2022|53ISSUEEconomy GREEN journal THE ESG OF FINANCECLIMATE14 THE FUTURE OF ENERGY IN SOUTH AFRICA32 MINISTER OF WATER SANITATIONAND48 INCIRCULARITYCONSTRUCTION
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And then this past Monday, the president made an address to the nation and in one swoop, knocked the scoop out of this issue by making some announcements that we never thought would happen. Turn to page 8 for a full summary of the national plan to save our power. Nevertheless, there is so much more. We talk to the Minister of Water and Sanitation, Senzo Mchunu, and Lebalelo Water User Association about collaboration between the public and private sectors. The Journal interviews SAPVIA’s new chief executive officer, Dr Rethabile Melamu – a true catalyst of power and the CEO of AFSA. Enjoy the read! Dear ThreeReader,months ago, the gun was cocked and loaded, the industry was pregnant with projects just waiting. And waiting… and now suddenly, triggered by the worst loadshedding in 10 years, there’sEskomprogress!hascontracted the long-awaited World Bank funded Battery Energy Storage System (BESS) procurement phase 1, and 199MW/832MWh of storage will now be added to the beleaguered Eskom grid by the end of 2023. Eventually common sense has prevailed, albeit late, and under duress, the president has announced, amongst other proposed action, that the 100MW cap has been removed for license exemption for own generation and the condition waiver of local content rules has been implemented. At the same time, the smaller end of the industry has gone bananas, with equipment prices going up almost weekly. Locally integrated L-Ion batteries having gone up 35% in two months, and no stock is available with waiting periods of up to 12 weeks! Solar panels and inverters are also under pressure. got to give… Well, we asked for it, we wanted it, and it now seems we’re havingGoodit!luck to customers and suppliers alike. May the industry cover itself in glory as we bring through the promised low-cost rapid implementation solutions to Eskom, and indeed all our energy and carbon problems. NOTE
In this, the 53rd issue of Green Economy Journal, we have focused, largely on the energy crisis in South Africa. How could we not? I thought as I sat planning the editorial mix by candlelight. The long and short of loadshedding solutions suggests that if the problem is tackled purposefully and urgently with a coordinated emergency plan partnering Eskom and civil society, we could solve our loadshedding woes within two years (page 10).
Something’s
Yours, PUBLISHER’SPublisherAlexisKnipeEditor NOTE EDITOR’S
4 All Rights Reserved. No part of this publication may be reproduced or transmitted in any way or in any form without the prior written permission of the Publisher. The opinions expressed herein are not necessarily those of the Publisher or the Editor. All editorial and advertising contributions are accepted on the understanding that the contributor either owns or has obtained all necessary copyrights and permissions. The Publisher does not endorse any claims made in the publication by or on behalf of any organisations or products. Please address any concerns in this regard to the Publisher. EDITOR: Alexis alexis@greeneconomy.mediaKnipe CO-PUBLISHERS: Gordon danielle@greeneconomy.mediaDaniellealexis@greeneconomy.mediaAlexisgordon@greeneconomy.mediaBrownKnipeSolomons LAYOUT AND DESIGN: CDC Design OFFICE ADMINISTRATOR: Melanie Taylor WEB, DIGITAL AND SOCIAL MEDIA: Steven Mokopane SALES: Gerard Jeffcote Glenda Kulp Nadia Maritz Tanya Duthie Vania Reyneke PRINTERS: FA Print GENERAL ENQUIRIES: info@greeneconomy.media ADVERTISING ENQUIRIES: alexis@greeneconomy.media REG NUMBER: 2005/003854/07 VAT NUMBER: 4750243448 PUBLICATION DATE: July 2022 www.greeneconomy.media Economy GREEN journal
On page 32, What is the future of SA’s energy, Matthew Cruise, Hohm Energy, uncovers what could happen in our country over the next five years with regards to electricity. He also unpacks solar and battery installations from requirements to costs.
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7 CONTENTS Economy GREEN journal 24 32 46 To access the full report in our Thought [ECO]nomy report boxes: Click on the READ REPORT wording or image in the box and you will gain access to the original report. Turn to the page numbers (example below) for key takeouts of the report.REPORTREAD THOUGHT [ECO]NOMY greeneconomy/report recycle reportoftakeoutskeythe reportoftakeoutskeythe reportoftakeoutskeythe0201 03 8 NEWS AND SNIPPETS 10 CLIMATE FINANCE The long and short of loadshedding solutions 14 How to integrate ESG and transform your business for the better 18 Food security: where environmental and social collide 22 CIRCULARITY SPAR is creating positive change 24 CONSTRUCTION Building a bio-based circular economy 30 MATERIALS Metal of the future 32 ENERGY What is SA’s energy future? 36 REVOV is offering freedom from dependence 38 A catalyst for power: SAPVIA CEO 41 SAWEA and EnergyDRIVE 42 Auto-X’s solar solutions 44 ENVIRONMENT NCPC-SA: How eco-industrial parks help SA 46 MINING How mines in Africa promote energy transition by SRK Consulting 48 WATER Interview with Minister of Water and Sanitation 50 Improving lives through water 56 MOBILITY EV sales are revving up 58 THOUGHT LEADERSHIP Seeking Covid exile in the burbs
THE LOAD SHARED
8 NEWS & SNIPPETS
“Climate change is currently costing African countries between 3% and 5% of their GDPs. Regionally, Africa is experiencing extreme climate impacts which the continent had very little role in causing. The Sixth IPCCC report confirms that despite having 17% of the world’s population, Africa is only responsible for 3% of emissions. For Africa, the Global Goal on Adaptation must increase the resilience of our population to the adverse impacts of climate change 50% by 2030 and by at least 90% by 2050. Focus must be placed on the most vulnerable people and communities; to support health and well-being; food and water security; infrastructure and the built environment; as well as ecosystems and ecosystem services. It is time that we deal with climate finance with the sense of urgency and scale it deserves. The reality is we have failed in promoting adequate ambition on finance. To put things in perspective: according to the UNFCCC Standing Committee on Finance, developing countries CREECY AT CLIMATE DIALOGUE
COP 27 needs to focus on supporting a peoplecentred just equitable transition in the developing world. The urgent need is to adapt now, while we build resilience for the future. We can only avoid loss and minimise damage with the appropriate scale of public finance that does not exacerbate the indebtedness of Africa.”
President Ramaphosa. need between five to 11-trillion US dollars, to meet their climate objectives. And yet according to the OECD only around US$80-billion was mobilised. This represents less than 2% of developing country needs. The only way we can re-establish credibility in financial provision is to set a realistic goal for developed countries to mobilise at least one-trillion US dollars per annum to assist developing countries meet their climate change objectives.
We will in the meantime waive certain regulatory requirements where it is possible to do so within existing legislation. This includes reducing the regulatory requirements for solar projects in areas of low and medium environmental sensitivity. Eskom can expand power lines and substations without needing to get environmental authorisation in areas of low and medium sensitivity and within the strategic electricity corridors. We are establishing a single point of entry for all energy project applications, to ensure coordination of approval processes across government.
To ensure that these measures are implemented in a coordinated manner, I have established a National Energy Crisis Committee.”
To incentivise greater uptake of rooftop solar, Eskom will develop rules and a pricing structure – known as a feed-in tariff – for all commercial and residential installations on its network. Eskom has established an independent transmission company and is on track to separate its generation and distribution businesses by the end of 2022. Broader reforms to establish a competitive electricity market will be expedited through the finalisation of the Electricity Regulation Amendment Bill to enable private sector investment.
The National Treasury is working to finalise a sustainable solution to thisWedebt.will use climate funding provided through the Just Energy Transition Partnership to invest in the grid and repurpose power stations that have reached the end of their lives. Eskom will be constructing its first solar and battery storage projects at Komati, Majuba, Lethabo and several other power stations. These will result in over 500MW being added to the system. Our second priority is to accelerate the procurement of new capacity from renewables, gas and battery storage. The relevant government departments are working together to ensure that all projects from Bid Window 5 of the renewable energy programme can start construction on schedule. This includes taking a pragmatic approach to the local content requirements for these projects. The new generation capacity procured through Bid Window 6 for wind and solar power will be doubled from 2 600MW to 5 200MW. We will release a request for proposals for battery storage by September 2022, and a request for gas power soon thereafter. We are accelerating greater private investment in generation capacity. Last year, we announced the raising of the licensing threshold to 100MW, which unlocked a pipeline of more than 80 private sector projects with a combined capacity of 6 000MW. We will remove the licensing threshold for embedded generation completely. While they will not require licences, all new generation projects will still have to register with the regulator and comply with the technical requirements for grid connection and our environmental legislation. We will be tabling special legislation in parliament on an expedited basis to address the legal and regulatory obstacles to new generation capacity for a limited period.
Over the next three months, Eskom will take additional actions to add new generation capacity to the grid on an urgent basis. As an immediate measure, surplus capacity will be bought from existing independent power producers.
In late July, President Ramaphosa announced interventions to overcome the immediate energy crisis. “We are fixing Eskom and improving the performance of our existing fleet of power stations. The maintenance programme of Eskom’s electricity generation fleet has declined. Over the next 12 months, Eskom will increase the budget allocated for critical maintenance to increase the reliability of its generation capacity. We are cutting red tape that has made it difficult for Eskom to buy equipment within the required period to effect repairs. One of the challenges that Eskom has faced has been the shortage of skills. The utility is now recruiting skilled personnel, including former senior Eskom plant managers and engineers from the private sector.
The grid will remain state-owned.
Eskom will import power from neighbouring countries through the Southern African Power Pool arrangement. Eskom will also use interim power solutions, such as mobile generators, to supplement current generation capacity for a limited period. Eskom’s huge debt, which stands at close to R400-billion continues to be a huge burden on Eskom’s ability to address its many challenges.
MAJOR LEAGUE SA SOLAR PROJECT
The government took another significant step in paving the way for retirement funds to invest meaningfully in infrastructure investments when it recently gazetted Regulation 28. The finalisation of Regulation 28, which takes effect on January 3, 2023, ultimately increases the scope of potential investment and importantly, lifts the ceiling on the amount retirement funds can invest in infrastructure assets to 45%. It follows two rounds of public comments in 2021. According to FDI Intelligence 2022, the renewable energy sector in the Western Cape has received the second-highest level of foreign direct investment (FDI), by CAPEX, when compared to other sectors, over the last 10 years. Through 11 projects between 2011 to 2021, this sector attracted R17.99-billion in FDI, coming second to communications on the same measure. it was ahead of the business services sector, which came in third. This data confirms the huge potential of the Western Cape’s green economy, and how a continued focus on strengthening our energy resilience will not only relieve the pressure created by loadshedding, but also contribute to more investment and economic growth, while driving a clean energy transition.
The project will be the largest investment in Scatec’s history with a total capex of approximately ZAR16.4-billion to be financed by equity from the owners and ZAR12.4-billion in non-recourse project debt. The debt will be provided by a group of lenders which includes The Standard Bank Group as arranger and British International Investment. The Kenhardt projects are funded in local currency.
The emergence of smart cities is one of the key megatrends shaping the world today, which is driven by rapid urbanisation as millions of people relocate from rural towns to major cities. Smart cities distinguish themselves by utilising information and communication technologies to increase operational efficiency, thereby improving the quality of their services and the welfare of residents.
THE GREENEST CAPE OF THEM ALL South African investors who are looking for an opportunity to invest in smart cities need to look no further following the listing of the Satrix Smart City Infrastructure Feeder Exchange Traded Fund (ETF) on the Johannesburg Stock Exchange (JSE). This ETF tracks the performance of companies that invest in infrastructure and technologies that transform cities into smart cities.
GAZETTED REGULATION 28 AMENDMENTS
The listing of the Satrix Smart City Infrastructure Feeder ETF brings the number of ETF listings on the JSE to 90 with a total ETF market capitalisation of more than R114-billion. The ETF tracks the STOXX Global Smart City Infrastructure Index, which is made up of a minimum of 80 companies that offer innovative technology-backed solutions for smart cities. LISTING TARGETS SMART CITIES Kenhardt in the Northern Cape. Western Cape.
JSE
As loadshedding escalates across the country, MTN South Africa is working to protect customer’s connectivity, with an aggressive rollout of batteries, generators and alternate power supplies. MTN is inviting all businesses that are in possession of generators, to become potential suppliers to the company. Whether the business has two or 20 generators, MTN is looking to partner. MTN has also deployed over 2 000 generators to counter the impact of stage 4 (and higher) loadshedding. It is currently using more than 400 000 litres of fuel per month, to keep these generators operational. Interested parties are invited to contact power@mtn.com
Scatec ASA is starting construction of three Kenhardt projects in the Northern Cape under the RMIPPPP after reaching financial close. Once operational, the project will have a total solar capacity of 540MW and battery storage capacity of 225MW/1 140MWh and provide 150MW of dispatchable power under a 20-year Power Purchase Agreement to the Kenhardt region.
9 NEWS & SNIPPETS MTN SA SUPPLEMENTS BATTERY ROLLOUT
THE
Furthermore, a partnership comprising the major energy users, municipalities, energy supply companies and funders should be constituted to accelerate implementation by any means.
Time to call disaste and harness the power of wind and solar energy LONG AND SHORT OF LOADSHEDDING SOLUTIONS
As South Africa once again plunges into severe loadshedding in the wake of sabotage and more unexpected breakdowns of our aging power stations, the Centre for Sustainability Transitions at Stellenbosch University and the Blended Finance Taskforce have launched a breakthrough report entitled Making Climate Capital Work: Unlocking $8.5bn for South Africa’s Just Energy Transition.
BY MARK SWILLING* arguable that the consequences of further loadshedding – that could eventually lead to a total collapse of the grid – would do far greater damage to the South African economy and society than the pandemic did in 2020 and 2021. If the pandemic justified the declaration of a national disaster, why not the threat of a deepening energy crisis? After all, experts have worked out that stage four loadshedding costs the South African economy nearly R1-billion per day. This is clearly a crisis that cannot be allowed to drag on, even for the short term.
After all, who else has the capacity for such a task? Eskom may not be credible in the eyes of the public, but it does manage a massive energyEskomsystem.cannot do it alone. As in the case of the pandemic, an expert group drawn from industry, academia and civil society should be constituted to advise Eskom’s emergency implementation team.
Speaking at a side event during the annual meeting of the World Economic Forum in Davos, Switzerland, Catherine Koffman, group executive, project preparation at the Development Bank of Southern Africa, said: “It is difficult to conceive of a path to 2050 that doesn’t account for people – we must not only talk about the energy transition, but about transitioning the whole economy including sectors and jobs currently linked to the coal value chain.” We urgently need to adopt short- and long-term solutions, to the energy crisis in general and ever-more-serious loadshedding. The one without the other will plunge South Africa into an even deeper crisis, with disastrous economic consequences that will ultimately translate into mass protests that will make the July 2021 insurrection look like a picnic.
COLLAPSE OF THE GRID In the short term, there is no doubt that conditions are now so serious that it is appropriate to support the call for some sort of equivalent to a declaration of a national disaster for the energy crisis. It is The huge cost of loadshedding could have disastrous economic consequences and cause civil unrest that makes July 2021 pale into insignificance. If the problem is tackled purposefully and urgently with a coordinated emergency plan partnering Eskom and civil society, it is technically and financially possible to end loadshedding within 24 months.
The target for such an emergency energy plan is simple: the installation of at least 10 000MW of new solar and wind generation, plus 5 000MW of storage by the end of the 24-month period. That will bring loadshedding to an end.
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After declaring such a national state of disaster for the energy crisis, the president could mandate Eskom to do whatever is necessary to bring loadshedding to an end within 24 months. As many experts have shown, this is technically and financially possible. But not if there is no single point of coordination for this emergency energy plan.
10CLIMATE FINANCE
4. The rehabilitation, strengthening and extension of the transmission and distribution grids at a cost of $40-billion to $50-billion, which will mean ramping up our build rate from the current estimated 400km of transmission cables per year to 1 500km per annum.
5. Climate justice outcomes will need to be funded, estimated to be around $10-billion – these will have to be grant or zero interest loans to mitigate negative effects on affected communities, but also to prepare workers for new jobs in the green mining and manufacturing industries that will be created.
Until then, we as a nation will have to grit our teeth as things get worse, while we all pull together to achieve this one unifying strategic mission, without confusing messages about technology pet projects that will take at least a decade to implement. The only technology that can deliver at affordable rates what is needed in 24 months is wind and solar power. This fact cannot be disputed.
1. The timely and gradual closure of all our coal-fired power stations over a period of two decades at an estimated cost of $24-billion.
As far as the long term is concerned, the Making Climate Capital Work report has calculated what is needed through to 2050. To put the $8.5-billion pledge made at COP26 by donor governments into perspective, this report calculates that a total investment of $250-billion (R3.7-trillion) will be required through to 2050 to ensure South Africa joins the global renewable energy transition that is well under way across all world regions. This makes sense because it is the only way to procure the cheapest available energy, mobilise largescale affordable foreign and local investment (including low-cost climate finance), trigger upstream industrialisation and therefore drive an economic recovery that can reduce unemployment, end extreme poverty and tackle the serious inequalities that plague us. Such a transition will also ensure South Africa becomes increasingly climate resilient. It will reduce our emissions by 1.4 gigatons, which is what will be required if we are to live up to the ambitious end of our commitment, as expressed in our Nationally Determined Contribution (NDC) document approved by the government and tabled – along with NDCs from other governments – at COP26. By honouring this commitment, we also establish the credibility we need to raise the kind of climate finance that will be needed to ensure large-scale adaptations to climate change.
