for which they are liable. This reduction is to be done by utilising carbon offsets as prescribed by the minister of finance, but subject to the percentage limitations set out in Schedule 2 of the Act. In terms of section 19(c) of the Act, the minister must publish regulations in respect of section 13, which regulations have to contain:

  • The projects or activities in respect of which an offset is generated
  • The limitation on the carbon offset allowance
  • Offset duration periods
  • The institution, board or body that must administer the offset allowance
  • The powers and responsibilities of the institution, board or body referred to above
  • The procedure that must be followed in claiming the offset allowance
  • The records that must be kept in respect of administering the offset allowance; and
  • Anything else needed to regulate the utilisation of the carbon offsets.

Fugitive emissions

Fugitive emissions are leaks and other irregular releases of gases or vapours from a pressurised containment — such as appliances, storage tanks, pipelines, wells, or other pieces of equipment — mostly from industrial activities.

Offset Regulations

The Offset Regulations (those under Section 19 of the Carbon Tax Act) were published under Government Notice 1556 in Government Gazette 42873 on 29 November 2019. In terms of the Offset Regulations, an offset means an avoidance, a reduction or a sequestration of carbon dioxide equivalent (CO2e) emissions recognised in terms of an approved project. Approved projects include:

  • Clean Development Mechanism (CDM) projects
  • Verified Carbon Standard (VCS) projects
  • Gold Standard projects

Other projects (those that comply with another standard approved by the minister responsible for energy or delegated authority).

The United Nations’ CDM, VCS and Gold Standard can be understood as existing international carbon offset standards developed under the Kyoto Protocol in 1992. Each of these international standards have various registration and eligibility requirements that projects need to comply with to qualify as an approved project.

Following on from this, approved projects under these standards generate carbon credits, a generic term referring to:

  • Certified emission reductions (CERs) generated under the CDM
  • Verified carbon units (VCUs) generated under the VCS, and
  • Gold standard credits

The generation, transfer and acquisition of carbon credits generated by these projects are tracked and recorded through registry systems and the International Transaction Log (ITL) established under the UNFCCC’s Kyoto Protocol.

Earning carbon credits through gas extraction: A case study

A Cape Town project has earned 126 274 carbon credits from the United Nations’ Clean Development Mechanism (CDM). The purpose of the Landfill Gas Extraction and Utilisation Project is to reduce carbon emissions at its Muizenberg site, thereby contributing to the overall mitigation of the effects of climate change. Further mitigation takes place when the landfill gas is then converted into electricity. Landfill gas, which consists predominantly of methane, has a global warming potential that is about 25 times greater than carbon dioxide.

The CDM is one of the flexibility mechanisms under the UN Framework Convention on Climate Change (UNFCCC). The UNFCC’s Kyoto Protocol encourages developing countries to implement emission reduction and thus earn carbon credits. 

How does it work?

The gas extraction system comprises a wellfield made up of a combination of vertical and horizontal wells, well heads, condensate traps, pipelines, gas blowers, measuring instrumentation and a gas flare. It extracts landfill gas for flaring to reduce the greenhouse gas emissions associated with waste decomposition in landfill sites. Once the electricity generation equipment is installed, the landfill gas will be used to generate electricity.  

Quick Facts

Each carbon credit represents a one-tonne reduction in carbon dioxide emissions.

  • This means the project has reduced 126 274 tonnes of carbon emissions between July 2018, when credits began to be tallied, and June 2021.
  • This is equal to reducing greenhouse gas emissions from about 24 762 passenger vehicles driven for one year.
  • It is also equal to carbon captured from the atmosphere and stored by planting the seedlings of two million trees and growing these for more than 10 years.

Benefits of Carbon Credits

These credits can be sold to industries that are otherwise unable to reduce carbon emissions to meet their carbon tax obligations.

Carbon credits can be sold on the international carbon markets as well as on the South African market under the carbon tax legislation that was signed into law recently. They can also be used to meet the recipient’s own obligations under the carbon tax in the form of offsets under the South African Carbon Offset Regulations.

