Green Economy Journal Issue 55

Strive for Net Zero while saving money at the same time!

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Intergrated water resource management and infrastracture development In the Southern African Development Community

THE SADC WATER FUND FRAMEWORK

SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)

SADC REGIONAL DEVELOPMENT FUND (RDF)

Receipts and expenditures relating to development of SADC region, RDF shall be main SADC instrument for social, economic development and integration of SADC region.

Water-Energy-Food NEXUS

REGIONAL WATER INFRASTRUCTURE AND BASIC SANITATION FUND

SADC

Objectives

Cross-border WASH Improve water and sanitation transboundary infrastructure along major trade corridors in the region key to promote regional integration and address rapid urbanisation due to increased cross-border trade and traffic volumes.

Regional Water Utilities Innovation Resilience

Investment in pilot projects (locally relevant innovative technology, financing and governance models) for resilient water sector in major cities in transboundary catchments.

Transboundary Water Information System

Support to transboundary hydrological and metrological data collection and development of information for sustainable infrastructure, risk preparedness and climate adaptation.

Have the Africans broken COP?

The fundamental objective of COP is to propose and agree on marketbased mechanisms and foster ingenuity to reel in carbon emissions and slow global warming.

Market-based mechanisms are key. A perfect example is the Kyoto protocol which set up the carbon markets and enabled companies in developed countries to offset their carbon emissions by essentially buying the projected emissions of new production facilities in developing countries, thereby bridging a funding gap to facilitate the use of green tech. This would enable developing countries to avoid high-impact technologies which might be cheaper, and to leapfrog as it were straight to low/zero/positive impact technologies, and to be more competitive in the process.

These mechanisms create an open channel of funding to flow from developed countries to developing countries, and comes with only one caveat, the new investment must be green. See the JET deal just signed by South Africa ahead of COP27.

It would appear however that instead of green investment, African countries want a handout, ostensibly on the grounds of the damage they are suffering as a direct result of global warming brought about by the fossil fuelled development of developed countries. That the developed world who emits comparatively little, are the ones paying the price of climate change.

Nevertheless, it seems that in a desperate attempt to keep the COP conversation alive, some developed countries have caved and agreed to a compensation package. The big outcome of COP 27.

But what just happened?

Climate Change advocates have been dealt a bloody nose. In their efforts to raise awareness and drive the climate agenda, scientist and climate change lobbyists have blamed just about all recent climate-related disasters, including wild fires, on climate change and instead of helping to constructively change how we produce, developing countries have decided to drop a big fat damages claim at the door of developed countries. Can’t help feeling that the fossil fuel lobby is somehow behind this clever trick.

The effect: the developed world may just have swapped billions of dollars in investment for millions in damages, and broken COP in the process.

Economy GREEN journal

EDITOR: Alexis Knipe alexis@greeneconomy.media

CO-PUBLISHERS: Gordon Brown gordon@greeneconomy.media Alexis Knipe alexis@greeneconomy.media Danielle Solomons danielle@greeneconomy.media

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PUBLICATION DATE: December 2022

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EDITOR’S NOTE

Welcome to the 55th issue of Green Economy Journal: and what is now an award-winning journal (page 8). I would like to say a huge thank you to the great team that have contributed to the publication’s success.

Graham Ching ‘ambu, DBSA, says on page 10 that the development impact and shared prosperity of a project only becomes a reality when there is actual implementation of it. I feel inner prosperity when I look back at all the projects that we have successfully implemented at GreenEconomy.Media – it would not have been possible without the great team that we have.

The DBSA has a financing sustainability strategy anchored on the diversification of portfolio, products and partnerships. The bank is making maximum regional impact in the SADC region (page 10).

Southern Africa has some of the world’s most attractive sites for generating renewable solar electricity. Together the best onshore and offshore wind conditions, this makes it an appealing option for high-capacity and scalable renewable energy for hydrogen production. Read why the time is now for southern Africa and green hydrogen to make gold on page 18.

In our special report (page 14), Sandy Lowitt, TIPS research fellow, asks what will qualify as a just transition transaction. On page 24, we look at Carbon Capture, Utilisation and Storage, which is seen as one of the key technologies to achieve global climate goals.

Have a safe, relaxing and green festive season.

Publisher Alexis Knipe Editor

All

behalf of any organisations or products. Please address any concerns in this regard to the Publisher.