11 CLIMATE FINANCE
The recent KZN floods are the canary in the coal mine: rebuilding KwaZulu-Natal should be our laboratory for designing, constructing and operating climate-resilient infrastructures. A business-as-usual infrastructure design will just set that province up for failure when the next floods arrive (which will be soon). At this stage, it is difficult to estimate the investment needs of green industrialisation. The South African Renewable Energy Masterplan is not yet complete and hopefully will provide guidance in this regard when it is published.
6. The energy transition can stimulate green industrialisation, ie the creation of a mass of mining and manufacturing activities that will be able to respond to the demand for new materials (many of which can be extracted by our mining industry for local use and export), manufactured components (from ball bearings to blades, also exportable) as well as exportable green fuel such as green hydrogen and ammonia.
UNDISPUTABLE SOLUTIONS
3. Enabling flexibility for a grid that transmits variable renewable energy so that demand can be met at all times will mean building 33GW of battery storage (ideally, over the long-term, vanadiumrather than lithium-based because we have vanadium in South Africa, but no lithium), and 30GW of gas backup for occasional use when supply cannot meet demand (using green hydrogen that we can produce in abundance and not natural gas, which we don’t have); at an estimated cost of $50-billion.
SUSTAINED ECONOMIC RECOVERY What is very clear, is that if the prices of renewables are pushed down too low because of hyper-competitive dynamics, it will not be possible for public and private developers of renewable energy to adhere to the local content requirements. The average internal rate of return for Bid Window 5 projects was around 11%. This can only work for international developers with access to cheap international finance. To lower costs to make reasonable profits at low prices, South African developers will put on the pressure to get exemptions from local content requirements so that they can import all the equipment. That might work for Chinese workers, but not South African workers.
For those who think the numbers are wildly out of line, it might be worth considering the National Infrastructure Plan 2050 (NIP2050), recently approved by Cabinet, which estimates that R6.2-trillion is needed between 2016 and 2040 to meet the investment requirements for bulk energy and water, as well as freight and digital infrastructure. Of this, R4.4-trillion is estimated to be needed for energy and water alone up until 2040. If it is assumed
If we are serious about economic recovery by way of a long-term commitment to permanent energy security, then according to the Climate Capital report, a 24-month emergency energy plan needs to be coupled to a long-term energy transition plan that should aim to achieve six key outcomes:
SIX KEY OUTCOMES
2. Building 5-6GW of renewable energy per annum to reach a target of 160GW by 2050, at a total cost of $125-billion, to replace the coal-fired power stations and meet new demand.
Finding the appropriate price to kick-start green industrialisation so we sustain job creation and economic recovery over the long term is crucial. That will require the right partnerships across public, private and philanthropic capital providers.
• It must be country-led, respecting domestic development and growth priorities. In doing so, affected communities must be given a voice. The Presidential Climate Commission is pioneering a transparent and collaborative governance process (eg holding open sessions and community consultation for the Just Transition Framework).
South Africa has substantial public and private sector financial institutions that have the capital to invest most of what is required through to 2050. The fiscus will have a role to play, especially with respect to Eskom debt, which hovers around. As far as the public finance institutions are concerned, the most significant are the Government Employees Pension Fund (GEPF), whose investments are managed by the Public Investment Corporation (PIC), as well as the Industrial Development Corporation (IDC) and the Development Bank of Southern Africa (DBSA).
12CLIMATE FINANCE that energy makes up 70% of this amount, a R3.7-trillion investment requirement through to 2050 is within the ballpark. This narrative helps to contextualise the $8.5-billion pledged by donor governments at COP26 to support the South African energy transition. This is less than 5% of the total requirement. However,
INFRASTRUCTURE INVESTMENT In 2020, the DBSA set up the Infrastructure Fund (IF), South Africa’s largest blended finance vehicle, with start-up capital of R100-billion from the fiscus to crowd in R900-billion in private sector infrastructure co-investments over the next decade. The IF is now well-staffed with competent executives recruited mainly from the private sector and has Debt sustainability is a key issue in South Africa and a deal is not fit-for-purpose if it further exacerbates the debt burden (of the sovereign or the utility). it is unhelpful to write it off as irrelevant. It could be catalytic if the cost of this capital is lower than normal sovereign rates if it includes “de-risking” instruments like guarantees and if it is made up of a substantial grant component to address the climate justice element of the overall challenge.
The president has appointed former deputy Reserve Bank governor Daniel Mminele to lead a task team to deal with the matter. To get the best result, this task team needs to present a compelling case to the donors that clearly defines what South Africa wants. This will need to be a pipeline of catalytic projects that respond to both the short-term crisis (and ideally forms part of the emergency energy plan) and the long-term energy transition (especially regarding the transmission/ distribution grids and climate justice outcomes which support worker upskilling, retraining, compensation and community rehabilitation).
FRAMEWORK PRINCIPLES
Ultimately, any package – including transaction costs – must be more attractive than what South Africa could get on the capital markets in the case of debt financing or through bilateral negotiation in the case of other financial instruments.
The PIC/GEPF, coupled with the complementary de-risking mandate of DFIs like the IDC and DBSA, are ideally placed to play key roles in the mobilisation of the large-scale public, private and international funding that will be required to accelerate the energy transition.
• It must not create burdensome transaction costs on South Africa of engaging with a fragmented group of donors with diverging interests and financial capabilities.
The Climate Capital report proposes a set of principles that should be used as a framework for South Africa’s $8.5-billion just energy transition transaction – as well as for other climate deals currently being negotiated in countries like Indonesia, India and Vietnam:
The DBSA has already invested nearly R20-billion in renewables, which is only 10% of the total generated by the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) but helped to leverage nearly half the R200-billion generated by the REIPPPP from private investors.
The GEPF/PIC hold R80-billion of Eskom’s debt (against assets worth R2-trillion) and the DBSA holds R20-billion (which is a quarter of its loan book). Together, this amounts to more than a quarter of Eskom’s debt and is unlikely to be converted into equity.
• Debt on debt won’t cut it – debt sustainability is a key issue in South Africa and the deal is not fit-for-purpose if it further exacerbates the debt burden (of the sovereign or the utility). Simply offering more debt is not responsive to the challenges South Africa faces. Donors need to make greater use of catalytic instruments (like guarantees, concessional funding for project development and low-cost hedging). They also need to engage complementary pools of capital in a systematic way to drive synergies, avoid duplication and secure quick wins.
• Justice needs to be at the centre of any package, making sure that coal-dependent workers and communities are not left behind –this is a whole-of-economy transition.
As the Presidential Economic Advisory Council made clear in its report Briefing Notes on Key Policy Questions for SA’s Economic Recovery: “What used to be a choice is now mandatory. Those countries not adapting to a green transition will find themselves behind and excluded. They will be behind on the innovation curve, the cost curve, will suffer from stranded assets and will face increasing barriers to markets that have accelerated their own transitions. Thus, the question is not whether, but how.”
BLENDED FINANCE
EFFICIENT LEVERAGING That plan must include a way to leverage new climate finance commitments more efficiently. Eskom needs full control over what is required to make this happen. This needs to be coupled to an unambiguous commitment to a long-term energy transition through to 2050 on the scale proposed by the Centre for Sustainability Transition and Blended Task Force in the Climate Capital report.
13 a pipeline of projects worth R85-billion across several sectors. It is ready and able to package large-scale blended finance initiatives aimed at accelerating the energy transition, with a special emphasis on grid extension and transmission. Like the cross-sectoral investment role of the PIC, the IF is well-placed to manage a new generation of energy infrastructure investments on behalf of the GEPF. A large share of the IDC’s loan book of R144-billion is invested in South African coal mines. This means the IDC may be facing the threat of stranded assets. This provides clear impetus for its diversification into financing the clean energy infrastructure that will underpin the transition. This has started to happen on scale. CLIMATE FINANCE
However, except for the REIPPPP, PPPs are in decline and only account for 2% of the public infrastructure budget of R791-billion envisaged for 2021/2-2023/4 in the Cabinet-approved Medium-Term Expenditure Framework. And yet, the vast bulk of the $250-billion proposed by Climate Capital report to enable the energy transition through to 2050 will need to be mobilised via a wide variety of blended finance vehicles.
The principles in this paper are aimed at donors who, like the rest of the world, cannot afford for this deal to fail. After all, decarbonising South Africa’s coal-dependent energy system is critical to achieving global climate targets under the Paris Agreement as well as more inclusive development in the region, which relies heavily on South Africa for power.
Similarly, most recommendations to implement a just energy transition in South Africa are focused on actions that the government and its state-owned utility, Eskom, need to take. There is little scrutiny on the donors – or the composition of the $8.5-billion itself – making it hard to tell if the deal is fit-for-purpose and worth the transaction costs of engaging with a multidonor funding programme.
The 26th Conference of Parties in November 2021 was a climate meeting defined by raised expectations. Dubbed the “Finance COP”, a handful of rich countries pledged $8.5-billion for South Africa’s just energy transition – signalling the first in a series of country-led climate deals to accelerate the phase out of coal, scale up renewables and support workers and communities impacted by the transition to Net Zero. But – as is usually the case in the climate world – what happens after the press conference is what matters. Despite the initial optimism surrounding the $8.5-billion pledge, there is still a lot of work to do to ensure it lives up to expectations. Most analysis of the $8.5-billion is speculative – speaking to the lack of transparency surrounding the commitment.
MAKING CLIMATE CAPITAL WORK | Unlocking $8.5bn for South Africa’s Just Energy Transition | Blended Finance Taskforce | Centre for Sustainability Transitions, Stellenbosch University [2022]
Finding the appropriate price to kick-start green industrialisation over the long term is crucial.
* Mark Swilling is a professor at the Centre for Sustainability Transitions at Stellenbosch University.
What used to be a choice is now mandatory.
In summary, within the next few weeks we should urgently commit to an energy emergency plan coordinated primarily by Eskom that unites the country around one single overriding strategic mission –end loadshedding within 24 months.
The NIP2050 emphasises the importance of blended finance, with only 30% of the R6.2-trillion investment in bulk infrastructure between 2016 and 2040 envisaged to be publicly funded. The remainder, according to the plan, should be sourced through progressively structured public-private partnerships (PPPs), ie blended finance.
Fortunately, South Africa is already leading on the just energy transition agenda – dedicating resources within Eskom, via its Presidential Climate Commission and Presidential Climate Finance Task Team and across civil society to take a more systemic approach to financing a low-carbon, equitable economy. A plan already exists. But given the scale of the challenge, catalytic climate finance will be critical to move fast enough. The opportunity is clear. And the opportunity cost is enormous. There is no time to waste.
REPORTREAD THOUGHT [ECO]NOMY greeneconomy/report recycle ofcourtesyArticle MaverickDaily
The IF will clearly play a major role in this regard.
This paper takes a different approach. It lays out a framework for the investment needs and costs to deliver an ambitious energy transition in South Africa (at least $250-billion over the next three decades). While the $8.5-billion only represents ~3% of that total figure, deployed right, it can accelerate the broader transition and avoid an additional 1GT+ of emissions compared to South Africa’s current pathway. But this will depend on what the deal really looks like. Unless the $8.5-billion includes new, not repurposed, funding for catalytic instruments like guarantees, currency hedging and grants, it will not be “fit-for-purpose” to address the most challenging transition costs linked to decommissioning coal, accelerating enabling grid infrastructure and supporting the just components of the transition for workers and communities.
Most corporate leaders understand the benefits of sustainability initiatives. They face pressures from stakeholders up and down the supply chain, and from investors and banks that look at ESG efforts. This is how to define your ESG goals and embed them into your business.
BY KEARNEY CONSULTING T here are many barriers to successful execution of sustainability initiatives (to rephrase: making actual progress). There may not be enough coordination and transparency across the enterprise. Key performance indicators (KPIs) may not be clearly tracked – and their relevance may not even be clear. The business may resist change, with a particular fear of increasing costs. How do you avoid such stumbling blocks to achieve your benefits?
1. Assess current state and select focus areas Sustainability is a broad topic full of interrelated ESG impacts. Your first step is to figure out what you are currently doing as a company. Given the complexity of ESG issues, assessing your current state can be a lengthy process. ESG is inherently cross-functional, requiring input from operations, product development, IT, finance, procurement, sales and other functions.
MANAGEMENT FRAMEWORK To embrace ESG, your organisation can start with a few impactful sustainability initiatives. Doing this is a three-part process: 1. Assess current state and select focus areas 2. Determine strategy and roadmap 3. Track progress and report Figure 1. Understanding double materiality is essential in determining ESG priorities. Issues with outward impact should be presented in public ESG reports for a wide audience of stakeholders. Issues with business impact should be reported in annual reports to investors and lenders.
analysisKearneySource:
As the figure shows, most companies report to investors and lenders on the materiality of how ESG can affect future value. For example, an increase in forest fires could increase risks for certain facilities. However, what is far more valuable to stakeholders is a double materiality report.
14CLIMATE FINANCE and transform your company for the better HOW TO INTEGRATE ESG
Once you have assessed your current state, understanding where to focus can feel overwhelming. But the double materiality assessment evaluates the impact of ESG issues from both financial and ESG perspectives. It also identifies two-way risks associated with each issue. Double materiality is part of the proposed European Commission Corporate Sustainability Reporting Directive (see figure 1).
The answer is to embed sustainability in every aspect of the business, from strategy and operating models to day-to-day operations.
2. Determine your ESG strategy and roadmap. Now that you have your priorities clear, it’s time to create the strategy. Given the complexity, setting the strategy and creating a roadmap for how to get there can be a challenging process. Here’s where you set targets. Like so much about sustainability, target-setting can be both complicated and politically charged. Your company’s targets need to be aggressive, to stand out from the industry. But if you can’t achieve them, you will lose credibility in the long term. By doing this process upfront, you gain trust both internally and externally. A sustainability department. In true “what gets measured gets done” fashion, all functions need to be measured on ESG-related performance to ensure they feed into the overall targets. Procurement needs to secure the sourcing of renewable energy, certified materials and supplier diversity, where other functions work on energy reduction, waste management and so on. Every function has its role to play, and this must be reflected in KPIs and target-setting. Once you have your targets, you choose your KPIs. You want to be sure to choose measures that are meaningful and appropriate. Furthermore, you need to embed ESG metrics into your daily ways of working. In other words, to make a true impact, your ESG priorities will need to show up in your financial statements, appropriation requests, requests for proposals/quotes, HR policies, monthly business reviews and other work products. With targets, KPIs and other metrics in place, you can develop a comprehensive implementation strategy and roadmap including internal and external communications.
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Success in ESG transcends a project mindset of setting, measuring and meeting targets. The ESG journey eventually radically changes a company’s business model – and changes the business models of its customers, suppliers and other stakeholders. The mindset of integrating ESG will make any company’s transformation more powerful and lucrative. To achieve your sustainability goals, you will need to engrain a new mentality across your organisation’s culture. You’re changing the way you work. Sustainability is not just a stand-alone project, it requires much more collaboration – across the enterprise, with suppliers, with completely new stakeholders you’ve never engaged with before and perhaps even with competitors. Such collaborations have benefits beyond saving the planet. But to get there, you’ll need changes in your operating model and governance structure. Eventually, sustainability will need to be embedded into all decisions and day-to-day operations. It needs to come as naturally to the business as cost reduction or quality. Therefore we refer to ESG as a transformational journey. You may start with a simple tweak of a single function, such as substituting a less carbon-intensive input for a specific product. But your ambitions can and should be greater. As your ESG transformation moves from a single function to the enterprise, you can have bigger impacts on society and the environment – and drive new dimensions of growth and profitability (see figure 2).
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TRANSFORM YOUR ORGANISATIONFigure2.To achieve their ESG targets, companies can rethink their business models using the ABCs of ESG transformation.
Current state: Existing networks, suppliers, products TRANSFORM YOUR ORGANISATION
Operational innovation: New networks, products, services, suppliers, technologies, and so on
Double materiality examines the outward impacts of a company’s activities. It helps highlight issues where your investments could best improve society and the environment. When you map internal and external impacts on a matrix, you can see your ESG priorities. In short: your ESG agenda should connect closely to your core business. It’s not easy to quantify the impact of each issue. But this process helps you engage senior leaders all the way up to the board of directors. They know how to assess risks, set thresholds, and prioritise goals based on impact.
Business growth: Radical business model/ecosystem transformation (customers, regulators, industry bodies, and so on)
3. Track progress and report. To track and report on your ESG targets, both internally and externally, you should invest in robust structures – think everything from software tools to new organisational governance. You need to get ahead of the market and take advantage of the value of integrating ESG into your business offerings. You will likely not be perfect from the get-go. Your company will learn (and may even fail). You will have to readjust your strategy, targets and KPIs as you go. No single company has cracked the ESG code just yet; each company’s ESG journey is going through multiple stages of development. We are all learning together and evolving as we learn.