How to Receive Credits

A Programme of Activities (PoA) must be approved by the CDM to potentially earn carbon credits. This is a complex process, but it allows third party projects to join at a low cost. It is governed by strict methodologies that require substantial documentary evidence to be verified in terms of the UNFCCC rules.

The CDM’s third-party provision means that, with Cape Town’s approved PoA, future landfill gas projects all over South Africa may be eligible to earn carbon credits, provided they comply with the technical and legal specifications governing the PoA. This has the potential to make a significant contribution towards local and national carbon emissions reduction goals.  — Linda Cilliers

Designing plastic packaging with recycling in mind

Plastic bottles are the poster child for plastic pollution in the environment. They feature heavily in images of pollution and recycling campaigns: strewn across beaches, floating in rivers, and bobbing alongside sea turtles. These images as well as the undeniable damaging effects on the environment and unsustainability of a single-use society has led to wide-spread calls for the complete ban of plastic. 

However, it is difficult to imagine a society without plastic. There are several benefits to these polymer-based materials. PET plastic (from which bottles are made) is lightweight, resource efficient, hygienic, shatterproof, versatile, and in many cases 100% recyclable. The PET Recycling Company (PETCO) points out that without packaging, we wouldn’t be able to purchase liquids, gels, powders or out-of-season fruit. There would be significant problems with food safety and hygiene, and food wastage would increase, with negative environmental impacts. 

It is essential for retailers, brand owners, packaging manufacturers and designers to embed recyclability into their processes so that packaging can be recycled. (Photo: PETCO)

Rather than eliminating plastics completely, steps are being taken to ensure that packaging is either reused or recycled, rather than being disposed of after use, in a move towards a circular rather than linear economy. 

Government’s recently published Section 18 regulations in the National Environmental Management Waste Act makes Extended Producer Responsibility (EPR) mandatory for all producers and importers of packaging. This means that producers, brand owners, retailers and importers of plastic packaging must take physical and financial accountability for the products they put on the market, ensuring they don’t negatively affect the environment after use by consumers. 

According to the legislation, manufacturers or importers of plastic packaging must join a producer responsibility organisation (PRO) and pay an EPR fee per tonne to them. The PROs use this revenue to support the collection, sorting and recycling of recyclable materials. There are several plastics-related PROs in South Africa that have already been fulfilling this function for their voluntary members for many years. 

PETCO is one of these PROs and the organisation has published extensive guidelines for the design of PET plastic packaging based on the requirements of the mechanical recycling process in South Africa. Kara Levy, PETCO’s Marketing Officer, says that designing packaging with the environment in mind will help packaging producers to meet their EPR obligations. 

As the guide states: “The recycling of packaging does not begin with its collection, but rather with its design. To maximise the recycling of plastic packaging, it is essential that retailers, brand owners, packaging manufacturers and designers embed recyclability principles into their pack design processes so that, at the end of its life, the packaging material can be successfully recycled and used again in new products and packaging.”

The comprehensive document acknowledges that while optimal packaging design is necessary to minimise environmental impact, it also needs to fulfil technical, aesthetic, consumer and customer needs. The guide covers in detail how the shape, composition, additives, barrier layers, colour of plastic, closures, labels and adhesives, inks and other components of PET packaging affects its recyclability. 

“In the best-case scenario, PET bottles that are clear or very light blue, have labels that come off and have no glue remaining on them, and are not directly printed onto with ink, are 100% recyclable and compatible with recycling infrastructure in South Africa,” says Levy. 

These bottles can be used to make new PET bottles. “This is really important for the circular economy in South Africa because it closes the loop and enables one bottle to be turned right back into a new PET plastic bottle,” says Levy. However, there is a finite number of times that a bottle can be made into a new bottle. Those that are no longer suitable for recycling into new bottles are turned into polyester fibre which is used in duvets, car mats and geotextiles. They also create an income for waste collectors who get paid by buy-back centres when they bring in used PET bottles. 

When PET products aren’t designed with recycling in mind, there’s a strong chance they will land up at landfill sites. “Or if the bottle is made from something PLA (Polylactic Acid) that looks, feels, and tastes like PET, and it gets into the recycling stream, it can clog up the machines at a recycling plant and have really bad effects on the infrastructure,” Levy points out. 