Unlocking the power of trees to make your everyday better.

Together, we’re building a thriving world with a biobased, circular economy. It begins with championing innovative approaches to responsible forestry and continues as we strive to cultivate more value and purpose from every tree, by-product and other resource we use. Our bioproducts are sustainable alternatives extracted from woodfibre to reduce the need for fosil-based materials used in everyday products.

GREEN ECONOMY JOURNAL WINS INTERNATIONAL AWARD

GreenEconomy.Media is proud to announce that Green Economy Journal has won the Best Book and Periodical Publishing Company – South Africa in the MEA Business Awards 2022. This established awards programme identifies those individuals and companies who excel in their respective industries in the Middle East and Africa, in its search for the region’s finest businesses.

GREEN HYDROGEN SUMMIT 2022

“This summit builds on a foundation laid by the Sustainable Infrastructure Development Symposium (SIDS) 2021, which highlighted SA’s potential as an exporter of green energy.

We recently released for public comment a Just Energy Transition (JET) Investment Plan as the basis for our pathway towards a lowcarbon and climate resilient society. According to the plan, SA will need approximately $98-billion over the next five years to enable a just transition.

Green hydrogen is identified in the Investment Plan as one of the four “big frontiers” of a JET. Globally, the demand for green hydrogen and related products is rising significantly. This presents a unique opportunity for SA to link its mineral and renewable energy endowments to drive industrialisation.

The Department of Science and Innovation (DSI) has been leading research in green hydrogen since 2007 through Hydrogen SA. This was motivated in part by the potential impact that the transition away from the internal combustion engine (ICE) to battery electric vehicles would have on the country’s platinum mining industry. Together, SA and Zimbabwe hold over 90% of the world’s known platinum group metal reserves.

Since 30-40% of the supply goes into the production of catalytic converters for ICE, the initial focus of the research was on hydrogenpowered fuel cell electric vehicles as an alternative market to the ICE vehicle.

It is estimated that SA has the potential to produce six- to 13-million tons of green hydrogen and derivatives a year by 2050. This would require between 140 and 300 gigawatts of renewable energy.

GREEN HYDROGEN PROGRAMME

The focus would be on green hydrogen exports, electrolyser and fuel cell production, green steel, sustainable aviation fuel, ammonia, fertilisers and renewable energy components.

SA has a supportive legislative environment and experience in the deployment of renewable energy with the largest installed capacity of wind and solar power projects in Africa.

Last year at SIDS, we began to profile the remarkable work that several large and emerging South African companies were doing in the green hydrogen sector. These include the Boegoebaai Port and Rail project.

Sasol and the Northern Cape provincial government have made significant progress on the masterplan for a green hydrogen special economic zone, which aims to support 40 gigawatts of electrolyser capacity by 2050. This would require approximately 80 gigawatts of renewable energy, which is almost double South Africa’s current installed electricity generation capacity.

Transnet has issued a request for proposals for the port and rail project, which could see the port developed by 2028.

The Prieska Power Reserve Project, which is being led by Mahlako a Phala, a black women-owned renewable energy developer, has made major progress over the last year. It has received most of the required environmental approvals and its water use licence and has brought in the IDC as an equity partner.

Another initiative is the development of a Hydrogen Valley that would link the three hydrogen hubs of Mogalakwena (Limpopo), Johannesburg and the Durban-Richards Bay hub. This initiative is being led by the DSI and supported by Anglo American, Bambili Energy and Engie.”

The programme consists of 19 projects. Nine catalytic projects have been identified as part of this initiative:

Hydrogen Valley programme (includes nine projects along the Limpopo, Gauteng to KwaZulu-Natal Corridor.)

Excerpt from Ramaphosa’s address at the summit

President Ramaphosa

RAMAPHOSA: FOOD AND ENERGY

G20 Leaders’ Summit, Indonesia

“Low- and middle-income economies are most affected by the food shortages and need substantial financial support to ensure food security and tackle the effects of climate change. With this support, poorer countries can invest in climate-smart agriculture, sustainable food production systems and climate change early warning systems.

Trade restrictions are a major source of risk for global food price stability. We support the call for multilateral trading systems that are transparent, inclusive, predictable and rules-based.”