16CLIMATE FINANCE SOUTH AFRICAN GREEN FINANCE TAXONOMY | 1st Edition | Department of National Treasury [March 2022] A green finance taxonomy is a classification catalogue that defines a minimum set of assets, projects, activities and sectors that are eligible to be defined as “green” in line with international best practice and national priorities. The South African Green Finance Taxonomy can be used by investors, issuers and other financial sector participants to track, monitor and demonstrate the credentials of their green activities in a more confident and efficient way. The Taxonomy is intended to have a range of benefits. Amongst other things, it will: • Help the financial sector with clarity and certainty in selecting green investments in line with international best practice and South Africa’s national policies and priorities. • Reduce financial sector risks through enhanced management of environmental and social performance. • Reduce the costs associated with labelling and issuing green financial instrument., • Unlock investment opportunities for South Africa in a range of green and climate-friendly assets. • Support regulatory and supervision oversight of the financial sector. • Provide a basis for regulators to align or reference green financial products. REPORTREAD THOUGHT [ECO]NOMY greeneconomy/report recycle reportingImpactfinanceTaxonomy-aligned Technical screening criteria3928 51 ESG BEST PRACTICE • Choose a sustainable business strategy rather than a sustainability strategy. ESG should be fully integrated into corporate strategy – not subordinate to broader business strategies. • Appoint an external advisory board with varied functional expertise. • Embed ESG accountability throughout your organisation. A position of responsibility includes understanding the sustainable business strategy and factor it into decisions. • Integrate sustainability into visible, daily operations across all departments. • Engage employees and incentivise their sustainability contributions. The idea of transforming your organisation around ESG may seem intimidating. But companies regularly undergo similar transformations to meet other evolving consumer needs. REPORTREAD materialityframeworks formats disclosures2014 23 35 VIDEOWATCH
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Russia’s invasion of Ukraine brought food security issues to our doorstep: agricultural food prices jumped 36.6% yearon-year in March after rising 28% in 2021. Energy continues to be under-owned, and performance has not mirrored previous geopolitical crises: rather than outperforming on higher oil and gas prices, energy spreads remain wide. This appears to be at least partly due to a rotation away from the sector related to ESG factors as well as a shunning of corporates with any links to Russia. ESG increasingly sees environmental concerns intersecting with social issues. Lack of food security can lead to higher prices, acute shortages and ultimately social unrest. Addressing food security becomes more urgent when considered against a backdrop of a warming world, with longer-term climate change potentially pushing large, often poor populations out of their current homes and toward areas that may be less affected. In the more immediate term, Covid and inequality have increased food insecurity, and war in Ukraine is likely set to exacerbate the situation even more. Food security occurs when an entire population can access sufficient safe and nutritious food to meet their needs for a healthy life. Regionally, consumers facing severe food insecurity are found mainly in Asia and Africa. Many low-income economies were facing inflation above 20% in September 2021. In fact, 22% of the world faced food price inflation >10% at that time.
Food waste is responsible for 8-10% of global greenhouse gas emissions. short-term financing that would normally pay for seeds and inputs. Fields are inaccessible, labour is scarce and equipment and storage facilities have been destroyed, particularly in the western part of the country. Ukraine’s Black Sea ports are closed and freight rates for nonUkrainian ports have skyrocketed. Rising fertiliser costs could contribute to lower crop yields and higher food costs. Western sanctions on Russia have disrupted shipments. In the US, fertiliser bills are expected to jump 12% in 2022 after rising 17% in 2021. This could cause growers to plant fewer acres
WAR = WHIPLASH Ukraine is a country of just over 40-million people that produces food for 400-million. Russia/Ukraine are responsible for 25% of the world’s wheat exports, 65% of sunflower oil exports, 20% of its barley and 18% of its corn. A total of 26 countries gets over half of their wheat from Russia/Ukraine. Russia is the largest exporter of fertilisers, including 23% of global ammonia, urea (14%), processed phosphorus (10%) and potash (21%) exports. Ukrainian farmers are unable to access
Over 800-million people around the globe face hunger daily. Another 1.4-billion people lack vital micronutrients. The United Nations estimates that Covid-19 increased incidence of food insecurity for 500-million people from 2019 to 2020 alone. ESG
WHEREmattersENVIRONMENTAL AND SOCIAL COLLIDE FOOD SECURITY:
BY BANK OF AMERICA SECURITIES
The concentration of crop production into regional and local breadbaskets makes food production more vulnerable to extreme weather events. For eight of the first 15 years this century, global grain consumption outpaced grain production due to droughts in key breadbasket regions worldwide. third of food produced human consumption is wasted year. 10% 20% and Ukraine global imports
Loss of land
The UN reports that 300-million acres of natural habitats will be converted to farmland in developing countries by 2050. The UN sees a loss of 4-million to 8-million acres of prime agricultural land annually in 2000-2030 due to urbanisation. Yet agricultural land in use often fails to produce to its full potential. A recent study showed that yields are up to 50% lower than what is possible. Closing this gap – rather than clearing additional land – could feed up to 850-million people. A third of the world’s soil is moderately-to-highly degraded, which affects food supply and increases carbon emissions. This degradation is the result of factors including industrial farming, deforestation, over-grazing and global warming. Soil degradation increases the risk of flooding, as soils lacking in organic matter cannot absorb and retain water effectively. This also leaves degraded soil at risk in drought conditions. Urban development of fertile agricultural land results in a permanent loss of arable land, which has an outsized impact on subsequent crop production. This happens as urban sprawl pushes farmers to cultivate less productive land – land that is “still available” rather than prime agricultural land. Biofuel production competes for food production for natural and agricultural resources because its main feedstock is agricultural product. Increasing biofuel production impacts world agricultural commodity prices. The pandemic obscured the impact of rising global biofuel mandates on food and energy due to collapsing transportation fuel demand and prices. Global mobility has been normalising, and the pressure from biofuel demand on the agriculture market has become clearer and is contributing to the rise in grain, oilseed and food prices. Biofuel demand is expected to hit a new record this year unless more countries start to dial back blending mandates. or switch to less fertiliser-intensive crops. Farmers in less wealthy nations may find themselves with fewer financial resources and options for weathering the storm. McKinsey has run scenarios that see 19-million to 34-million tons of export production disappearing in 2022 from Russia/Ukraine alone. This could mean 10-million to 43-million tons of lost production in 2023 (Russia/Ukraine only), which represents caloric intake for 60-million to 150-million people.
Physical and human factors affecting food security are increasingly intertwined: climate change, soil erosion and degradation, water stress and loss of farmland. Agriculture drives most deforestation and contributes 10-12% of annual greenhouse gas emissions, but only 20-25% of projected emissions can be reduced with current best practices. Much higher reductions could be delivered with changes including dietary shifts, more effective supply chains or relocating production to more efficient locations. Climate change Rainfall is increasing in some places and falling in others. Higher temperatures and unpredictable rainfall patterns make farming more difficult. This is true in more marginal growing areas and/or for farmers who are already struggling to survive. For large-scale farming, climate change may force crop changes, which can be difficult to implement quickly due to existing expertise in other areas and uncertainty around future weather patterns.
for
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of wheat. Source: BofA Global Research, FAO YoY change in food price indices by product. Source: BofA Global Research, FAO. Latest data as of February 2022 -50% -30% -10% 10% 30% 50% 70% 90% 110% 130% 18 19 20 21 22 Meat Dairy Cereals Oils Sugar
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30% 40% 50% 60% MENA Africa AsiaEuropeex-EU EU-27 LatAm OceaniaNorthAmericaCaribbean Russia Ukraine -50% -30% -10% 10% 30% 50% 70% 90% 110% 130% 18 19 20 21 22 Meat Dairy Cereals Oils Sugar Russia
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20 Water stress Irrigation accounts for about 70% of global water withdrawals and up to 90% of water consumption. Only about 20% of cultivated land is irrigated, although this land contributes about 40% of the total food produced globally. Competition for water resources is increasing with population growth, urbanisation and climate change.
Irrigation will continue to play an important role in food production – with a shift from rain-fed to irrigated production systems, implying an increase in average yields. However, the potential for further expansion of irrigation is limited by growing water stress, increasingly inadequate sources of renewable water and climate change. Less fertiliser Nitrogen fertiliser (ammonia) production could be impacted beyond the immediate Russia/Ukraine/Belarus region due to the spike in European natural gas prices. This has significantly increased the cost of producing nitrogen fertilisers in Europe, meaning that producers are making big negative margins at spot prices. We expect either lots of capacity to be shut down in Europe or nitrogen fertiliser prices to double (again) to restore positive margins for European producers –both of which are likely to lead to further reduction in application rates (due to either demand rationing or destruction).
Lost stock and no barrel Current anecdotal information suggests about 20% of Ukraine’s agriculture exports continue to flow, mostly through back channels that are more difficult to track. The world is short about 40-million metric tons (mt) of corn, wheat and barley (annualised), assuming trade flows persist at current levels. In the current environment, the market is grappling with drought and the loss of Ukrainian exports, which may take a year or potentially a lot longer to recovery.
WASTE NOT, WANT NOT There is enough food produced globally to feed everyone. If 25% of the food currently wasted globally was used, it could feed 900-million hungry people. Wasted food costs the global economy over $1-trillion annually. Food waste occurs at all steps in the value chain, but there are telling regional differences. In more developed countries, the lower relative cost of food increases the incentive to waste. Large portion sizes contribute to food loss in the hospitality sector. In less developed regions more food is lost in the production phase, or due to lack of infrastructure to move it to market or to keep food fresh. It should be possible to reduce food waste by bringing improved production and storage techniques to developing countries and launching initiatives to reduce waste at the consumption level in developed countries. Growing more food on an existing land base limits pressure on natural ecosystems; reducing food waste would save on water usage, labour and greenhouse gas emissions.
The World Bank estimates that agricultural production will have to expand by about 70% by 2050. Future demand for water (from all sectors) will require 25-40% of water to be re-allocated from lower to higher productivity area. Much of this re-allocation will have to come from agriculture given its high proportion of water use.
DISRUPTED DISPERSION Reports within Ukraine suggest that limited fuel, fertiliser and feed supply could constrain planting efforts in spring. In Russian occupied regions, such as the north and east, it is unclear whether farmers will plant at all. The longer the war drags on, the more likely it is that winter wheat and rye harvests are also disrupted, causing a more lasting grain supply crunch. It is too early to tell just how long the war will persist, what planting and harvesting activity will look like, and when global agribusiness companies will return to their Black Sea facilities to start merchandising and exporting agriculture commodities again. Even if Ukraine can plant and harvest this year, it is unclear whether the Ukrainian government or the Russian military will allow those crops to be exported. Food security is a priority during war time. Ukrainian farmers are reportedly still sitting on unseasonably high inventories due to ongoing trade flow disruptions. If farmers are unable to empty their bins before next harvest, storage could become an added constraint and force some farmers to find short-term storage alternatives or leave crops unharvested.
Soft target Roughly half of Ukraine’s corn and barley exports go to Africa, the Middle East, and Asia. More than 80% of its wheat exports go to these countries, creating the risk of food supply shortages like the early 2010s. Disparities in income per capita between emerging and developed market (EM) (DM) economies mean that DMs have more room to absorb rising food prices relative to EMs.
Scientists are exploring ways to increase land productivity, including 1) more efficient use of fertilisers, 2) improved irrigation and encouraging crops that use less water, 3) targeting food for direct consumption (rather than animal feed, for instance), and 4) reducing food waste.
Agriculture globally uses about 70% of all fresh water and produces around a third of all greenhouse gas emissions.
Impact on crop yields of a 3°C rise in temperatures. Source: WRI report, Creating a Sustainable Food Future
This article
3) Strengthening resilience. In 2020, the pandemic caused global GDP to plunge. Governments globally reacted with social programmes as well as other emergency measures to protect populations. The UN suggests that social programmes must continue to increase food security among vulnerable populations, first by supporting household incomes, but also by improving access to affordable, healthy diets. Climate-related events can contribute to a rise in social instability and trigger conflict.
5) Tackling poverty. Poverty rates are three times higher in rural areas than urban areas; 80% of the extreme poor are rural. The UN advocates reducing extreme poverty in part through accelerated food systems transformation. This might include improving access to finance and productivity-enhancing technologies, increasing market integration for small farmers and the introduction of public-privateproducer partnerships. disrupts food systems, and may also disrupt clean water, quality health services and sanitation.
6) Changing behavior. Obese people outnumber the underweight – a quarter are also malnourished. Increased availability of ultraprocessed foods is linked to weight gain but lacking in necessary micronutrients. The policies recommended for changing consumer behaviour rely on a combination of taxes and policies to support more healthy choices. About 60% of all calories consumed come from rice, wheat, corn and soy. Fewer than 15 crop types and five livestock species provide about 80% of our global food supply. A wider range of foods would allow greater crop rotation practices to maintain soil nutrients. Using more “native” crops could produce larger yields in specific areas. Overreliance on just a few crop varieties also leaves the food system vulnerable to shocks and stresses and does little to prepare for climate change scenarios.
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The UN makes six recommendations for increasing food security:
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1) Efforts in conflict. The majority of the malnourished live in countries impacted by insecurity and conflict. The UN highlights the need for policies to address reductions in immediate food insecurity as well as conflict mitigation. Conflict disrupts food systems, and may also disrupt clean water and quality health services. Development in conflict-ridden areas needs to emphasize sustained positive change or moving populations away from a future-need for humanitarian intervention. This may happen in tandem with emergency food assistance programmes, but it should also address development of sustainable livelihoods, consistent access to food systems and improved nutrition. The agriculture sector can serve as a driver.
The food system is expected to account for most of the carbon budget for a 2°C temperature increase by 2050. is an
4) Reducing the cost. Healthy diets cost 60% more than those that only fulfil requirements for essential nutrients. More than 57% of the populations of sub-Saharan Africa and Southern Asia cannot afford a healthy diet. The high cost of healthy diets is linked to greater food insecurity, malnutrition, child stunting and adult obesity. These conditions in turn limit an individual’s prospects and impact on communities and economies. Policies that look across the food chain can realise efficiency gains and reduce loss. Incentives should favour more nutritious foods over heavily processed food choices. Fortifying foods including rice, corn and wheat can help to address micronutrient deficiencies in large portions of a population.
2) Scaling up climate resilience. Agriculture as we know it today won’t be as successful in a warmer world. Adaptation of crops, including more drought-resistant strains of seeds, for example, will be just one change demanded. In some regions, crops grown will have to change altogether in response to warmer and/or drier climates. Climate change will bring new technologies to agriculture. Governments will need to plan for climate change and integrate adaptation research into policies, budgets and funding plans. This will mean encouraging changes in types of crops to pursue (or reduce), what production systems may need relocating (and where) and creating incentives to facilitate investments.
About one-third of the world’s grain is fed to farm animals. If this were fed to people instead, it could feed an four-billion people. No single action will solve food waste, and some improvements require longer-term, large-scale infrastructure development. Changes in technology, policy and consumer behaviour are all needed.`
LONGER-TERM RESPONSES
excerpt taken from the report GLOBAL RESEARCH ON THEMATIC INVESTING | Bank of America Securities [May 2022]
Barley Corn Wheat mn mt Ukraine exports by region. Source: UN, BofA Global Research estimates
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CIRCULARITY One of the most positive eco-movements in the last few years has been the rise of the circular economy mindset across industries, most recently, the retail industry. The trigger for this growth can be attributed to several factors. One of the most significant factors is rapid urban and population growth, with The pandemic has spotlighted our collective impact on the environment, and we have become more conscious of how to live and work more sustainably. However, it’s not just up to individuals to make positive changes; businesses must become major catalysts to create sustained momentum. SPAR has chosen the phrase “My SPAR, Our Tomorrow” as a public commitment to the future of our brand and our planet. We can no longer continue taking and consuming finite resources to make products and then dispose of them at their end of life. through circular thinking CREATING POSITIVE CHANGE In a thaninnovationeconomy,circularupstreammeansthatratherworkingouthowtodealwithapileofwaste,weworkouthowtopreventthewastefrombeingcreatedinthefirstplace.–EllenMacarthur 22
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THREE EXAMPLES OF RETAIL INNOVATION These
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IGNITING CHANGE NOW FOR FUTURE REWARD These innovations are small steps in SPAR Group’s sustainability journey, but they inspire more change within our people, trading partners, and suppliers. If harnessed correctly, circular thinking has the potential to solve sustainability goals while offering a commercial return on investment and, crucially, offering customers better value too. This initiative is part of our journey to create a better future for all and reduce our carbon footprint! 100% recycled plastic bags have resulted in 4 000 TONNES of used plastic being diverted from landfills annually. Scan the QR code to find out more about circular systems and sustainability or visit spar.co.za/About-SPAR/Sustainability
The SPAR Group is committed to procuring its products responsibly and sustainably to promote ethical and sustainable business practices. key partnerships and close collaborations have resulted in ground-breaking sustainability projects and circular concepts. SPAR milk bottle caps Inspired by SA Plastics’ pact to rethink the design of our products, the SPAR Group is now collaborating with Johan Conradie from Myplas. This has resulted in SPAR being one of the first brand owners to change its milk bottle caps from coloured versions to white. This enables a more streamlined and cost-effective recycling process from the waste pickers and the recycling plant. 100% recycled carrier bags We at SPAR are becoming more mindful of like-minded partners who will support our circular thinking. Tuffy, Transpaco, Leader, Flexpak and Premier plastics are some of the contributing partners who have made this ecoconscious carrier bag possible. SPAR plastic bags are 100% recyclable and are made from 100% recycled plastic material with a minimum of 70% post-consumer waste (and have been since 2018). This results in 4 000 tonnes of plastic waste diverted from landfills every year. By utilising this method of bag production, there is a 40% reduction in the carbon footprint. Rural hubs This award-winning initiative enables greater sustainability for small-scale farmers by supporting and empowering them nationally and by growing local businesses. Thanks to a collaborative approach with a range of stakeholders, this initiative is beginning to enjoy measurable success and the farmers are unlocking tangible and substantial benefits.
