Session 9: Energy Utilisation
A global benchmarking of policy instruments for effective climate change mitigation demonstrates the need for a mix of policy measures. The optimal policy package is characterised by the complementarity of its policy components, and the recognition of context: the appropriateness of the mix of measures varies from country to country depending on unique sets of climate change challenges as welll as other national objectives. South Africa is considering a number of policy options for climate mitigation: a carbon tax, desired emissions reductions outcomes, and required energy management plans. To determine the optimal policy package, an assessment of the range of policy instruments is needed, particularly in understanding how these instruments can be used together and in which cases they are redundant or suboptimal and burdensome.
Session 8: Agricultural value chains in the region
This paper expands a case study by Emet Consulting for the South African Institute of International Affairs (SAIIA) in 2014. The case study (Regulatory Constraints to the Development of a Fuel Ethanol Market in SADC) was a component of a project funded by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), through its ProSPECT project, investigating the most significant constraints to doing business in the SADC region. Through the project GIZ and SAIIA aimed to provide concrete examples of constraints to doing business in the region, as well as potential solutions. The overall objective of the research was to reduce these business constraints by facilitating a dialogue in the SADC region on their removal, thereby allowing the private sector to take advantage of the opportunities offered by regional integration.
Policy interventions at national and international scales are driving efforts to simultaneously reduce greenhouse gas emissions and provide sustainable socio-economic improvements. The Clean Development Mechanism (CDM) is one such policy instrument implemented through the Kyoto Protocol under the international climate change regime. Questions remain particularly around how socio-economic development can be achieved and, more importantly, how these policy approaches play out on the ground in the lives of those they affect.
This paper presents a case study, focusing on the impact of a skills development component of the Kuyasa CDM project, in Cape Town, South Africa. It investigates two specific aspects of the project, highlighting challenges for CDM projects to achieve their desired socio-economic outcomes. Findings indicate that formal accreditation is not, in all cases, found to be beneficial to the lives of those living in Kuyasa. At the same time, many benefits are drawn from the experience of productive work but these are not acknowledged. Implications for expectation management and more appropriate interventions are outlined, including understanding the multi-dimensional impact of the experience of training and employment. Finally, reflections are provided on how CDM projects could contribute to effective skills development.
This paper falls under the TIPS Small Grant Research Papers annual Peet du Plooy Small Grant for Sustainability, launched in 2013, given for economic research on issues pertaining to the green economy and climate change.
Policy Paper prepared for the Economic Development Department and the Department of Trade and Industry
The impact of electricity price increases on the competitiveness of selected mining sector and smelting value chains in South Africa: Has it incentivised mining-related companies to invest in renewable energy, cogeneration and energy efficiency?
This research project was jointly commissioned by the Economic Development Department (EDD) and the Department of Trade and Industry (the dti). The Global Green Growth Institute (GGGI) was tasked with implementing the project as part of a partnership to support the South African government's green growth planning efforts. TIPS was the primary research partner and service provider. This project is the result of the collaboration of all of these institutions.
The South African government's Inter-departmental Green Growth Committee, chaired by EDD, served as the project steering committee for this research. A multi-stakeholder Technical Reference Group was also established to offer inputs on various drafts of the report.
This policy paper represents a condensed version of an earlier report, which was the result of extensive fieldwork and interviews with stakeholders across the selected mining value chains. The research team comprised Reena Das Nair, Dinga Fatman, Evans Chinembiri, Gaylor Montmasson-Clair, Georgina Ryan and Wendy Nyakabawo of TIPS. Gaylor Montmasson-Clair and Georgina Ryan were the lead authors of the policy paper. Alison Goldstuck and Katlego Moilwa were GGGI contributing authors.
Although not directly associated with the transition to a green growth path, recent trends in South Africa's electricity supply industry, which has been characterised by energy supply problems since a load shedding crisis in 2008 and drastic price increases (i.e. a trebling of the average electricity price from 2009/2010 to 2017/2018), provide an opportunity to investigate the shift to a greener path. Using these developments as an entry point, this paper investigates the impact of electricity price increases on the competitiveness of mining-related companies and the mitigation measures which have been implemented by various firms in the four most important mining value chains in South Africa, namely platinum, gold, iron ore and coal. Particular attention is paid to the role that electricity price increases and energy security concerns have played in fostering investments by mining-related firms in renewable energy and energy efficiency.