CLIMATE FINANCE ACCELERATOR

Fifteen low-carbon projects from across SA have been selected to join the UK’s Climate Finance Accelerator second cohort of projects. The call for proposals attracted 166 applications. The chosen projects come from the energy, transportation, agriculture, forestry and other land uses, circular economy and water sectors. This follows a successful first round in 2021 that has so far seen almost a third of projects find new partners and investors.

EDUCATION TRUST

The Nordex Education Trust awards bursaries to students, across the green energy. Most recently, this Trust has appointed two trustees to further strengthen its resolve to drive education within the beneficiary communities where Nordex Energy SA has built and is operating no less than nine wind farms.

“We work to specifically benefit students in the communities closest to where our wind farms operate and have hence built solid relationships within these community structures. Our mandate is that of provision of scholarships and bursaries, with an approach of supporting students for their three- or four-year periods of study, to ensure that they complete their tertiary education and can be further exposed to meaningful enterprising opportunities,” says Compton Saunders, MD, Nordex Energy SA and trustee of the Nordex Education Trust.

ECO SECURITY SYSTEMS

A BLUE BIG DEAL

The Department of Water and Sanitation alongside the Dutch Water Authorities have officially initiated Phase 2 of the Blue Deal programme which seeks to enhance access to sufficient and safe water for all by 2030 and beyond.

PRESIDENT PARTNERS WITH UK

Ramaphosa has concluded his state visit to the UK, where he championed a new partnership between Britain. The president expressed his appreciation for King Charles III’s hosting of the state visit as well as the King’s visionary engagement on development, the environment and mitigation of climate change.

The president’s assignation with Prime Minister Sunak centred on upgrading trade and investment levels between the two countries and creating more opportunities in British markets for SA goods and commodities, to protect jobs in SA and grow the country’s manufacturing and agricultural industry.

Ramaphosa and Sunak engaged on the JET Investment Partnership in which the UK has committed itself alongside the US, EU, France and Germany to provide financial support for SA’s energy transition.

Environment Minister has published the revised national list of ecosystems that are threatened and in need of protection. A total of 120 of the 456 terrestrial ecosystem types assessed are threatened (10% of the remaining natural habitat in SA). Of the 120, 55 are critically endangered, 51 endangered and 14 are vulnerable.

INCREDIBLE IMPACT INVESTMENT

Multinational, TERRAGRN, is leading the charge against climate change by turning up to 200 000ha of unused land in coal mining-centred Mpumalanga into a $2.6-billion sustainable land management agroforestry project over the next 10 years.

Acciona Gouda Wind Farm, operated by Nordex.

CROSS-BORDER water and sanitation INFRASTRUCTURE DEVELOPMENT

More than 100-million people in the SADC region do not have access to safe drinking water and over half of the region’s population do not have access to improved sanitation facilities. These urban statistics exclude the poor living in informal settlements. The need for water and sanitation infrastructure in SADC is dire.

Presently we are dealing with so many water-related issues. “The one question we are all faced with is how we ensure the sustainable use and management of water resources because water is a finite resource,” says Graham Ching’ambu, regional fund manager at Development Bank Southern Africa (DBSA). The sustainability of water resources, both surface and groundwater, is especially acute when we experience the reality of climate change and the need to adapt and mitigate against that in terms of building resilience in the water sector.

Infrastructure needs to be developed, rehabilitated, expanded and climateproofed to be resilient to floods and droughts. The recent outbreak of the Covid19 virus is a strong reminder of the importance of access to WASH facilities, especially for the poor, to ensure community resilience to adverse outbreaks or effects of climate.

“We also have the challenge that there is very, very limited access to water and sanitation in the world-at-large, the continent and particularly in the southern African region,” adds Ching’ambu. “And, of course, we always have the money issue. How do we sustainably finance all these needs?”

Left: Graham Ching’ambu, Head: SADC Water Fund.

Right: Mamarinyana Ratsaka: Head of Programme Management Services: Infrastructure Delivery Division (IDD).

This is essentially what the SADC Water Fund seeks to respond to. In 2012, the SADC member countries established the SADC Water Fund as a regional development financing facility with the mandate of strengthening the coordinating function of SADC by funding projects to improve regional water and sanitation infrastructure and to facilitate information and knowledge sharing.

The Fund’s development objectives include climate resilience as well as the application of integrated water resources management principles for infrastructure developments in the SADC region.