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24 BUILDING A CIRCULARBIO-BASEDECONOMY
The global challenge of moving to a sustainable economy involves shifting away from a linear extractive, non-renewable economy. A transition from a fossil- to a bio-based economy has the potential to answer the demands of rapid urbanisation while reducing the carbon footprint of cities and infrastructure. Proceeding in a sustainable way, a bio-based economy can become one of the possible pathways towards circularity in the buildings sector. The world has continued to use natural resources unsustainably1. The Covid-19 pandemic has offered an opportunity to develop recovery plans that build a more sustainable future. A bio-based economy, where construction materials are produced from renewable biomass, can engage construction sectors at a local scale, transitioning away from global supply chains. How we produce materials can greatly impact greenhouse gas emissions, in addition to having impacts on ecosystems and pollution.
CONSTRUCTION
A recent International Resource Panel report2 emphasises the strong interrelationship between the production and use of construction materials and human-caused climate change. It highlights how the production of energy-intensive, mineral-based construction materials leads to greenhouse gas emissions. However, efforts within the buildings sector to mitigate emissions and to adapt to climate change will still require the production and use of materials. Therefore, factors that determine greenhouse gas emissions include: 1) which materials are used, 2) how these materials are sourced and 3) how they are produced and used.
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To achieve transformative environmental effects, several construction sector industries and policymakers recognise the need to make a biobased economy viable and sustainable at a large scale3. Policymaking will play a key role in catalysing such transformation by enabling the manufacturers of new bio-based and sustainable building products to industrialise their products successfully and competitively at scale. Policies are crucial in subsequently enabling and incentivising the use products in the construction industry. A bio-based economy has the potential to generate new industries and employment. Given that biomaterials for construction are “local” or “context-specific,” opportunities for job creation and technological innovation would take effect at the local scale, supporting local economies and societies4. These promising opportunities are especially relevant for Covid-19 recovery plans. Bio-based materials are also linked to potential health benefits, such as the use of green chemistry and green engineering principles in the design of, for example, bio-based resins for wood treatment to offer an alternative to toxic materials, such as some synthetic resins that may release volatile organic compounds; this would contribute to healthier indoor air conditions, including better air quality as well as temperature and humidity control5 According to the International Resource Panel6, the production of materials in the global economy contributed 11 gigatons of carbon dioxide equivalent, or 23% of total greenhouse gas emissions, in 2015. Of that share, 32% was for producing iron and steel, 25% for cement, lime and plaster, 13% for rubber and plastics, and 13% for other nonmetallic minerals. Such material production fails to close the loop on waste generation, as it is typically associated with a linear process that relies heavily on the energy-intensive extraction, manufacturing and transport of non-renewable, mineral-based resources.
Mycelium, the root structure of mushrooms, is used in bio-fabrication to grow advanced biomaterials and bio-resins. Bamboo filament is a biodegradable material that can be used for many construction applications such as structural and non-load-bearing walls, roofing, interior panels and flooring. 84 materials.hempblockshempcreteusingconstructedbuildingworld’sHemp,andHemporiumdevelopedStreet,HarringtonbyAfrimatisthetallestbeingandbuilding
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The key to the circular economy is that it takes a systemic approach in aiming to redesign an economy.
Nanotechnology is proving to be beneficial for the construction industry. Several applications have been developed to improve the durability and enhance performance of construction components, energy-efficiency and buildings safety.
From a circular economy perspective, promising research and initiatives demonstrate that construction, renovation and demolition residues, which include materials that have already been
CONSTRUCTION
PhysicsStatePennsylvaniaCrespi,Vin
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The global extraction and production of construction materials, such as metals and concrete, results in a wide range of environmental impacts. Iron and steel have the highest absolute environmental impacts due to their large volume of use; concrete has smaller impacts per kilogram, although it is also used in large volumes, making it responsible for 9% of total greenhouse gas emissions7
PRODUCTION Failing to fundamentally challenge mainstream approaches related to the unsustainable production and consumption of construction material supply chains hampers the capability to foster systemic change. The key to the circular economy is that it takes a systemic approach in aiming to redesign an economy. The circular economy can be defined as a process to improve material efficiency, primarily by closing the resource loop and reducing material waste at the end-oflife of a Achievingmaterial.circularity involves following a set of principles. According to the Ellen MacArthur Foundation (2020), the first principle is to “design out waste and pollution,” the second is to “keep materials and products in use,” and the third is to “regenerate natural systems.” Haas et al. (2015) note that implementing these three basic principles across the economy implies an extensive overhaul to the basic structure of industrialTraditionalsystems.material production practices are associated with the extraction of raw materials and with energy-intensive processes that contribute to global greenhouse gas emissions. According to the OECD (2019), global materials use is projected to more than double from 79 gigatons in 2011 to 167 gigatons in 2060. More than half of the total materials currently in use are non-metallic minerals used in construction, such as sand, gravel and limestone.
DECARBONIZING CONSTRUCTION | Guidance for investors and developers to reduce embodied carbon | WBCSD [2021]
Future-proofing the building sector must be a centre piece of building resilience and GHG emissions mitigation. For example, passive design or use of green roofs and façades reduces vulnerability to heat for building users and reduces their energy demand for mechanical cooling for thermal comfort. Adaptation in the buildings and construction sector is still in its early stages and efforts need to be rapidly scaled up to cope with increasingly intense climate change impacts.
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ENVIRONMENT IN THE GLOBAL SOUTH | Yale University | UN Environment Centre [2022] REFERENCES 1. Organisation for Economic Co-operation and Development [OECD] 2019; IRP 2020; United Nations Economic and Social Council 2020 2. IRP 2020 3. Hill, Dibdiakova and Zukowska 2019 4. Mussatto 2017 5. Zimmerman et al. 2020 6. IRP 2020 7. OECD CONSTRUCTION2019
Recent research predicts that by 2050, 1.6-billion urban dwellers will be regularly exposed to extreme high temperatures and over 800-million people living in more than 570 cities will be vulnerable to sea level rise and coastal flooding. When ill-suited to their local environment and strongly exposed to extreme climate conditions, buildings become drivers of vulnerability, rather than providing shelter, leading to both human tolls and economic losses.
A PRACTICAL GUIDE TO CLIMATE RESILIENT BUILDING AND COMMUNITIES | UN Environment Programme
Financial institutions mobilise capital for buildings and influence their construction. Their investment decisions provide powerful incentives to shape the activities in the building system and the behaviour of all market participants. Lenders can link carbon performance to their loans and provide incentives. Property developers can set carbon performance requirements as part of the procurement process for their projects. And lastly, all these firms occupy and manage real estate themselves and can develop policies for low-carbon performance in their role as tenants, thereby driving the change from the end-user side.
The expected impacts of climate change, including sea level rise, heat waves, droughts and cyclones, will increasingly affect the built environment and in turn the society as a whole.
greeneconomy/report recycle extracted and used in a building, can be re-used, extending their life span. Many biomaterials “design out” waste – for example, using postagricultural waste materials such as rice, straw, corn and coconut husk –providing new solutions to the need for immediately available building materials. Other bio-based materials include sheep wool and recycled textiles (for insulation), wood wool, hemp and nature-based materials, such as the use of linseed oil (flaxseed) in the production of linoleum flooring. Biomaterials are typically local or “climate specific,” offering appropriate performance characteristics in response to passive design strategies, while providing additional income streams to local economies. They eliminate the need for mining of construction minerals, thereby reducing extractive processes and offering an alternative that is typically biodegradable at the end-of-life, helping to regenerate natural systems.
To meet the Paris Agreement objectives, it is essential to decarbonise economies by 2050.
For the built environment, this means reaching net-zero emissions across all activities in the building and construction system, meaning emissions from energy use during building use as well as emissions from materials production – so-called embodied carbon.
This report provides a resource to companies who want to set requirements for embodied carbon reductions in the projects they finance and develop in a performance-based way. It provides examples of how to include circular solutions in the design phase of projects, which is an important economic, environmental and social opportunity to catalyse innovation and new business models to reduce embodied carbon. Central to these efforts is achieving net zero across the entire life cycle, rather than a silo approach that detaches products in the system from one another. THE TRANSITION TO A CIRCULAR BUILT
REPORTREAD
REPORTREAD THOUGHT [ECO]NOMY greeneconomy/report recycle *This article is an excerpt from the report BIOMATERIALS SUPPORTING
Alignment and collaboration between all companies in the building and construction system is crucial to reaching this goal, as no stakeholder can do it alone. To achieve full system decarbonisation, it is necessary to ensure each company focuses not only on its own emissions reductions, but also on how it can actively support an overall net-zero transition of built assets.
This practical guide presents a range of adaptation interventions to respond to climate change for different building types and settings, which policy-makers can scale up by integrating them into policies and regulations for the built environment. It also reflects on the possible landscape level green infrastructure measures that can deliver adaptation benefits at an urban scale.
Hempcrete blocks by Afrimat Hemp.
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www.afrisam.com Creating Concrete Possibilities THAT’S SUSTAINABILITY, FIRST. Not only were we the first to measure kiln emissions in Southern Africa, we were the first to install bag-house filter technology to reduce kiln emissions, setting a benchmark for the industry by not only identifying a production problem but providing a productive solution. We also achieved a 90% reduction in particulate emissions and a 33% reduction in CO2 emissions because, as the leaders in sustainability, putting sustainability first has been, and always will be, second nature to us. 1012337
We have also seen a sustained growth towards the use of aluminium beverage and food packaging globally and locally.
By virtue of it being recyclable. Most of the aluminium that was made long ago is still in use today and it is still to be used in the future. It is known to have been recycled over 100 years and almost exists everywhere, even in subtle ways. Aluminium is a material of the future because of its sustainability and exceptional properties such as high electrical and thermal conductivity, ductility, high corrosion resistance, high strengthto-weight ratio and formability. Globally, it has continued to expand in tonnage over the years and is expected to increase in the future.
What are the current drivers and opportunities for aluminium? And the barriers?
GEJ: Please tell us about the Aluminium Federation of South Africa. Muzi Manzi: The Aluminium Federation of South Africa (AFSA) is the voice and the gateway of the industry. It consists of approximately 80 members who are both national and international companies, involved in the production, distribution, fabrication and use of aluminium. The Federation promotes the use and the growth of this green metal. Members are provided with technical services, so that they are well-informed and make suitable choices with regard to the material.
The roadmap is a blueprint adopted by the South African aluminium industry and government to develop the sector by leveraging the potential the metal holds as a preferred metal for the manufacturing of vehicles, construction and packaging material. The use of aluminium in both internal combustion and electric vehicles has been growing and is expected to increase due to the metal’s lightweight properties.
Why is aluminium known as the material of the future?
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Aluminium is setting its stage as a major player in the green economy: curating the circular economy and curbing the impact of climate change. This green metal is gaining traction across many sectors as it is infinitely recyclable. Muzi Manzi, CEO of AFSA, tells us more.
The current drivers for aluminium, amongst many others, are the packaging industry, the building and construction industry, as well as the automotive industry. There are significant opportunities in the automotive industry due to the development of electric vehicles and demand for light-weight vehicles. The demand for the development of new technologies is the driving force for aluminium. One of the barriers continues to be the high energy costs required.
Close to 75% of the aluminium ever produced is still in use today, in one form or another.
Why should South Africa have an aluminium industry? The aluminium industry contributes and forms a very critical part of the economy. Aluminium demand is inevitably expected to increase within the coming years. It is considered the top metal of choice for many different sectors. Apart from revenue generation, it contributes to job creation. South Africa has the potential of becoming a major net exporter of aluminium in the future.
MATERIAL
METAL OF THE FUTURE
Green Economy Journal interviews the CEO of AFSA
Please provide an outline of South Africa’s Aluminium Industry Roadmap that was developed in 2017.
2018 – present : Chief Executive Officer | AFSA 1996-2010: Various managerial positions | Eskom 2010-2018: Director: non-ferrous metals | the dti As CEO, Muzi Manzi is responsible for the management and governance of AFSA. He is also a member of its board of directors and is tasked with the implementation of the South African Aluminium Industry Roadmap. One of the roadmap’s deliverables is to expand the federation’s drive to position the local industry as a formidable and significant producer and supplier of aluminium in South Africa, the rest of the African continent and other markets beyond the continent. Manzi has a qualification in Metallurgical Engineering and an MBA together with extensive industry-specific experience in policy development and stakeholder engagement.
greeneconomy/
The reprocessing of aluminium scrap requires only 7% of the energy required for primary aluminium production. Considering that close to 75% of the aluminium ever produced is still in use today, in one form or another, the metal is a major contributor to resource efficiency. Aluminium is one of the few metals that can be recycled infinitely without it losing its properties. This means, a fledged aluminium production facility can operate by only recycling scrap without the need for primary metal. It is through the increased use of aluminium scrap that the industry can contribute towards net-zero carbon emissions by 2050 as the global aluminium sector has committed.
What role will aluminium play in revolutionising South Africa’s clean energy markets?
MATERIAL31
This industry-level roadmap is intended to guide strategy and action in taking the aluminium industry into the future. AFSA is the custodian of this living document. [ECO]NOMY report recycle
The industry aims to supply aluminium extrusions and clamps into the renewable energy projects so that these materials are not imported from abroad while accumulating greenhouse gases before they are even installed on our shores. We can only contribute toward the greening of the electricity grid by ensuring that we source construction materials in close proximity to the projects, and the South African aluminium industry has the capacity and capability to meet the demand of renewable energy projects. Aluminium is an “energy bank”, recovering most of its original input each time the product is recycled.
What are AFSA’s medium-term prospects in terms of the country’s transportation sector? With the ever-increasing cost of fuel, the transport sector is encouraged to adopt the use of aluminium in the manufacturing of trailers and other autobody parts for more payloads without the risk of overloading. There are several AFSA members who can supply into this sector to alleviate the burden posed by exorbitant fuel costs. The industry currently supplies aluminium parts and components to the automotive industry, and with the increased demand for local materials, AFSA members are poised to maximise collaboration with the Original Equipment Manufacturers (OEMs) in order to identify further opportunities to increase supply.
THE SOUTH AFRICAN ALUMINIUM INDUSTRY ROADMAP | Department of Science and Technology | CSIR [March 2017]
CAREER BIOGRAPHY
Increased local production will result in a bigger volume of scrap, which AFSA can grow a circular economy from. How so?
The country has been involved in building its aluminium industry for over 70 years. The future of the industry depends on the new market requirements that are absorbing aluminium in a myriad of products, driven by the consumer revolution. The industry has the potential to create employment, attract significant foreign exchange earnings and develop the economy.
Please expand on the urbanisation trends that hold high potential for more aluminium in smart and green buildings. Aluminium as a construction material for façades, windows, fittings and glass enclosures is unrivalled. Smart cities and green buildings are highly aluminium intensive based on the material’s contribution towards building climate control capabilities in comparison to other materials.
REPORTREAD THOUGHT
32ENERGY
BY MATTHEW CRUISE*
Unfortunately, the renewable energy capacity totalling 7 783MW will not contribute much towards meeting the peak demand. It will need to be supplemented by batteries or gas turbines for peak demand to be met. The RMIPPPP will add 2 000MW, about 1 200MW8 of this will be able to contribute to peak demand as gas-fired turbine or battery energy.
Loadshedding and the price of electricity are projected to double over the next five years. Both Eskom and the municipalities each get an increase close to inflation year-on-year (last year 18%1, this year 17%2 overall). There are other market dynamics that are coming into play that will further increase the price. The price of diesel3 and coal4 are currently skyrocketing due to the Russian/ Ukraine war and these costs will be passed down to the consumer as they have not been budgeted for in Eskom’s five-year projection. This will further increase the cost of electricity in the short-to-medium term as gas-fired turbines are utilised to curtail loadshedding.
The real cost of taking back the power
REIPPP Bid Window 5, with a combined capacity of 2 583MW 6 (1 608MW wind, 975MW solar), has been delayed recently in terms of its financial close. The commercial close timelines for the 25 preferred bidders are being undertaken in a phased approach with all projects expected to sign agreements by the end of September 2022. The projects are expected to reach commercial operation within two years from commercial close. Bid window 5 will see the energy coming onto the grid in about a year-and-a-half and during the same time the coal power is coming offline. Bid Window 6 is planned to have a generation capacity of 5 200MW7 and will follow in about three years. This renewable energy that is planned to come onto the grid is one fifth of the coal power that is leaving it.
WHAT IS SA’S ENERGY FUTURE?
Does renewable energy contribute to peak demand?
Will the IPPs resolve the crisis?
Peak demand is when we have the highest demand for electricity in the country. The peak demand periods are in the evenings, when people cook their dinners and warm their homes, and in the mornings, when they are getting ready for the day.
Energy use peak demand periods and solar generation peak.
As old power stations come offline due to reaching end-of-life, the ability to meet the peak demand of 32 000MW will be reduced. The oldest power stations (Camden, Hendrina, Arnot, Grootvlei and Komati)5 will be coming offline within the next five years, they have a combined capacity of 7 885MW.