For any enquiries related to the report that are relevant to the dti and EDD, please contact Christian Prins, Economist (macro economic policy), EDD, at email@example.com.
This report is part of the project called the “Social Dialogue for Green and Decent Jobs. South Africa - European Dialogue on Just Transition” funded by EuropeAid's budget line SA/21.060200-01-08. The project has been cofunded by Sustainlabour. The Congress of South African Trade Unions – COSATU acts as partner organization.
In 2012, South Africa remains faced with the triple developmental challenge of unemployment, poverty and inequality. In addition, the country's current economic growth model is heavily resource and energy-intensive, aggravating pressures on the environment and the threat of climate change. The transition to a green economy, stemming from the concept of sustainable development, has been internationally recognised as a ground-breaking way forward, combining economic development, social welfare and environmental protection.
South Africa is in a unique position to exploit the emergence of green economic development in the world. The country's renewable resources abundance (solar and wind predominantly) and biodiversity positions it to play a leading role in the Southern African region and in Africa. In addition, if supported by an enabling environment, green sectors have the potential to foster South African growth and employment, as well as the shift to sustainable development.
This paper investigates the potential to harness trade finance to foster the development of a green economy in developing countries.
The world is facing multiple crises of sustainability: global financial crisis, climate change, and the overuse of natural resources. Many developing countries are additionally destabilized by poverty, disease, corruption, and failures in democratic governance and education.
The transition to a green economy is recognised by a variety of organizations and experts as a ground-breaking way forward, combining economic development, social welfare and environmental protection. In order to shift to a green economy, changes in production and consumption practices, and therefore also in trade patterns, are crucial. This makes the leverage power of leading export credit agencies, which totalled an exposure of USD 1.7 trillion in 2011, colossal.
The principle that the person or the organisation responsible for pollution or environmental degradation should be responsible for the restoration of the affected ecosystem has been established in South African law. However, what constitute successful restoration remains a contentious issue. This policy brief considers two examples and make recommendations for improving the regulatory environment.
Author: Marco Pauw, Stellenbosch University and ASSET Research
Authors: Helanya Fourie, Western Cape Department of Agriculture and ASSET Research, and David le Maitre, CSIR
The marketability of the natural environment is influenced by different forms of restoration activities, which in turn has cost implications depending on the different types of ecosystems and the extent of the damage. This brief adopts an economic approach to explore some of the key market challenges.
Authors: Douglas J Crookes, University of Stellenbosch and ASSET Research and James N Blignaut, University of Pretoria, Beatus and ASSET Research (firstname.lastname@example.org)
An increase in tree density, or bush thickening, beyond a certain threshold may be detrimental for the ecosystem and reduce the productivity of such rangeland for agriculture and conservation. However, the woody plants in areas where there is bush thickening present at opportunity to harvest the wood as bio-fuel.
Authors: Jacques Cloete, University of the Free State and Asset Research, and Nico Smit, University of the Free State
Joint report from Industrial Development Corporation, Development Bank of Southern Africa and TIPS
In its recent green economy study, UNEP9 concluded that environmental sustainability and economic progress are not opposing forces and that significant benefits will flow from the greening of the world's economies. Greening generates increases in wealth, measured in classical terms of higher growth in gross domestic product (GDP) – even in poorer or developing countries – as well as in the form of ecological gains due to positive impacts on the natural capital of ecosystems and biodiversity. An important synergy exists between poverty eradication (ensuring food supply, water, energy and health, as well as support to subsistence farmers) and enhanced conservation of natural capital.
The green economy could be an extremely important trigger and lever for enhancing a country's growth potential and redirecting its development trajectory in the 21st century. A burgeoning green economy will reflect a clear expansion of productive capacity and service delivery across many existing areas of economic activity, and the introduction of numerous new activities in the primary, secondary and tertiary sectors.
This should be evidenced by substantial investment activity in conventional and non-traditional activities, meaningful employment creation, sustaining competitiveness in a world that is increasingly determined to address adverse climate change trends, and by opportunities for export trade, among others.
The imperative of stabilising greenhouse gas (GHG) concentrations in the atmosphere within particular boundaries, so as to contain atmospheric warming trends and other associated forms of climate change, is leading to discernible behavioural change in societies around the world, and to the consideration of (or a commitment to) specific national targets.