Addressing such a colossal need presents both a challenge and opportunity for innovation in infrastructure technological approaches, financing and implementation models anchored on enabling policies and market structures within the region.

The SADC Water Fund Secretariat was mandated to ensure its operationalisation and it selected DBSA as an existing and reputable development finance institution to house the funds and to ensure its operation. This allows the Fund to leverage the bank’s institutional capacities and promote synergies with DBSA’s other activities. The DBSA also co-funds projects. The Funds’ seed financing of €15-million is a grant provided by Kreditanstalt für Wiederaufbau (KfW).

The Fund has three programmes that have a nexus approach with the following strategic priorities:

• Cross-border WASH. To improve water and sanitation transboundary infrastructure along major trade corridors in the region, which is vital in promoting regional integration and addressing rapid urbanisation due to cross-border trade and traffic volumes.

• Regional water utilities innovation resilience. To source and invest in pilot projects (locally-relevant innovative technology, financing and governance models) for a resilient water sector in major cities in transboundary catchments.

• Transboundary water information system. To support transboundary hydrological and metrological data collection as well as the development of information for sustainable infrastructure, risk preparedness and climate adaptation.

The SADC Water Fund exists to capitalise partner funds and coordinate sector financing. It selects bankable project proposals (quality feasibility studies must be available), provides support to them in finalising project documentation and raises funds from development partners. The Fund facilitates, monitors and evaluates cross-border coordination during project preparation, implementation and post-implementation.

“Essentially, once we pull the money and resources together, we ensure that the Fund is appropriately invested in the priority projects in such a way that there is protection and promotion of the low-income communities, so that the heart of DBSA’s shared prosperity becomes a reality within the region,” says Ching’ambu.

The DBSA provides transparent fiduciary management and assurance to stakeholders.

The development impact and the shared prosperity only becomes a reality when there is actual implementation of the project.

TRANSBOUNDARY PROJECTS

Money is not the only difficulty when dealing with transboundary infrastructure. The policy and regulatory environment within the water sector is a challenge and so is preparing the right project.

“You could have the money, but if the project is not well prepared, there is a hindrance in terms of being able to move to implementation. We need to consider the right financing instrument that is appropriate for a project. There is no one-size-fits-all approach. We need to deal with each specific case separately. But, most important, is to ensure that we can implement these projects. This is a key passion for the bank,” he adds.

Mamarinyana Ratsaka, Head of Programme Management Services in the Infrastructure Delivery Division at DBSA, says that one of the lessons learnt about the fund is that implementing cross-border water projects is not an easy process. “The other big lesson that we have learnt is with the identification of projects. We have found that a lot of projects are not properly prepared.”

The DBSA provides transparent fiduciary management and assurance to stakeholders. “You must plan practically and in a structured way. This preparation gap, as Ratsaka highlights, has been of the most difficult challenges to overcome and hence our model is now to invite all partners around the table so that we can overcome this hurdle,” explains Ratsaka.

In a collaborative way, internally and with other external partners, the DBSA ensures projects are suitably prepared with appropriate investment. The bank has a rolling investment portfolio of prioritised projects in the region that it invests towards and can break the silos that exist between preparation and investments.

Ching’ambu says that many delivery hurdles exist. “Foremost are the institutional mechanisms, especially from a regional perspective. How do you bring the many stakeholders together in a mechanism that is institutionalised and that will drive the process forward? This is the gap that DBSA bridges. We can bring together multiple countries and have an institutionalised approach to collaboration for ventures, which allows for optimised investment.”

“The development impact and the shared prosperity only becomes a reality when there is actual implementation of the project,” he adds. The DBSA has a growth and financing sustainability strategy anchored on the diversification of portfolio, products (funding instruments) and partnerships. “If we have a portfolio that we roll and build into a solid pipeline, then we have a pipeline towards which we can structure appropriate financing products and in collaboration with partners, we are able to make maximum regional impact.”

INNOVATIVE INTEGRATION

“The Fund is a key financing facility within SADC’s vision of establishing a regional development fund, which is the instrument to promote socioeconomic development and integration within the area. We have this proper, strong focus added to our focus on safeguarding integrated water resource management for infrastructure development and therefore, we have espoused a

thematic approach within the three broad cluster areas to make sure that we endorse regional innovation for resilience as well as to ensure that we have climate resilience systems in transboundary water information systems,” says Ching’ambu.