As Eskom grapples with costly maintenance and the increasing cost of coal, there will be less incentive for the parastatal to maintain its coal-generation units. There has never been a greater need to switch to alternative energy sources.
Now is the best year to invest in a solar and battery (hybrid) installation.
Now is the best year to invest in a solar and battery installation.
Power during the day does not automatically mean that it’s available at night when needed. Solar energy peaks in the middle of the day and declines at night. The morning energy use peak demand is around 7am. At this time, the sun hasn’t started shining yet, so there is no solar energy coming onto the grid. Similarly in the evening, when we have our highest peak demand of 32 000MW the sun is not at that time providing power on the grid either.
Energy demand juxtaposed against solar and wind output.
Homeowners and businesses are recommended to take control of their electricity needs with a solar and battery installation that is grid-tied. The price of solar equipment has historically declined consistently over the past 15 years, up until 2021 when prices rose due to global demand. Growth in this market is accelerating due to the increase of solar farms worldwide. The demand is increasing the price of equipment coming out of China and India primarily.
EnergyHohmcourtesy:graphsandtablesAll
Our highest input of energy from wind is at 2am, when wind tends to peak – and then it is sporadic during the day. As the wind blows is when we get power.
Getting a system that takes care of 80% to 90% of the electricity needs is recommended, along with a lifeline to Eskom to recharge the battery during cloudy weather. This is the optimal percentage that will mitigate loadshedding and the impending price increases. By investing in a hybrid installation, an immediate net saving is made as the monthly cost of a system does not increase. The saving is from the amount of money you used to pay Eskom for the same electricity that you get with the installation.
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What is the recommended solution?
the monthly electricity bill and
from
per month.
Eskom price hike of 17% for 2023 was
An inverter system is critical as it regulates the power coming in from the sun and feeds it into the battery and the house (the battery needs recharging, and the house uses power during the day). It will separate the power as needed and reduce the overall amount of Eskom power.
More panels and a bigger inverter are recommended for higher energy demand. Below is an example of a client who opted for an 8kWh inverter system that has about R2 500 worth of electricity usage perThemonth.labour, cabling and accessories are included in the price and in the above example, the distribution board needed wiring. Another line-item cost is the certificate compliance with third-party signoff from an engineer to confirm that the system has been installed properly.
718
following years. A system
An installation plan with two batteries. An example of an 8kWh inverter system. Qty Size R 178 314.98 Core Solar System Solar PV panels Battery backup system Inverter system (inverter, MPPT and controller) Mounting structure Cabling & accessories SolarDBLabourrewiringCertificate of Compliance Third-party signoff 1021111111 455kWp5kWh5kWh RRRRRRRRR 32 493.83 57 647.78 22 218.00 3 967.50 22 019.63 27 370.00 6 532.00 1 437.50 4 628.75 Total Turnkey Solutions (inc VAT) R 178 314.98 Optional five-year Maintenance Plan (incl. VAT) R 28 750.00 Qty Size R 190 263.70 Core Solar System Solar PV panels Battery backup system Inverter Third-partyCertificateDBLabourCablingMountingsystemstructure&accessoriesrewiringofCompliancesignoff 1621111111 545kWp5kWh8kWh RRRRRRRRR 45 780.00 46 200.00 27 300.00 10 987.20 19 516.50 32 050.00 3 680.00 1 250.00 3 500.00 Hohm Facilitation fee VAT 15% RR 22 467.56 31 909.69 Total Turnkey Solution (inc VAT) 244 640.94 Optional five-year Maintenance Plan (incl. VAT) R 28 750.00
What are the line-item costs?
average
The battery is the most expensive part of any solar and battery installation, with the solar panels being the second-most expensive followed by the inverter. In the example above, the client opted for two 5kWh batteries to ensure that solar energy is stored for the mornings –especially during periods of heavy loadshedding. This system would take care of about 90% of the client’s energy needs. The installation can be built up gradually.
Financing a hybrid system would result in a monthly net saving for most systems, provided they are specified professionally. A home that spends R2 500 per month on electricity and has a bond at prime with 10 years left, would save R50 per month, with more savings in that costs R197 would on replace R2 150 of cost R2 376 (The implemented July.)
Costs of a typical installation
34ENERGY
The total all-in costs for a system and what that would cover when financed through a bond or a rent-to-own model result in a minimal impact on the monthly budget. A package for a home that is spending about R1 500 per month will include 3.6kWp of solar, a 3.6kW inverter and a 2.8kWh battery. (A prepaid meter is charged in kilowatt hours which is currently about R2.50 per kilowatt-hour.) A 3.6 package will cover about R1 000 on average per month of the home’s energy needs. How does an installation result in saving?
2022 ENERGY SERVICES | Market Intelligence Report | GreenCape [2022]
ENERGY35
for several years,
REFERENCES 1 Businesstech 2021 2 Businesstech 2022 3 WeForum 2022 4 The Conversation 2022 5 NS Energy 2021, Green Building Africa 2019 6 Successful energy projects bid window 5 7 Greenbuilding Africa article 8 RMIPPPP - a disappointing outcome 9 FuturePolicy
The German Feed-in Tarriff, Instyle Solar Australia, Forbes advisor USA 2022, Solar Reviews Top Solar How can the government help? installations are incentivised 9 in first-world countries by their governments through tax incentives, rebates and preferential feed-in tariffs for providing power to the grid during peak demand. needs to incentivise customers to feed back their stored power into the grid. Instead, there’s talk that Eskom may charge solar users an upfront cost. Unlike other countries, such as Europe, the US and Australia which are doing all they can to encourage private solar use through rebates and beneficial tariffs, South Africa is heading in the opposite direction. By incentivising the wealthy and middle-class citizens to invest in their own installations, the citizens of a country start to contribute towards supplying energy demand directly. There will be no coal power coming online from government, as they cannot afford it, nor can they borrow the money for coal power from the World Bank or similar institutions.
Having worked in the sector Matthew Cruise has insider knowledge of the state of South Africa’s addition to an academic background in electrical and mechanical engineering, Cruise completed an MBA on the need for a transition. for Hohm Energy, an online solar platform and marketplace.
This market intelligence report highlights investment opportunities in embedded generation and energy efficiency created by South Africa’s diversifying energy services market.
He now consults
energy
There are five main factors driving growth in the energy service market: the above-inflation electricity price rises; national energy insecurity; decreasing technology costs; supportive policies, regulations and tariffs; and well-adapted finance options. Amidst the Covid-19 recovery, there is an increased interest from businesses in improved cost efficiencies and secure energy supply. The national embedded generation market for installations, operation and maintenance of rooftop solar PV has been identified as an important part of the country’s immediate efforts towards energy security.
electricity sector. In
Positive regulatory movement, investor sentiment, and steady recovery in the key commercial, industrial and agricultural sectors have led to continued market growth during 2021. The market is still expected to reach a total capacity of 7.5GWp by 2035 at a market value of R75-billion, it is estimated that 20% of this market is in the Western Cape.
Government
sustainability and energy
REPORTREAD THOUGHT [ECO]NOMY greeneconomy/report recycle
An example of various packages for a hybrid installation. electricityMonthlybill Reccomendedkit Kit system specifications Cost inc. VAT electricityMonthlysavingsatR2.50p/kWh Cost @ prime (9%) over 10 yrs increaseOverallinmonthlybudget R1 500 3kW Backup 3kW inverter + 3kWh battery R66 000 n/a R836 R836 R2 000 5kW Backup 5kW inverter + 5kWh battery R84 266.83 n/a R1 067 R1 067 5kW Hybrid 4.9kWp solar, 5kW inverter + 5.5kWh battery R138 981.36 R1 532 R1 761 R229 R2 500 6.5kW Hybrid 6.54kWp solar, 5kW inverter +10kWh battery R188 802.73 R2 044 R2 392 R348 R3 500+ 9.3kW Hybrid 9.27kWp solar, 8kW inverter + 15kWh battery R276 778.40 R2 895 R3 506 R611
*Content is from What is South Africa’s energy future? a Hohm Energy Media Roundtable presented by Matthew Cruise. The democratisation of the energy sector to become an open market is going to increase the cost of electricity even further.
Hybrid
In the President’s recent national address on the loadshedding crisis, Cyril Ramaphosa announced that Eskom will be unbundling into three separate entities in December 2022. This move heralds the democratisation of the energy sector towards an open market model. This will unfortunately lead to further increase in the cost of electricity as it will take about a decade for the market to become efficient and the price of electricity to decline.
Loadshedding – or, if we are to be more accurate, power cuts to prevent collapse of a grid that is not producing enough electricity – is far more than an inconvenience. It shreds the economy. If anyone is still in any doubt, take a stroll through the smaller shopping malls and retail centres during bouts of loadshedding and witness the darkness and absence of retail.
In the year between May 2021 and May 2022, the cost of diesel at the pump is up in the region of 45%, from R16.20 a litre to R23.67, according to data from Statistics SA in June of this year. A litre of petrol in May 2021 was R17.23 and a year later, it sat at R21.84. In July, it skyrocketed to almost R26.74 a litre for 95 petrol inland. Let’s assume that a small or medium business owner can, somehow, afford to run a generator which is almost twice as expensive as a year ago. If the business is in a small retail centre or in the middle of a small shopping mall, there is no way it can legally run a generator, never mind the health and safety hazard of toxic fumes and power cables. Solar installations may well be the route to take for businesses that have access to roofing, especially now that financiers, including those specifically targeting SMEs, are supporting renewable energy installations. The problem is that many businesses just don’t have access to space for solar panels or don’t own their own properties. It would be no surprise then, that many businesses are looking at uninterrupted power supply (UPS) systems. While inverters have come a long way, most of these systems sold on shelves around the country
Late June and early July 2022 will go down as one of the lowest moments in South Africa’s loadshedding history. Stage six loadshedding, which was briefly touched a few years earlier, became the norm. What may well have been unimaginable – it shouldn’t have been as the writing has been on the wall for ages – was now a daily reality.
Lithium supply chains are under immense pressure, driven by electric vehicle (EV) battery demand from China and elsewhere, pushing up prices. However, second life (2ndLiFe) lithium iron phosphate batteries play a crucial role in providing storage batteries with superior lithium performance but at more palatable prices.
Economy, and SMEs in particular, need FREEDOM FROM DEPENDENCE
Once an EV battery has served its useful life in a vehicle it is replaced, however, the individual cells from these batteries, when expertly repurposed for stationary storage, have a lifespan similar to first life storage batteries, but with the added advantage of robust performance in harsh environments. This is why REVOV has developed the CUBE, a plug-and-play system that gives businesses and households the opportunity to develop freedom from dependence in a carbon-friendly manner, while relying on the superior performance of 2ndLiFe lithium iron phosphate batteries.
While the entire economy suffers, small and medium businesses bear the brunt of dependence on the grid. And so, those that can, plan –increasingly the South African norm. What does this plan look like? To many, it takes the form of a generator because of the lower initial outlay. This is far from ideal. Consider that in early July fuel price protests shut down national routes – the “easy solution” is not easy any more. The cost of running generators has increased astronomically.
BY LANCE DICKERSON*
If you consider that the government’s National Development Plan (NDP) proudly proclaims that it envisions a country in 2030 where SMEs create 90% of new jobs, it’s a tragedy. Government, with all the right intentions in the drafting of the document, appreciated that unleashing the power of this economy and seeing real GDP growth and job creation lay in the hands of small and medium businesses. The fact that these businesses are dependent on an unreliable and increasingly fragile national power grid is akin to cutting their hands off before they even have the chance of trying to make a living.
* Lance Dickerson is the founder and CEO of REVOV
We all know how the story started: warnings from as early as the late-1990s were not heeded, new builds went over time and budget, and they included design flaws. Infrastructure was not maintained, years of state capture turned Eskom into the country’s biggest risk, and delays in unleashing the power of renewable energy frustrated everyone except, it would seem, those tasked with making decisions in our collective best interest.
The CUBE is a plug-and-play system that uses 2ndLiFe lithium iron phosphate batteries.
36ENERGY
have lead acid batteries, which do not hold a candle to the performance, safety and longevity of lithium iron phosphate batteries.
Johannesburg Head Office: 010 035 6061 • Cape Town Office: 021 569 2760 TM CUBE & CUBE 800 Compact fully integrated all-in-one backup system with pre-programmed inverter, pre-connected batteries and BMS. Perfect for small businesses and homes. Available in 5 kWh and 10 kWh configurations. Pre-cabledCUBE 5kW inverter with 80A MPPT CUBE 800 6kW Sunsynk inverter with 7800W MPPT
SAPVIA’s new chief executive officer, Dr Rethabile Melamu, is of the view that unlocking largely untapped renewable energy capacity can catalyse the implementation of South Africa’s sustainable development imperatives, invigorate industrial activity and deliver meaningful socio-economic value to its citizens. “A s we celebrate a decade of solar in South Africa, it is fitting that we have at the helm of the association a driven and powerful advocate for renewable energy. Dr Melamu comes to the South African Photovoltaic Industry Association (SAPVIA) with an outstanding track record of delivery. She will lead the organisation into a new era of growth, focusing our strategic direction and ensuring that our members capitalise on the local and regional solar markets,” comments Wido Schnabel, a managing committee member of SAPVIA since 2013 and chairperson from 2019 to 2022. (The new chairperson is Chanda Nxumalo, who was elected at SAPVIA’s 2022 AGM.)
Dr Melamu brings on-the-ground experience developing sub-national energy, green economy and public sector strategies and policies from inception to implementation.
ENERGY
GEJ: You have recently been appointed as the SAPVIA CEO. How have your education and career led you to where you are now?
Dr Melamu: My undergraduate qualification in chemical engineering paved a way for me to specialise in renewable energy and sustainability at post graduate levels. My master’s degree focused on environment analysis of bio-ethanol and hydrogen, and my Doctor of Philosophy (PhD) explored how new technology innovations develop in society.
38 Green Economy Journal interviews the new CEO of SAPVIA A CATALYST FOR POWER
We wish to understand the barriers to local competitiveness in South Africa and to be able to share perspectives on how industry should support localisation solutions that build capacity and local supply chains in a competitive and sustainable way.
As a trusted partner to government, I foresee SAPVIA and principal stakeholders contributing progessively towards the creation of conducive business and regulatory environments that will unlock market opportunities along the solar PV value chain for the benefit of SAPVIA’s members and the broader sector.
How can we maximise participation in this dynamic sector of the labour force?
ENERGY
Off-grid solar is a critical step toward the economic advancement of the continent. How should South Africa scale up off-grid solar?
What are SAPVIA’s near-term objectives and long-term goals?
SAPVIA has commissioned a local content study to better understand the manufacturing potential across the solar PV value chain. The study will provide a long-term market view and give insight into what can be done to alleviate the current industry uncertainty, which is crucial to sustain investor confidence.
I would like to position SAPVIA as a go-to organisation for best industry practices and for all matters relating to the development, regulation and promotion of solar PV in South Africa and sub-Saharan Africa. SAPVIA’s expansion into the SADC and sub-Saharan African regions in the coming years is something that I would like to earnestly pursue, for us to realise the vision of the “Africa we want to see”.
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What has been the highlight of your career?
A localised future depends on the right manufacturing and skill bases. Without these, we won’t fully realise Africa’s solar potential.
Equally, my career in academia, quasi-private sector and government was a good foundation.
What are the latest trends and developments in the sector?
South Africa’s solar resource potential is among the highest in the world. Are we making the most of it?
What are your thoughts on your role at SAPVIA?
This is a policy stance for individual countries. There is no one-size-fitsall approach. For remote areas in South Africa, off-grid solutions such as micro-grids can address energy access challenges. Innovative business models that include community participation can address the problem.
Indeed, the country and the continent need skills. We have established the need to maintain the integrity of the industry by ensuring quality installation especially in the SSEG space. That is why SAPVIA developed the PV GreenCard programme. There are other initiatives such as the South African Renewable Energy Masterplan which should give insights on skill needs in South Africa.
The centrality of solar energy in the diversification of the South African energy mix and the delivery of secure, affordable and clean electricity supply to all citizens is unquestionable in my view. I am of the opinion that solar photovoltaic (PV) and the broader renewable energy technologies can support a resilient energy system and anchor the green economy transition in South Africa and the African continent.
SAPVIA and the broader market encourage members to embrace diversity.
My highlight is when I am able to execute my responsibilities in a manner that solves a client’s or a stakeholder’s challenge. I thrive at seeing people progress and grow. As such, I have had lots of highlights over the years. Accolades and awards are motivating but they don’t inspire me to get out of bed every morning.
We need a favourable regulatory environment and cohesive procurement processes for government-led programmes. Better coordination of industry and private sector in project development is also needed. Of course, financing of projects can be a stumbling block, so all interested parties, government, financing institutions and industry need to work together to develop innovative business and financing models. The continent needs to build a sufficient skill base to exploit this potential.
What are your personal aspirations in terms of SAPVIA?
The South African renewable energy manufacturing sector has been in survival mode for many reasons. What are these reasons and how do we overcome them?
In the near term, SAPVIA will focus on nurturing partnerships that create a beneficial legislative and business environment for members. SAPVIA plans to contribute towards meeting the country’s generation capacity shortfall. In the long term, our goal is to significantly increase the share of solar PV in the national energy mix, and through that, to address socioeconomic and energy access challenges in the country and continent.