Stats for a graphic:

  • PET plastic recycling in numbers
  • PETCO recorded the following stats for 2020: 
  • 82 469 tonnes of post-consumer beverage PET bottles collected. 
  • 55% post-consumer beverage PET bottles collected for recycling.
  • 511 310 cubic metres of landfill space saved. 
  • 123 704 tonnes of carbon emissions saved.
  • 52 600 active collectors involved in PET collection and recycling
  • R59.2-million spent (by PETCO) in support of contracted industry recycling projects. 
  • R278-million paid by recyclers for baled bottles delivered to plants. 
  • R895-million injected into the downstream economy. — Gabi Falanga

What does a circular economy for South Africa look like?

South Africa needs to phase out coal-based power generation, reduce exports of non-renewable resources and focus on developing the nation to achieve a circular economy. These are recommendations from a recent study that quantified all the materials used in the country in a year and the resulting waste and emissions.

The research was conducted by Professor Harro von Blottnitz from the University of Cape Town’s Faculty of Engineering and the Built Environment. He collaborated with and used a sophisticated material flow analysis tool developed by Dr Willi Haas and his counterparts at the University of Natural Resources and Life Sciences (BOKU) in Vienna, Austria. 

Paper-based containers are not only recyclable but they form a vital part of the food supply chain — from farm to factory to export markets. (Photo: Sappi)

A circular economy moves away from the unsustainable linear “take-make-waste” model by improving the way that finite resources are used, lengthening their lifetime, and minimising waste. Von Blottnitz’s analysis, which focused on data from 2017, found that South Africa is far from circular. 

The country’s extraction of all food, minerals, metal ores and coal amounted to 875-million tonnes (Mt). Exports, consisting predominantly of refined metals and coal, weighed in at 170 Mt and imports at a comparatively small 32 Mt. South Africa generated high levels of waste, with 310 Mt of solid and liquid waste returned to nature. Waste from mining activities accounted for 171 Mt and carbon emissions from technical processes, humans and livestock to 175 Mt. 

This shows that South Africa’s economy, which was built around mining, is still dominated by what Von Blottnitz calls the minerals-energy complex. Finite resources are excavated and exported and the coal that remains in the country is burnt to produce power. Both activities are inherently linear. 

“When you’ve got a dig and take mentality, then you don’t build the permanency that one would associate with a circular domestic economy,” says Von Blottnitz. While this relates to our mining of fossil fuels, it also refers to the study’s finding that South Africa suffers from a low rate of domestic stock building. This means there has been a lack of investment into long lasting infrastructure such as roads, power grids, buildings and durable consumer goods. 

Government should scale back on our reliance on fossil fuels for power and reduce exports and focus instead on developing the nation, says Von Blottnitz. “The domestic economy matters when you look at the circular economy. South Africa has a problem with its inherited domestic economy and inequality problem. We need to address the fact that many of our compatriots still live in shacks.”

Addressing this in part means that resource extraction and manufacturing must be designed in a way that ensures the population gets the best services with the least extraction of resources. Infrastructure and goods must be designed to be suitable for recycling when they reach the end of their life. Circularity is about using resources wisely and prioritising reuse above recycling, Von Blottnitz points out. 

“The first time you hear ‘circular economy’ you think of end-of-life and recycling. But the circular economy is all about the front-of-life and what we take from nature. And when we take from nature, we must take it with the intent to use it wisely and don’t take too much, because that damages nature and undermines what the environment does for us, and of course, also takes from the future generation’s opportunity to take from nature.”

The department of forestry, fisheries and the environment has already incorporated the concept of the circular economy into legislation that predominantly focuses on waste management. Minister Barbara Creecy has on more than one occasion alluded to the importance of the green economy in the country’s post-Covid-19 reconstruction and recovery plan. In April she told the World Circular Economy Forum that the plan “promotes waste recycling, renewable energy generation, revitalising our ecotourism and forestry sectors; and retrofitting government buildings to save on water and energy consumption”. 

While Von Blottnitz welcomed these regulations and strategies, he commented that other government departments such as the departments of trade, industry and competition; human settlements; the presidency and treasury needed to do more to incorporate and act on circular economy principles. — Gabi Falanga

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