On top of this, there is a “growing threat of increasing 'eco-protectionism' from advanced industrial countries in the form of tariff and non-tariff measures such as carbon taxes and restrictive standards”. Such trends are proving to be a powerful force for the evolution of a green economy to protect biodiversity, address adverse climate change trends, pollution and unsustainable resource use.
The quest for new sources of energy away from traditional petroleum products has in recent times led to the development and use of biological material (biomass). As the name suggests, biofuels are developed from organic materials. Thus an increase in the price of oil has also increased demand for biofuels, resulting in a high correlation between agricultural commodities* prices, particularly maize, and energy prices. While escalating petroleum prices are one reason for the quest for other sources of energy, this is not the only factor. The search for alternative sources of energy was underscored by environmental concerns and energy security concerns in the US and European Union countries about their reliance on oil from a few countries. The use of food products to generate fuel has raised concerns that this will raise prices of essential food items for poor households – and experts agree that biofuel production has affected the cost of food. Estimates range from a conservative estimate of 2%-3% by the US Department of Agriculture to 70%- 75% in a study done by Mitchell (2008)**. Has this increased production of biofuels resulted in a shortage of food supplies at the household level? Has that shortage – perceived or real — resulted in a permanent increase in prices thus threatening food security for poor households? Assuming that increased biofuels production threatens poor households' food supplies, what policy choices are available to governments in the Southern African Customs Union (SACU)? biofuels production on maize prices, how the rise in maize prices affected low-income groups in SACU, and whether and when exportable maize surpluses are likely in South Africa.
The construction sector has a key role to play in greenhouse gas (GHG) emissions reductions. Not only can firms in the sector, by using less energy-intensive and polluting strategies and techniques, contribute to this reduction, these firms can also encourage clients to utilize such technologies. The construction sector encompasses a range of segments; the building sector with primary building work demolitions, maintenance, repairs and alterations and heavy construction work. Typically, however, the construction sector is seen as encompassing residential building (houses and residential property), non-residential building (industrial buildings) and civil works (or civil engineering). As noted in the economic sector review of the construction industry, the building sector dominates. This segment accounted for 62.5% of all construction activities in value terms in 2009.
The draft Integrated Resource Plan (IRP) for electricity generation was released for public comment by the South African Department of Energy (DOE) in October 2010. While the document is therefore still in draft form, and will presumably be refined in the final stage of public engagement, it is worthwhile to reflect on the state of this draft IRP, a document that marks a turning point in the energy planning process in South Africa.
The process of supporting transparent and accountable electricity planning in South Africa, open to public debate, and reflected upon and refined based on a process of democratic engagement, has hitherto been absent in contemporary South Africa. Indeed, until very recently, dialogue on the makeup and priorities of electricity planning were restricted to a handful of closely knit institutions and individuals, and outside of the breadth of public examination. The IRP 2010, as the latest IRP document is referred to, represents the first in what will hopefully be a long history of transparent electricity planning efforts in the country.
Equally important, the document constitutes the first tangible attempt to commence the process of integrating and aligning South Africa’s climate change mitigation objectives on the one hand, through a reduction in greenhouse gas (GHG) emissions associated with electricity usage, and the country’s traditional and critically important energy planning functions and priorities related to universal access, economic development, industrial competitiveness and security of supply.
This paper maps developments in the energy, climate change adaptation and water sectors that have the potential to benefit the South African economic development process. Whilst the risks associated with environmental disasters form part of the analysis, the emphasis is on the concepts and emerging opportunities that could benefit South Africa's development cause.
A number of research organisations around the world have recently attempted to capture and explain the impacts that biofuel policies have on agricultural commodity markets. Previously, food price inflation has gone along with the general inflation trend but this has changed. On the supply side the international market has experienced a slightly shorter supply of commodities with weather conditions being one of the most important factors involved (Westhoff, 2008).
High expectations exist about the possible contribution of SMMEs to economic growth and development in South Africa. It is recognized, however, that SMMEs are seriously constrained in many regards, amongst others, legal and institutional requirements, whereas the authorities do not have adequate capacity for enforcement. Non-compliance cannot therefore be effectively sanctioned. The same trend is observed regarding compliance with environmental legislation and the implementation of environmental management systems. It is suggested here, based on international evidence, that prudent environmental management should not be viewed only as a cost item or legal matter, but actually as a matter of good business. This necessitates a proper and well-implemented development support and communication system between science, industry and government.