I strongly value collaboration. I plan to nurture existing partnerships and foster new ones that will deliver value to our members, the public sector and country’s citizens. Providing thought leadership as well as reliable and credible market intelligence will remain a priority under my leadership.
Most technical challenges are being resolved over time; PV technology is mature. The pace of procurement for utility scale projects can be increased. That requires capacity reinforcement from institutions at the forefront of it. Municipalities need to be enabled to implement their own generation projects. A national wheeling framework is the right place to start.
Clean, sustainable and adequate energy supplies could enable Africa to reach its full potential. What is standing in the way?
The cost of solar has dropped drastically in the past decade, evident at the utility scale. Legislation reforms, particularly for the increase of a threshold of projects that do not require license from 1MW to 100MW, has opened more opportunities in the commercial and industrial market segments. We’ve seen tremendous growth in the past year. The electricity crisis has catalysed the rate of development and has stimulated the small-scale embedded generation (SSEG) market. What, in your opinion, are the main challenges in this sector?
The continent needs to build a sufficient skill base to exploit its potential.
I think we are increasingly exploiting solar resources, but there is scope to expand across market segments.
SAPVIA’s expansion into the SADC and sub-Saharan African regions in the coming years is something that I would like to earnestly pursue.
solar
association
it
The PV GreenCard programme is designed to ensure quality and safety standards are maintained by all solar PV installers. Installers take part in specialised training to become certified. The certification means that these installers are proficient and compliant with all of the relevant electrical regulations. ENERGY CAREER BIOGRAPHY 2008-2012: Research officer lecturer | Department of Chemical Engineering, UCT 2014-2015: Biofuels project specialist | GreenCape 2015-2018: Director: Green Economy | Gauteng Provincial Government 2016-2022: General Manager: Green Economy | The Innovation Hub 2017 – present: Steering committee member | Aspen Network of Development Entrepreneurs 2018 – present: Member board of trustee | Central University of Technology 2019 – 2022: Member of the board of advisors | Department of Chemical Engineering, UCT 2019 – present: Member board of directors | SAREBI 2021 – present: Non-executive director | GreenMatterZA May 2022: Chief Executive Officer | AnSAPVIAengineer by training, Dr Melamu has become renowned for her global expertise in the green economy and energy sectors. She has leveraged both the theoretical and practical to harness innovative smart technologies to mitigate the impact of climate change in society, with a dedicated focus on African sustainable development. How
40There are associations and organisations such as the Energy and Water Sector Education Training Authority (EWSETA), Eskom, South African Renewable Energy Technology Centre (SARATEC) and GreenCape who are contributing to skills development in the renewable energy space in one way or another. Our role is to support these institutions in the execution of some of their plans for the benefit of our members. I plan to nurture existing partnerships and foster new ones that will deliver value to our members, the public sector and country’s citizens.
members
SAPVIA is a member-led organisation formed with the express purpose of growing the solar PV sector’s role in powering South Africa’s future. The advocates, engages and influences on behalf of its to harness the power of PV and capitalise on the opportunities offers individuals and the broader South African economy. does SAPVIA advance gender equality? SAPVIA and the broader market encourage members to embrace diversity. There is a shared SAWEA and SAPVIA working group that focuses on increased participation of women in the sector and in leadership positions. In fact, there is currently a GIZ supported study by SAWEA and SAPVIA and plans to improve gender diversity in the renewable energy sector. In your opinion, what is one of the biggest challenges that women in the energy industry face today? Due to other societal obligations, women tend to have limited access to networks that contribute to their growth the way men do, participation in after-work engagements, for instance. Challenges tend to be systemic, reflected in organisation policies and practice. What advice do you have for those interested in starting a career in the green economy? There is a lot more information about the sector now compared to a decade ago. Educate yourself about various career options and use professional platforms such as LinkedIn to reach out to professionals in the sector, to educate yourself and for inspiration. Please give a message of motivation to women aspiring to leadership positions. Find and do something that you’re passionate about, do it well, do it for the benefit of society. In time, you will need to grow in influence and step up into a position of leadership. A position of leadership comes with responsibility, and it is important to allow yourself time to grow into it. Be intentional about growing other women and men when you occupy these positions. You have highlighted before that entrepreneurship in the climate space takes a lot of effort. Why is this so? Because it requires different types of support – both technical and non-technical. Those needs, include but are not limited to, access to strategic infrastructure for prototyping, product testing and manufacturing. Entrepreneurs need business development support to develop route-to-market strategies, appropriate business and financial models, as well as intellectual property support. Of course, access to market and finance are major requirements. All these factors need to be juggled at the same time which can be overwhelming for start-up Entrepreneurshipentrepreneurs.needswide engagement with various government departments as well as with financing and funding institutions, etc. Supporting entrepreneurs is an art, it takes years – and a couple of weeks pitch training, as is sometimes the practice in industry, is insufficient.
companies,
As South Africa ramps up its transition to renewable energy, educating school learners about this clean source of energy is becoming increasingly important. This is the impetus behind the country’s wind power sector support of the
2021 EnergyDRIVE at Ceres Secondary School in the Western Cape.
EnergyDRIVE.2021EnergyDRIVE at Joe Slovo Freedom High School in the Eastern Cape.
With the intention of increasing awareness to create a generation of well-informed decision-makers that can play an essential role in increasing adaptation and mitigation capacities of communities, while empowering youth to adopt sustainable lifestyles, EnergyDRIVE will be making its way across at least three of the country’s provinces.
ENERGY41
ENERGYDRIVE INCREASES SCHOOL LEARNER’S CLIMATE LITERACY
2021SAWEAEnergyDRIVE: Okiep High School learners at Kangnas Wind Farm in Springbok, Northern Cape.
With the conviction that education is an essential element of the global response to climate change, as it helps increase climate literacy, especially among young people, EnergyDRIVE encourages changes in attitudes and behaviour. Designed to be interactive and educational, it features a solar roof structure, biogas digester, photovoltaic panel display unit as well as a solar hot water display unit. The walls of the container are made up of a battery bank, photovoltaic components and a TV, making it an inspirational and experiential teaching aid.
“High school learners are at the stage where they will be making study and career choices, they are also leaders of tomorrow, hence the programme promotes renewable energy and climate change awareness. It demonstrates and imparts knowledge to learners across communities about the benefits and uses of clean energy technologies,” says Niveshen Govender, CEO of SAWEA.
School learners across South Africa’s green energy map will once again welcome the much-loved mobile edu-unit, EnergyDRIVE, a partnership between the South African Wind Energy Association (SAWEA) and the Durban University of Technology. Although it is promoted by the wind association, this initiative stretches across renewable technologies, to include communities within the vicinity of solar farms as well, so that other technology partners and stakeholders with a national footprint are also able to get involved.
BY
ENERGY
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The Rentech brand was established in 2001 as a dedicated provider of renewable energy products and services. Rentech Renewable Technologies is part of the AutoX family, standing alongside renowned battery brands, Willard Batteries and SABAT Batteries.
Sunways focuses on providing reliable, advanced and cost-effective power solutions for customers. Thanks to the common building block product design concept that has been widely used in our hardware and appearance design and firmware control since the company’s inception, Sunways’ reaction to new technology in the market is faster than its competitors. This ensures that Sunways always takes the lead in new product development as well as product iteration and updates. With an operation centre in Germany and local teams
AutoX recently signed an exclusive distribution agreement with Ningbo Sunways Technologies for the Sunways inverters for South Africa and Namibia. Sunways is a cutting-edge technology company founded in Konstanz, Germany in 1993, dedicated to developing, manufacturing and distributing PV parts, including inverters for on-grid and energy storage PV systems in residential, commercial and industrial projects; data communication solutions; accessories as well as applications for monitoring and managing. With a strong belief in renewable energy, Sunways produces a series of technology leading solar solutions, these include on-grid and hybrid inverters. They have been dominant in the solar industry since the late 1990s and millennium. In 2018, the company received reinvestment from Puze Group and established Ningbo Sunways Technologies, allowing Sunways to obtain more resources to invest in R&D, production, marketing and supply chain, and achieve comprehensive upgrades such as strengthening the research and development team, optimising production capacity layout, stabilising supply chain and globalising the sales and marketing team.
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SOLAR SOLUTIONS
distributed all over the world, Sunways can quickly address industry challenges, strengthen customer relationships and deliver timely localised services.
The Sunways solar inverter product list includes single- and threephase on-grid (string) inverters from 1kW to 125kW and high-voltage battery hybrid on-off-grid inverters from 3kW to 33kW, with accessories and a remote monitoring and control solution. This caters for solutions ranging from energy cost (electricity bill) saving with on-grid inverters and solar panels, to back-up power (loadshedding and off-grid) and energy saving with battery hybrid inverters, solar panels and batteries.
AutoX/Rentech and Sunways provide local training, installer certification and support for the Sunways products and solutions.
Sunways focuses on providing reliable, advanced and cost-effective power solutions for customers.
Ndivhuho Raphulu, NCPC director.
Although the EIP concept dates back to the 1990s, major uptake only increased in 2018. South Africa and other countries started adopting EIPs’ principles to enhance resource and materials efficiencies, improve the overall environmental, economic and social performance of industrial parks for common benefits.
Increasingly, companies need to ask themselves, “What can industry do that has a knock-on effect on communities and the environment,” asserts Oellermann, who recently joined the NCPCSA’s EIP programme team. He urged conference attendees to think about the value that their respective companies are making, not just the surrounding community and the environment, but to the entire country.
The Global Eco-Industrial Parks Programme (GEIPP) was launched in 2020 to green industrial parks by improving resource productivity and economic, environmental and social performances of businesses. The project is funded by the Swiss State Secretariat for Economic Affairs (SECO) and implemented internationally by UNIDO. The NCPS-SA is implementing GEIPP SA from 2021 to 2023 through a collaboration with UNIDO and the dtic The first step in this revitalisation journey is the development of a set of tools for industrial parks, their tenants and policy makers. The purpose of the tools and guides is to provide free resources that will aid in the transition of parks to the EIP model. To view or download the guides visit: www.ncpc.co.za Contact us: ncpc@csir.co.za Collaboration is crucial within an eco-industrial park.
NCPC stand at the fifth Biennial Industrial Efficiency Conference 2022. Delegates at the NCPC fifth Biennial Industrial Efficiency Conference 2022.
The EIP approach encourages park companies to enter collaborative partnerships and create synergies to gain a competitive advantage through the physical exchange of materials, energy, water and by-products, thus diverting waste from landfills and reducing environmental impact.
How eco-industrial parks help South Africa to decarbonise
44ENVIRONMENT
With a large number of South Africa’s industrial parks becoming dilapidated, a NCPC-SA partnership with UNIDO and the Department of Industry, Trade and Competition (dtic) to revitalise and transform them into eco-industrial parks (EIPs) may hold the answer for how industry can start to decarbonise. The NCPC-SA reflected upon the revitalisation efforts at the fifth Biennial Industrial Efficiency Conference 2022. South Africa has a very energy-intensive industrial sector. The country’s direct and indirect emissions make up a high percentage of energyrelated carbon emissions. The industrial park revitalisation efforts to transform them into EIPs has a potential to change this negative picture. South Africa is one of seven countries leading the charge for the revitalisation of industrial parks to eco-industrial parks through the Global Eco-Industrial Parks Programme (GEIPP). In a country that has several public and private industrial parks, Blanche Ting from the United Nations Industrial Development Organization (UNIDO) South Africa argues that they, “Have a huge potential to make an impact in our decarbonisation ambitions.”
“Collaboration is crucial within an eco-industrial park,” explains Bernd Oellermann then regional industrial development director at the dtic Community collaboration is also an imperative of the EIP approach. When an EIP actively collaborates with surrounding communities, it fosters inclusive and sustainable development.
www.ncpc.co.za www.industrialefficiency.co.za ncpc@csir.co.za Services include industry and sector knowledge-sharing, company technical support; green skills development; and advocacy and awareness-raising. 5th Biennial Industrial Efficiency Conference 2022 Conference sessions, presentations & pictures available on www.ncpc.co.za Trade,Department:Industry and Competition REPUBLIC OF SOUTH AFRICA the dtic Funded by the dtic, hosted by the CSIR 22-2022THA 2002 – 2022 The NCPC-SA was established at the Joburg World Summit on Sustainable Development in September 2002. Its success since then has made it a true legacy project of the summit. The NCPC-SA is a national industrial support programme that drives the transition of local industry towards a green economy, celebrates 20 years of Industrial Efficiency in South Africa. Since 2002, the NCPC-SA has: Advised and assessed over 1700 companies Saved almost 7 000 GWh of energy in industrial plants Helped mitigate over 7 million tonnes of GHG emissions Trained over 6 500 professionals in resource and energy efficiency Now Available!
MINING
Anglo American pointed out that this was only the start of a wider initiative to decarbonise the company’s global mining operations and create a vertically integrated value chain. The group is therefore focused on creating a renewable ecosystem for South Africa. This, it is hoped, could generate three to five gigawatts of green energy, and pave the way for the company to become carbon neutral by 2040.
“Despite this, African countries are, through their mining industries, making a significant contribution to supplying the minerals for a global energy transition,” says Van Zyl. There are also possible economic reserves of lithium in Zimbabwe, and perhaps also in the Democratic Republic of Congo, Namibia and Ghana. He notes that mining companies in Africa, as elsewhere, have focused increasingly on ESG compliance, climate change and resilience, which drive efforts to reduce a mine’s carbon footprint. At the level of mining operations, there is growing momentum in raising energy efficiency as a route to cutting carbon emissions. There are also efforts to substitute fossil fuels with renewable sources of energy.
How mines in Africa promote ENERGY TRANSITION
Andrew van ZylBY SRK CONSULTING
Van Zyl points out that, with the right enabling legal frameworks, there could be opportunities to broaden the application of hydrogenpowered trucks in mining – and even in other sectors. Further, there is scope for extending the value chain into skills development and perhaps manufacturing.
As the world grapples with the transition to a net-zero carbon future, the African mining sector directly supports this trend from at least a couple of angles. Mines are producing more of the critical minerals that underpin renewable energy production and battery manufacturing –key pillars in the quest to move away from carbon-based technologies. And they are also innovating ways forward that embrace energy efficiency and renewable energy sources internally. On the production side, Africa contributes predominantly through the mining of copper, cobalt and tantalum in central Africa, while platinum group metals are mined in southern Africa. According to SRK director and principal consultant, Andrew van Zyl, these commodities come from regions which have contributed relatively little to the carbon emissions that hasten climate change.
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The African Development Bank has also highlighted the beneficiation potential associated with the region’s mineral wealth. Speaking at the Mining Indaba, acting director, Dr Vanessa Ushie, urged African countries to cooperate through deepening their regional networks and platforms – to leverage the continental free trade area to create resilience in new supply chains.
“We should ensure that local value is retained in Africa and we’re not just supplying raw materials,” said Dr Ushie. “We need to move beyond that.” She also argued that no-one should be left behind in the energy transition, raising the importance of a just energy transition. This should carefully manage the shift away from coalfired energy generation, so that coal assets, miners and communities are not left “stranded”. “We talk about stranded assets often, but it’s the people that could be stranded, leading to the creation of ghost towns and countries –simply because they’re not prepared for the future,” she said. “We need to build resilience towards this unfolding change.” She added that the energy transition will require new and innovative ways of mobilising finance to encourage the participation of the private sector. On that front, the World Bank has pointed to the unique opportunity for
FROM COAL TO HYDROGEN? At the 2022 African Mining Indaba, Anglo American Platinum unveiled its prototype of the world’s largest hydrogen-powered mine haul truck. Used at its Mogalakwena platinum mine in South Africa, the technology demonstrates the sector’s commitment to energy transition. Haul trucks account for almost 20% of Anglo's greenhouse gases. With about 400 haul trucks employed across the business, the conversion to hydrogen as a power source would significantly impact its emissions. In fact, it was argued, that using green hydrogen would amount to taking half a million light vehicles off the road.
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Demetrios Papathanasiou, the director for energy and extractives global practice at the World Bank, said that achieving Net Zero as quickly as possible is imperative to avoid the effects of climate change – which could be devastating to the continent. “The solution is to find more ways to collaborate between the government, private sector and financiers.”
LOCAL RENEWABLE NETWORKS
Africa to develop new industries that would bypass the fossil-fuel burning stage toward their economic maturity.
RESPONSIBLE SOURCING
For instance, where hybrid power plants have been established by mines to reduce their reliance on fossil fuels, these have opened the door for solar power technology to rapidly expand in the host country.
“On the strength of a few pioneering renewable energy installations, more affordable distribution channels are established, and skills are developed to support a renewable energy sector,” he argues. “Local businesses will increasingly be able to source equipment like solar panels and batteries to be more productive.”
As mines establish more renewable power capacity, this can create a critical mass and feed renewable energy into a local supply network. Such developments promote broader economic growth by making energy more widely available to host communities. In this way, the ESG focus adopted by the mining sector – when combined with enabling legal frameworks – will support the energy transition while developing local supply chains and social development. “Ongoing developments in renewable technology are likely to have significant impact on the lives of average citizens in Africa,” says Van Zyl. “It is possible to see mines themselves playing a catalytic role in this progress.”