The DBSA works with the private sector in terms of delivering service in the implementation of the projects and those engaged in international competitive bidding processes. The bank is looking at innovating and is essentially looking to develop new delivery models that open the space for the private sector.

SUSTAINABILITY

Sustainability is one of the investment principles of the Fund, so the DBSA gauges the environmental, social and governance (ESG) aspects of the projects that it is involved in. In terms of sustainability, the bank looks for projects that will be well-managed post implementation and that will reap the intended benefits. The project sponsor’s capacity to sustain and maintain the operations and safeguard that investment for the people is considered. The development impact of a project is also regarded. For example, the DBSA is currently working on a project in Kazungula, Zambia for the supply of water and sanitation infrastructure.

The Kazungula Water Supply and Basic Sanitation Project has had its water treatment plant and water supply system as well as its storage reservoir and distribution networks upgraded. Kazungula is soon to be an upcoming town with a newly constructed Kazungula Bridge that has seen an increase in trade volumes there. So, you see the regional multiplier potential of establishing a proper water supply service in a town like that because people from all around the region are trading. There is also growth in terms of industries and other activities in the area.

Another ongoing project is the Lomahasha Namaacha (LoNa) Water Supply Project where a bulk transmission line and distribution network is being constructed from the Simunye Water Treatment Plant in Eswatini to Namaacha town in Mozambique. Booster stations will provide rural offtakes for the communities along the way. A pumping main is being installed to Lomahasha and Namaacha Reservoirs.

The Kazungula and LoNa projects should be completed in 2024 and in the first half of 2025 respectively.

Ching’ambu concludes that the SADC Water Fund has around €50-million and an active working pipeline of over €100-million of projects that it is looking to develop and see implemented within the region itself. About €67-million of this sum represents projects that are ready for funding, including the second phases of LoNa and Kazungula.

DBSA PROJECT PIPELINE

• Two projects with completed feasibility. Chirundu Cross Border (Phase 1: €7.6-million, Phase 2: €13-million) and Livingston Water Supply (€23-million).

• Two projects currently being prepared with a DBSA-managed resource; the Project Preparation and Development Facility. Kazungula Phase 2 (€6-million) and LoNa Phase 2 (€12-million).

• One innovative technology project. Ramotswa Aquifer between Botswana and South Africa which has been motivated for German government support in collaboration with KfW (€8-million).

• SADC HYCOS project is being motivated for Green Climate Fund aid in collaboration with the DBSA Climate Finance Unit (€2-million for development and €40-million for implementation).

JUST IN CASE

Just transition financial flows

Multiple initiatives have been developed to support a just transition. There are also substantial pledges to finance these activities both locally and from abroad. The question of what will qualify as a just transition transaction is becoming pressing.

BY SANDY LOWITT, TIPS Research Fellow*

Identifying, codifying and tagging just transition activities and associated financial flows is a global challenge, which has often been characterised as a wicked problem because of its complexity. There are layers of complications. They include: the broad array of standalone and embedded projects and activities being advanced and implemented; the breadth and depth of project and activity originators (spanning all stakeholders in the economy); the wide array of sources of funding, disparate anticipated investment return profiles; different levels of activity sustainability; and highly divergent understandings of what a just transition entails as well as how it should be measured.

The three-decade long chronology of climate finance identification, codification, tagging and the development of a green taxonomy (which remains contested and muddled in the eyes of some) provides sombre thought for the enormity of the task of making progress on something as normative as a just transition transaction.

CURRENT RESEARCH

Work to date on how to measure just transition activity has largely been led by the private sector and research community rather than national governments. The work is being tied into the rapid progress being made in relation to sustainability and climate change reporting. Reporting progress in these areas has accelerated with the acceptance of double materiality and new climate-related products being created in the market (for example green and sustainability bonds). The green taxonomy has also substantially contributed to clarity and progress; and work on reporting standards has increased exponentially since 2020.

Work on measurement and reporting specifically on the just transition, however, lags. In a scan of existing reporting material,

explicit consideration of frameworks which seek to measure just transition activity were found to be limited and included: the World Benchmarking Alliance (WBA) , Climate Action 100+ , International Capital Market Association (ICMA) and the Johannesburg Stock Exchange (JSE) . In all these examples, nascent first steps to include just transition reporting must be applauded, but the very high-level and low initial expectations of such benchmarks speak to the complexity of the work at hand and the progress which still needs to be made.