In terms of engaging with the global drive towards a low-carbon future, the mining sector in Africa goes further than the continent’s borders in its contribution. A significant recent engagement has been on the issue of responsible sourcing of minerals, which is a growing concern among European countries. “Responsible sourcing is being pursued by many commodityconsuming countries, and Europe is wanting to ensure that its path towards energy transition is based on this principle,” Van Zyl says.
“This process will ensure that the value chain through which endcustomers procure their commodities is ESG-aligned.”
The number of mines in Africa that generate their own renewable energy is growing, driven by ESG policies, the lower cost of renewable energy and by unreliable supply conditions. This has a direct impact on the energy transition, but also a less obvious benefit. “In addition to the progress made by mines in some African countries in generating their own renewable energy, they are also facilitating the concept of decentralised generation,” Papathanasiou explained. “This is an important departure from the traditional model built around a centralised power grid.”
SRK Consulting is directly involved as a partner in the RE-SOURCING project – an initiative funded by the European Union’s Horizon 2020 research and innovation programme. The project aims to produce a global stakeholder platform, including Africa and Asia, to align international practices and facilitate communication for responsible sourcing. Van Zyl explains that SRK Consulting also engages with mining clients on how they can measure, mitigate and reduce their carbon“Whilefootprint.Original Equipment Manufacturers (OEMs) tend to drive the technological evolution of mining equipment toward lowercarbon options, we assist clients to understand exactly how these solutions impact on indices like cost, productivity and mine plans,” he explicates. “For instance, the introduction of new technology into a feasibility study impacts the confidence of the modifying factors linked to resource and reserve determination.” We should ensure that local value is retained in Africa and that we are not just supplying raw materials. We need to move beyond that.
As DWS will partly fund and co-owns the OMM Programme, how does this impact on DWS’ role as sector leader and custodian of South Africa’s water resources? How will DWS maintain the interests of local citizens?
Minister of Water and Sanitation, Senzo Mchunu.
The primary role of the Department of Water and Sanitation is the formulation and implementation of policy governing the sector, while striving to ensure that all South Africans gain access to clean drinking water and dignified sanitation, as mandated by the Water Services Act 108 of 1997. This partnership will not change that; it will rather, consolidate it. Due to fiscus being constrained, government needs to prioritise available funding, thus support from the private sector to help achieve service delivery, is welcomed. The department, as a sector leader, is responsible for managing the Green Economy Journal interviews the Minister of Water and Sanitation
To ensure the successful implementation of this project, we will work collaboratively with Lebalelo Water User Association (LWUA) and keep each other accountable as equal partners, with proper governance structures in place; furthermore, this partnership will ensure that ultimately, the people benefit.
Minister: The Olifants Management Model (OMM) Programme is a partnership with the mining sector that is aimed at accelerating and delivering cost-effective potable and bulk raw water to defined areas in the Limpopo province. The department has over the years established partnerships for the sustainable management of water resources. The OMM partnership is not different at all in that it seeks to achieve one primary goal, which is water security. But is unique – since this is a government water scheme, the assets will become those of the department.
48 COLLABORATIONSUSTAINABLE IS KEY
sustainability of the resource while ensuring that there is equitable allocation, especially in previously disadvantaged areas. Reinforced by a collective call to action by the president for the public and private sectors to work together, the sectors conceptualised the Olifants Management Model Programme. The OMM collaboration with commercial users is a partnership which will assist the department to attain its primary mission, without taking over the responsibility of the management of water resources.
When the Minister of Water and Sanitation took to office in August 2021, key to what the ministry wanted to do differently was to establish and enhance partnerships in the sector, to improve the delivery of water and sanitation services in the country. The Journal speaks to Minister Senzo Mchunu about one such partnership that is a success story in the making.
WATER GEJ: In the context of the partnerships that the Department of Water and Sanitation (DWS) has entered in the past, how does the Olifants Management Model Programme’s collaboration model differ from these? How will DWS ensure that the implementation of the model is successful?
Therefore, Phase 2 of the ORWRDP forms part of the Presidential Infrastructure Coordinating Commission’s strategic projects, which were aimed at fast-tracking development and growth across South Africa. Offtakers from Flag Bashielo will be diverted to De Hoop Dam thus freeing up water for the mines and communities in the Mogalakwena area.
Municipalities are the main driving force for the delivery of services to communities as they are at a level the public can engage. It is unfortunate that most municipalities are failing and continue to fail dismally at delivering the most basic of services. Of course, through the implementation of the OMM Programme, we do plan to get municipalities involved as some of the water infrastructure – where operations and maintenance is due to take place, will be fully operated by them, hence the need for their involvement.De Hoop Dam.
A key objective of government was to stimulate this mining growth and associated economic activity in a sustainable way for the socioeconomic benefit of the local and national economy in a way linked to the Growth and Development Strategy and the Spatial Development Framework of the province.
As the OMM Programme scope includes the construction, operation and maintenance of both potable and bulk raw water infrastructure, what is DWS’ strategy for getting municipalities on board with the programme?
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Together, we can all make sure that future generations do not ever have to be subjected to the severity of water scarcity.
Ultimately, we are establishing and maintaining these partnerships to ensure water security in the country as government, doing it together with the private sector.
When we hosted the National Water and Sanitation Summit in February this year, key to the resolutions, which were collaboratively agreed upon by the department and several stakeholders in the sector, was the much-needed joint effort between the public and the private sector. This, of course, does not mean government will hand over its responsibilities to the private sector. The alliances in essence, will be done to ensure that each one of us takes a stand towards building the future of this country. In this context, it means working together to ensure that South Africa is water secure. In one way or the other, water scarcity is affecting most of us. We have seen the devastation of the 2018 drought in Cape Town after three consecutive dry winters (2015-2017) in the City. Residents in the Nelson Mandela Bay Metropolitan Municipality are, in 2022, experiencing the dire effects of drought, with dams in the Metro emptying on a weekly basis. What the 2018 drought has taught us is that through coaction and individual changes in our own spaces, we can all make a big difference. South Africa is a water-scarce country with minimal rainfall experienced annually. It remains a priority of the Department of Water and Sanitation to ensure that sustainable and systematic solutions are implemented to secure water-stressed communities and enhance the delivery of dignified sanitation. Can the OMM Programme collaboration model be replicated in other provinces? If so, how? Absolutely, a similar programme can be replicated although each project has its unique elements. We are currently using the same model to collaborate with the Mine Leadership Forum to rehabilitate the Vaal Gamagara pipeline. We are establishing and maintaining these partnerships to ensure water security in the country as government, doing it together with the private sector. Together, we can all make sure that future generations do not ever have to be subjected to the severity of water scarcity as is being experienced in some parts of Limpopo and many other communities across the country.
How will the OMM Programme support the sustainable management and development of water resources in the Limpopo region? First and foremost, let me put it on record that I am optimistic that this collaboration will yield positive results. I was impressed to learn that LWUA’s primary purpose is “Improving Lives Through Water” and that its strategy can set out a staged implementation approach which is detailed and with timeframes. It suggests to me that this is a group of people who are willing, ready and wanting to put in the hard work and give out positive results. Of significance is that they are willing to uphold accountability and so should all of us, especially in government.
The programme aims to improve socio-economic growth in the Limpopo Province through the acceleration of the Olifants River Water Resources Development Plan (ORWRDP) and the cost-effective provision of potable and raw water infrastructure to defined areas in the Northern and Eastern Limbs of the Bushveld Igneous Complex.
The ORWRDP was conceptualised in the early 2000s with an aim to address the bulk water needs of the middle Olifants River catchment area as the water demands continued to increase significantly and fast, exceeding the supply because of the growing population and the anticipated development of the mining sector.
At the heart of the Olifants Management Model Programme is the desire to form a collaboration that pulls together to work in a 50:50 partnership for the betterment of industry and community. Chairperson of Lebalelo Water User Association, Prakashim Moodliar, tells us more.
IMPROVING LIVES THROUGH WATER
What is the history of LWUA’s relationship with communities in the areas in which it operates?
GEJ: Please share the history of Lebalelo Water User Association. Prakashim Moodliar: The Bushveld Igneous Complex in the northern parts of South Africa contains some of the richest ore deposits on earth. In 2002, several mining companies and the Department of Water and Sanitation (DWS) collaborated to establish the Lebalelo Water User Association (LWUA) and build bulk raw water infrastructure to develop mining activities along the Eastern Limb of the Bushveld Igneous Complex, with funding primarily sourced from the mining industry.
To answer this question, we need to take into cognisance the LWUA’s legal mandate, which is to build and operate an area-defined bulk raw water scheme in the Limpopo Province. When the project started, there was an understanding of our legal mandate among community members as we legislatively could not offer potable water services.
50WATER
The Olifants Management Model (OMM) Programme, which was the subject of an in-depth article in your previous edition of the Green Economy Journal, was borne out of a LWUA commercial member-funded concept study to accelerate the implementation of the DWS’ Olifants River Water Resource Development Project (ORWRDP) and potable water infrastructure to defined areas in Limpopo where we operate.
The Lebalelo Scheme, as it is known, is licensed to abstract water out of the Olifants River from the Flag Boshielo Dam and distribute this raw water to the mining houses that are members of the scheme. It consists of approximately 110km of pipeline, five pump stations, seven reservoirs, one desilting plant, administration facilities and appropriate siteInaccommodation.2005,weweregranted
permission to extend our jurisdiction and admit new members, which led to the completion of the southern extension of the pipeline in 2007. We run a well-governed, cost-effective ship – our infrastructure and operations have been running successfully for almost two decades; we have a focused asset care plan that reduces losses by ensuring worldclass maintenance practices, we also have an exceptional safety record Green Economy Journal interviews the Chair of LWUA with us achieving 130 000 fatality-free shifts to date. Underpinning our successful operations are our strong governance structures, evidenced by unqualified audit opinions since the inception of LWUA.
In 2016, a gazette notice of intent to disestablish LWUA prompted the mining industry to review its role in LWUA, together with the role that we play in society and supported the move towards a public-private collaboration model.
Please define the scope of the OMM Programme.
What is the timeframe for the implementation of the programme?
The OMM Programme aims to augment water supply by moving a portion of LWUA Scheme’s current supply from Flag Boshielo Dam, via the abstraction point on the Olifants River at the Havercroft Weir, to the De Hoop Dam to enable water supply to the Mogalakwena area. The programme will re-sequence the construction of the ORWRDP bulk raw water infrastructure and expand it to include potable water provision (for approximately 380 000 people) to meet revised water needs and reduce capital costs. It will also establish a resourcing partnership through the transformed LWUA to construct, operate and maintain infrastructure.
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Lastly, and most importantly, we aim to implement an SED programme, focused on sanitation services, connectivity, education and enterprise development with a view to developing skills, creating jobs and changing behaviour around water saving measures.
There has been a positive change in the community, because of us reaching out to them.
Please tell us why and how the OMM Programme was established and how it relates to LWUA? Back in 2004, government started engaging with mining houses to partner in the development of the ORWRDP. In fact, LWUA was incorporated into the overall design with the intention of linking the scheme in the future. For various reasons, the collaborative engagement at that time did not develop further.
Interestingly, during the building of the scheme, provision was made for abstraction points where DWS or any other water services authority (WSA) would be able to abstract raw water for purification and supply to 103 villages, as demarcated by the local government. Over time
Underpinning our successful operations are our strong governance structures. De Hoop Dam.
expectations changed because the communities wanted the LWUA to provide potable water, which we could not do as it is not part of our mandate. It resulted in strained relationships with the community.
Circumstances have changed, and we feel the time is right for real public-private collaboration that addresses the infrastructure challenges of the country. In line with this, LWUA approached government with a proposal to not only accelerate the development of the ORWRDP, and the cost-effective provision of potable and bulk raw water infrastructure, but also to be equal partners. This led to the development of the OMM Programme, which was officially launched by the honourable Minister Mchunu in May this year.
WATER
In 2016, we recognised the need to play a greater role in the communities in which we operate. As a result, we adapted our policies and started several socio-economic development (SED) projects, which have culminated in the development of the significant SED programme that forms part of OMM, which will have a major impact on communities acrossThereLimpopo.hasbeen a positive change in the community, because of us reaching out to them, especially in the areas around the Lebalelo Scheme.
The development of the programme is in line with the three stages of LWUA’s strategy – to look internally and strengthen our own governance processes; secondly, to engage and become a strategic water partner to government; and thirdly, to develop business opportunities for our communities via a comprehensive SED programme. To date, the governance aspects have been successfully implemented, and we are busy engaging with regards to the strategic water partnership. In terms of the third aspect of our strategy, the SED programme forms an integral part of the OMM Programme and will be the driver of long-term sustainability and serve as a catalyst for community development within the areas in which the LWUA operates.
As it is time consuming to put together complex collaboration systems, especially one as large as the OMM Programme, one needs to take cognisance of the fact that the schedule provides for the feasibility, detailed design, funding model execution. These activities are expected to take seven to eight years. We aim to complete the OMM Programme byHowever,2030. the starting part is often the most difficult portion of a collaboration, and as such, we are currently approximately six months behind as we establish the ways of working and the funding model to kick off the design work. We wanted to have the first set of service providers appointed by the end of June, but this will now likely take
Yes, there are still challenges as non-delivery of services continues – a while back there was significant damage to our infrastructure – and some communities are still negative towards LWUA, but the overall mood is a lot more positive, and infrastructure damage has reduced to zero. LWUA is described in our previous edition as transforming and rebranding, please elaborate. It is time for LWUA to transform and rebrand to fit this new look and purpose, one that sees us expanding beyond raw water supply and extending into the development of potable water infrastructure. Traditionally, LWUA has been a more private-oriented entity, with most of the membership comprising mining houses. This has changed with the launch of the OMM Programme which sees an equal partnership between the private sector and the different spheres of government that are involved. Institutional members now make up 50% of the partnership, with the other half made up of commercial members, based on water requirements and allocations.
52WATERplaceduring Q4 this year. As is the case with programmes of this size, scope and complexity, stakeholder alignment is key to set up the project for success.
Does the OMM Programme embrace an ESG approach? If so, how?
In terms of the environmental aspects, the programme will investigate the implementation of renewable energy at all our new pump stations and explore these options for backfit on the existing infrastructure as well, to get to the lowest sustainable operating cost. The design also ensures minimum environmental footprint and impacts maximum water conservation through operating and maintenance practices. We know that climate change is going to be an issue going forward, therefore we are looking at linking the system in the medium term to a larger resource base taking into consideration that there is the possibility to link the Olifants River to the Komati and Sand River systems. In this way, there is more than one river system linked to the programme, to plan for eventualities that may take place within the climate change environment. We are also looking at expanding the utilisation of secondary-quality water, such as effluent, for the mining industry and allow the betterquality water to be converted into potable water for communities. The mining industry itself is on a programme to reduce its water demand to ensure that the system can sustain itself over the next 50 years. The OMM Programme is going to have a large social impact, the anticipated details of which we have discussed at some length in the previous edition of the Green Economy Journal and have also touched on in earlier questions in this interview. Lastly, the OMM Programme is built on an exceptionally strong governance structure, and we are satisfied that the policies and procedures in place will ensure there is good governance throughout the course of the programme. What is the economic case for the OMM Programme? Sustainability is always an issue when you have a programme of this magnitude, and especially if end users are dependent on government for grants. This programme presents a unique opportunity where the mining industry is providing 50% of the capital, not only for bulk raw water infrastructure, but also for potable water infrastructure which enables government to provide water to communities at the lowest cost. This also links in with a strong SED programme that we are driving which aims to enable communities to become more economically active. This supports overall long-term sustainability of the programme.
Part of the OMM Programme’s scope is the re-sequencing on the ORWRDP Phase 2, please explain the thinking behind moving the off-takers from Flag Boshielo Dam to De Hoop Dam.
To balance the system, it is important to move some of the off-takers from Flag Boshielo Dam, which is currently under stress, to the newlybuilt De Hoop Dam, which is not yet being fully utilised. A dynamic system analysis completed for the whole Olifants River and its tributaries (and specifically the dams in the area) shows that it is imperative for De Hoop Dam to be fully utilised so that the system can suitably provide water for future development.
What factors are considered in determining equitable water allocation among water users from different sectors?
The OMM Programme presents an opportunity to ensure that the social sector (on the potable water side) and the industrial sector (bulk raw water) share water on an agreed basis ie what water is needed where and by when, to ensure the right provision of water to the end user and designs the system to meet present and future needs. Through the execution of the programme, the participants across industrial and institutional users will be finalised and the agreements established.
SYNERGISTIC EXISTENCE
In addition, Mogalakwena is severely water scarce currently and moving off-takers is the only way to ensure that the local municipality and industry in the area can get water from Flag Boshielo Dam. Polokwane is also experiencing a shortage, and the OMM Programme will make sure they can get a new water resource to draw from, in the form of De Hoop Dam, for the further development of the city.
There are a quite few anticipated benefits: First and most important is the provision of potable water to people that reside in the areas in which the OMM Programme will operate. Secondly, it’s the economic activities that the programme will support with raw water provision to the mining houses and other industries. Lastly, it’s the economic opportunities that will be provided to communities to participate, not only in the programme, but also in the larger SED projects that will be rolled out as part of the OMM Programme. One of the main drivers of this programme is to ensure that over time the secondary economy (ie not mining-linked) will grow and be sustainable to the extent that it will be able to survive independently of the mines once these start to close down.
What are the main anticipated benefits of the OMM Programme, and who are the main beneficiaries? Is it mainly mining companies and immediate communities, or is it broader than this?
Mining is contributing to potable water infrastructure for two reasons: firstly, because of current lack of service delivery in this space and the impact on communities surrounding operations, the opportunity to fully utilise the existing assets, enabling private industry to get involved and rebuild our country, which can be done through infrastructure development partnerships with government; secondly, mines are committed to bettering the lives of communities in which they operate, which explains the engagement in terms of potable water infrastructure and SED programmes. When you have a thriving and stable community in the areas in which you operate, it improves the ability for a mine to operate safely and continuously.
The hive understands the synergy between nature and bees and between bees themselves. The bee logo (above) was chosen as an interim icon to represent the synergistic nature of the OMM Programme. The programme aims to achieve synergy between the public and private sector.
We feel the time is right for real public-private partnerships that help address the infrastructure challenges of the country.
H2 H3 H4 H5 H6 Tel: 011 974 admin@sawpa.co.za1061 PROMOTINGwww.sawpa.co.zaTREATED TIMBER PRODUCED BY SAWPA MEMBERS PROMOTING THE USE OF PRESERVATIVE TREATED TIMBER
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A F S A I N T E R N A T I O N A L A L U M I N I U M C O N F E R E N C E & E X H I B I T I O N 2 6 2 7 O C T O B E R 2 0 2 2 C a p e T o w n I C C C o n v e n t i o n S q u a r e 1 L o w e r L o n g S t r e e t C a p e T o w n 8 0 0 1 A B O U T T H E C O N F E R E N C E T h e I n t e r n a t i o n a l A l u m i n i u m C o n f e r e n c e a n d E x h i b i t i o n e v e n t i s h o s t e d a n d o g a n i s e d b y T h e A l u m i n i u m F e d e r a t i o n o f S o u t h A f r i c a . T h e c o n f e r e n c e a i m s t o p o s i t i o n t h e S o u t h A f r i c a n a l u m i n i u m i n d u s t r y a s a p r e m i u m s u p p l i e r t o t h e c o n t i n e n t a n d t h e w o r l d . W W W . A L U M I N I U M S O U T H A F R I C A . C O M T H E M E : A L U M I N I U M L i g h t w e i g h t , D u r a b l e & S u s t a i n a b l e
REPORT BY IEA*
Nearly 10% of global car sales were electric in 2021, four times the market share in 2019. This brings the total number of electric vehicles on the world’s roads to 16.5-million, triple the amount in 2018. Global sales have kept rising strongly in 2022, with 2-million sold in the first quarter, up 75% from 2022 Q1.
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Few areas in the world of clean energy are as dynamic as the electric car market. Sales of electric vehicles doubled in 2021 from the previous year to a new record of 6.6-million. Back in 2012, just 120 000 electric cars were sold worldwide. In 2021, more than that many were sold each week.
Global Electric Vehicle Outlook 2022 EV SALES ARE REVVING UP
The increase in electric vehicle (EV) sales in 2021 was led by China, which accounted for half of the growth. More vehicles were sold in China in 2021 (3.3-million) than in the entire world in 2020. Sales in Europe showed continued robust growth (up 65% to 2.3-million) after the 2020 boom, and they increased in the US (to 630 000) after two years of decline. The first quarter of 2022 showed similar trends, with sales in China more than doubling compared with the first quarter of 2021 (accounting for most of global growth), a 60% increase in the US and 25% in Europe. In China, electric cars are typically smaller than in other markets. This, alongside lower manufacturing costs, has contributed to decreasing the price gap with conventional cars. China accounts for 95% of new registrations of electric two-and three-wheeler vehicles and 90% of new electric bus and truck registrations worldwide. The speed of charging infrastructure roll-out in China is faster than in most other regions. Covid-19 and Ukraine/Russia war have disrupted global supply chains, and the car industry has been heavily impacted. Soon, EV delivery delays to customers may dampen sales growth in some markets. But in the longer term, government and corporate efforts to electrify transport are providing a solid basis for further growth in EV sales. The amount of public charging infrastructure predicted may be insufficient to power the size of the EV market being targeted. There are important variations across countries in terms of charging infrastructure roll-out speed. The suitable number of chargers per EV will depend on local specificities such as typical travel distances, population density and reliance on home charging.
5 WAYS
2. Kickstart heavy-duty market More heavy-duty electric models are available, and electric buses and trucks are becoming competitive on a total-cost-of-ownership basis across more applications. Policy-led deployment, zero emission vehicle sale mandates, purchase incentives and CO2 standards can help speed up the transition.
5. Secure sustainable supply Electrifying road transport requires a wide range of raw material inputs. While all stages of the supply chain must scale up, extraction and processing are particularly critical due to long lead times. Governments must leverage private investment in sustainable mining of key battery metals and ensure clear and rapid permitting procedures to avoid potential supply bottlenecks.
If current high commodity prices endure, cathode chemistries could shift towards less mineral-intensive options. For example, the lithium iron phosphate chemistry does not require nickel nor cobalt but comes with a lower energy density and is better suited for shorter range vehicles. Their share of global EV battery supply has more than doubled since 2020 due to high mineral prices and technologyGovernmentsinnovation.should strengthen cooperation between producer and consumer countries to facilitate investment, promote sustainable practices and encourage knowledge sharing. Governments should ensure traceability of key EV components and monitor progress of ambitious environmental and social development goals at every stage of battery and EV supply chains.
1. Maintain support for EVs As the EV market matures, reliance on direct subsidies must decrease and eventually fade out. Budget-neutral feebate programmes can be a useful transition policy tool. Stringent vehicle efficiency and/or CO2 standards have promoted EV adoption in most leading EV markets.
Average battery prices fell by 6% to USD132 per kilowatt-hour in 2021, a slower decline than the 13% drop the previous year. If metal prices in 2022 remain as high as in the first quarter, battery packs would become 15% more expensive than they were in 2021, all else being equal. However, given the current oil price environment the relative competitiveness of EVs remains unaffected.
Today’s battery supply chains are concentrated around China, which produces three-quarters of all lithium-ion batteries and is home to 70% of production capacity for cathodes and 85% for anodes (both are key components of batteries). Over half of lithium, cobalt and graphite processing and refining capacity is in China. Europe is responsible for over one quarter of global EV production, but it is home to very little of the supply chain apart from cobalt processing at 20%. The US has only 10% of EV and 7% of battery production capacity. Both Korea and Japan have considerable shares of the supply chain downstream of raw material processing, particularly in the highly technical cathode and anode material production, Korea is responsible for 15% of cathode material production capacity. Japan accounts for 14% of cathode and 11% of anode material production. Europe and the US have bold public sector initiatives to develop domestic battery supply chains, but most of the supply chain is likely to remain Chinese through 2030. Pressure on the supply of critical materials will continue to mount as road transport electrification expands to meet net-zero ambitions. TO ACCELERATE UPTAKE
DOWNLOAD THOUGHT [ECO]NOMY greeneconomy/report recycle
4. Expand EV infrastructure Facilitating the installation of home chargers in existing parking spaces is important. Mandating EV charging readiness for new buildings can help. Local authorities should support the installation of chargers in existing buildings. Co-ordinated plans on grid expansion and enhancements, including digital technologies to facilitate two-way communication and pricing between EVs and grids, are needed now to ensure that EVs can become a resource for grid stability rather than a challenge.
seven times higher than at the start of 2021. Unprecedented battery demand and a lack of structural investment in new supply capacity are key factors. Russia supplies 20% of global high purity nickel.
*This article is an excerpt taken from the report GLOBAL EV OUTLOOK 2022 | International Energy Agency [2022]. Digital grid technologies and smart charging hold the key to transforming EVs.Electric trucks have so far been deployed only in China, thanks to strong government support. In 2021, however, several other countries announced support for heavy truck electrification. Truck manufacturers have developed new models: more than 170 were available outside China in 2021. Rapid deployment will be needed to keep pace with government announcements. The electric trucks accounted for just 0.3% of global truck sales. Short-haul trucks are the segment that can be electrified fastest, and for the most part these do not need a wide charging network if depot charging is available. Longer-range trucks will require high-power chargers that are currently expensive and often require significant grid upgrades. Early planning and investments are crucial to minimise the strain on the grid and provide a suitable network for the next stage of heavy-duty vehicle electrification. The simultaneous electrification of road vehicle transport and the deployment of decentralised variable renewables such as rooftop solar will make power grid distribution more complex to manage. Grid simulations suggest that between now and 2030, EV loads in major car markets should not pose significant challenges. EVs are likely to account for less than 20% of the overall vehicle stock in most countries. Early adopter cities could face grid congestion pressures between now and 2030. Digital grid technologies and smart charging hold the key to transforming EVs from a grid integration challenge to an opportunity for grid management. The rapid increase in EV sales during the pandemic has tested the resilience of battery supply chains, and the Russia/Ukraine war has further exacerbated the challenge. Prices of raw materials such as cobalt, lithium and nickel have surged. In May 2022, lithium prices were over
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3. Promote adoption in developing economies Electrification of road transport in emerging economies should prioritise two/three-wheelers and urban buses, as these vehicle types are most cost competitive. Price signals and charging infrastructure availability helps the economic case for electrification.
ANALYSTGrayson
One of the most fascinating – and contradictory – trends emerging out of the Covid-19 pandemic is the so-called evacuation of the city towards the suburbs. The claims are widespread including fearing the death of the city. Meanwhile, outside, the flow of traffic slows, blood cells en route to the heart splutter, the city lights blink out until the power plant shuts down. Auxiliary generators brought in aren’t enough. What’s left isn’t a metaphor. It’s us. John Baranow.1
58THOUGHT LEADERSHIP the pandemic as a driver of suburban migration SEEKING COVID EXILE IN THE BURBS
The US Census Bureau data released in November 2021 supports this notion. Despite the attention given to Covid-related migration out of cities, college towns and other pandemic-impacted areas,
It is noteworthy that those who have moved have had the luxury of choice: In New York City, the wealthier parts of the city emptied out after the pandemic hit. Not unexpectedly, some of those people may not return – and the impact is visible on the rental market.2
Perry presented by Victoria Miro at Art Basel, Hong Kong [2019].
BY LLEWELLYN VAN WYK, B. ARCH; MSC. (APPLIED), URBAN
In a piece titled All These Stories About People Fleeing Cities Are Total Nonsense (Curbed, 2020), Jeff Andrews argues that the “narrative persists, but supporting evidence is weak at best”. He concedes, that there are people who have lost their jobs and have decided to leave their cities for more affordable areas. Widespread adoption of work-from-home policies may also give people who didn’t want to live in cities in the first place an option to leave.
Numerous observers believe that Covid-19 will have a lasting impact on large, dense cities and their commercial real estate, though the changes that will happen are speculation for now.
We have learnt, she suggests, that workplace flexibility and productivity go together and many even found more meaning in their work during the pandemic than they did before. 1) The ability to travel, move and live away from an office while still working their jobs gave many the flexibility they want to keep once the pandemic is over. 2) Remote work made many workers not only feel more productive but improved their purpose, wellbeing and sense of community. 3) Respondents want some of the changes to remain and others to go back to normal. Pandemic-era changes that are desirable include outdoor seating at restaurants, kerbside grocery pick-up and pre-ordered shopping. Business travellers on the other hand want to get back on the road – or in the air.
As Frey explains, population movement within the US represents an opportunity for individuals and households to improve their own social and economic wellbeing, as well as an opportunity for communities of all sizes to attract people who can contribute to their labour forces and consumer and tax bases.
Diane Shi notes that the “pandemic has prompted workers to not only think about how they work, but where”. A 2021 report from Urban Land Institute and PwC demonstrates that workers’ interest in new homes and single-family real estate is on the rise with most growth occurring in the suburbs. However, interest in migrating differs among age groups with younger workers more likely to say they have moved away from their physical office locations than older workers. Many academics are studying Covid-19’s impact on urban centres: William Strange, a professor of real estate at the University of Toronto, is one of them. As he notes, the data confirms that the attraction for downtowns so far is weakening. He acknowledges that no-one knows for sure what is going to happen in 2023 or 2024 when the effects that are being seen now may not be due to Covid but of remote work.4
The data suggests that residents are leaving the city for surrounding suburbs. Trends outside of the US are more difficult to discern largely because of data scarcity, and so the Qualtrics survey of 4 000 global employees is useful in this regard as it includes workers from non-US locations. Speaking to the results, Leisl Nielsen from Qualtrics summarises the findings in a novel way when she says that the “world is in the middle of an experience transformation”.5 It has taught us that a new and better way of working is possible.
59 overall permanent migration levels in the US plummeted to a historically low level during the first year of the pandemic.3 In fact, a smaller share of Americans changed residence between March 2020 and March 2021 than in any year since 1947. Internationally regarded demographer, William Frey notes that the statistics do not negate the reporting of pandemic-related permanent or temporary movement for specific areas, in fact, mobility declined enough among broad segments of the population to lead to this historic migration low. It must also be remembered that the decline is a continuation of a decades-long migration decline, as well as a general demographic stagnation across the nation.
PEAK CITY Bloomberg reports that “the retreat from major cities has been the pandemic’s big real-estate story” and cites that “there’s been a spatial shock, whereby you don’t have to go to the city to earn money necessarily.”6 That will change cities a lot. Max Nathan associate professor in Applied Urban Sciences at University College London raises the notion of “peak city” and whether it has passed already. He too suggests that the shift to the periphery and to what many consider to be the second-tier city is clearly happening. Some governments are encouraging this, with Ireland actively seeking to create a network of remote working hubs and offering tax incentives for remote working. Unfortunately, much of the narrative focuses on those who do not need to go to a formal workplace: many of these workers are higherearning professionals. It ignores jobs like bartenders and meatpackers whose work cannot be done remotely. These are the workers who do not have the luxury of considering location arbitrage.
The Harvard Joint Centre for Housing Studies found that spikes in mobility during the pandemic fitted popular narratives that formed
It is true that the advent of remote work resulted in new disruptions to the concept of work, from how employees think about workplace benefits to more enlightened definitions of work-life boundaries.
SUPERCHARGED SPRAWL Of enormous concern is the resultant expansion of urban sprawl, fuelled, as Patrick Sission notes, by a “desire for space and liberated by remote work, homebuyers are pushing development ever deeper into suburban outskirts of US cities”.8 The Urban Land Institute refers to this explosion of sprawl as a real estate “supernova”, an explosion taking place in hundreds of Covid-era boom towns across the US – often small satellite suburbs and outlying exurbs where low property taxes and a strong local economy have lured new arrivals. Sission says that suburban sprawl has been a post-war American constant, but the pandemic, which pushed many people into remote work and offered families looking for more space a fresh reason to relocate, “supercharged the trend”. Consequently, development is consuming the countryside, bringing with it the litany of economic, social and environmental challenges associated with sprawl – traffic, environmental damage and city services that struggle to reach a spread-out
CONCLUSION
4. Pipitone, N. 2022. “Have people left big cities for good?”
6. Cadman, E., Pong, J., and Robles, P. 2021. “How covid has reshaped real estate from New York to Singapore. 7. Frost, R. 2021. Have more people moved during the pandemic? 8. Sisson, P. 2022. “How the pandemic supercharged sprawl.” 9. Ibid
THOUGHTpopulation.LEADERSHIP
Numerous reports suggest that the pandemic has caused a shock to big, dense cities and downtown business districts. Statistics confirms that cities saw considerable population losses immediately following the pandemic with people moving to the outlying suburbs of those areas. However, they may return, but, for now, it seems that is has affected commercial and residential rents in urban cores. Companies will need to recognise that people’s needs and priorities have shifted during the last year. Leaders have a unique opportunity to listen directly to their customers and employees to build on what they have learned during lockdown. Urban planners and city leaders need to bury the idea of a unicentric city (the central business district) and embrace a more diverse, multi-centred urbanism characterised by walkability and transit-oriented development. Overall, the data offers indications of an enlarged window of possibility in post-pandemic urban life. Adopting the right approach to the green stimulus could lay the foundation for a more liveable, sustainable and preposterous urban life for all, not just the 15% who can flee. The history of cities has amply demonstrated their resilience and ability to adapt to a changing world. That adaptation needs to include satisfying the changing needs of city dwellers.
REFERENCES 1. Baranow, J. 2021. Poetry and Medicine. JAMA. 2021;326(17):1751. doi:10.1001/jama.2021.12861 2. Andrews, J. 2020. “All these stories about people fleeing cities are total nonsense.” 3. Frey, W. 2021. “Despite the pandemic narrative, Americans are moving at historically low rates.”
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There’s been a spatial shock, whereby you don’t have to go to the city to earn money necessarily.
As one commentator laments “what happened to the voice and forces working against this kind of growth?”9 Smart growth and regionalism had become part of the religion of the development community he argues and yet the discussion turned so quickly.
5. Nielsen, L. 2021. “Report: Here’s how the pandemic changed the future of work.”
initial months of the pandemic, and that these spikes were primarily among individuals and were often temporary in nature. Additionally, the timing of mobility spikes during Covid-19 surges implies that the movers behind them may have been fleeing highcased areas, moving in with family or even responding to housing insecurity. But they suggest that the “stickiness” of pre-pandemic trends demonstrates that mobility is a multifaceted behaviour that responds to a host of different factors of which a world-upending pandemic is only one.7
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