All the surveyed approaches explicitly account for a just transition reporting component as part of larger existing frameworks which cover sustainability and climate activity more broadly. The brief synopsis of just transition disclosures and measures presented below is thus best appreciated and understood within a broader reading of such complete frameworks.

DISCLOSURES AND MEASURES

Common to all the approaches to measure just transition activities is their foundation in the 2015 Paris Agreement and the International Labour Organization’s 2015 report on guidelines for a just transition. As is well known, these two base documents essentially call for stakeholders to consider the imperatives of a just transition on the workforce and impacted communities, and the creation of decent work and quality jobs in accordance with nationally defined development priorities, as part of their climate actions and anchoring any plans in respect for human rights.

Climate Action 100+ is an investor-led initiative to ensure that the world’s largest corporate greenhouse gas emitters take necessary action on climate change. It collects data from these firms on 10 key indicators in its Net Zero Company Benchmark Disclosure Framework (figure 1).

The Climate Action 100+ benchmark requires that organisations must demonstrate that they are planning to proactively protect long-term value and mitigate severe disruption to the economy

The urgency to take preliminary steps is driven by the need to collect evidence to shape the ongoing research agenda related to just transition finance mobilisation and deployment; assist policymakers to make more informed decisions on possible legislative and regulatory interventions, subsidies and incentives to support a just transition; and, most importantly, the identification of just transition financing gaps and opportunities.

Double materiality extends the concept of important company information so that it includes social and environmental as well as financial impact.

Disclosure Indicator 9 - Just Transition [Beta]

In the Preamble to the Paris Agreement on Climate Change, signatory countries agree that their actions on climate change need to account for the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities.

Sub-indicator 9.1

Acknowledgement

Metric a): The company has made a formal statement recognising the social impacts of their climate change strategy – the Just Transition – as a relevant issue for its business. Metric b): The company has explicitly referenced the Paris Agreement on Climate Change and/or the International Labour Organisation’s (ILO’s) Just Transition Guidelines).

Sub-indicator 9.2

Commitment

The company has committed to Just Transition principles: Metric a): The company has published a policy committing it to decarbonise in line with Just Transition principles.

Metric b): The company has committed to retain, retrain, redeploy and/or compensate workers affected by decarbonisation.

Sub-indicator 9.3

Engagement

The company engages with its stakeholders on Just Transition: Metric a): The company, in partnership with its workers, unions, communities and suppliers has developed a Just Transition Plan.

while ensuring that workers and communities are given fair opportunity to transition to new and sustainable livelihoods.

The benchmark evaluates whether a company acknowledges the social impacts of its climate change strategy, which is measured by the issuing of a formal statement by the company. The benchmark then seeks to measure the company’s commitment to just transition principles both by seeking an explicit reference to the Paris Agreement and/or the ILO just transition guidelines; and in terms of a metric to measure commitments to retrain, retain, redeploy and/or compensate workers affected by decarbonisation. The JSE disclosure guidance takes the Climate Action 100+ commitment to retrain, redeploy and/or compensate workers a step further and measures actual performance against these measures rather than just commitments.

The third element the Climate Action 100+ benchmark seeks to address is whether a company has engaged with its stakeholders on the just transition. This is measured by the co-creation of a Just Transition Plan by the company, workers, unions, communities and suppliers. In this case, the Climate Action 100+ threshold is higher than that, for example, in the JSE guidance where the number of stakeholder engagements is suggested as an appropriate measure without any reference to what is achieved by such engagement.

Finally, the benchmark measures action taken. This covers actions which ensure that the company implements its decarbonisation strategy in line with just transition principles. This is measured by three metrics for the company to support:

i) Low-carbon initiatives

ii) New projects developed and implemented with the consent of the region’s communities

iii) Actions to financially support vulnerable customers

The Climate Action 100+ just transition addition to its net-zero benchmark indicators speaks to where real economy corporates are in understanding and acting on commitment to a just transition. It would be more useful to be able to benchmark and measure just transition activity outcomes and impacts on effected workers and

communities, but the addition of the concept to the just transition discourse remains nascent.

Benchmarking is currently characterised by acknowledgement, commitment and engagement rather than achieved impacts. This captures the reality that corporates are in the early stages of coming to terms with understanding what the just transition concept means to them and their climate action planning and activities. As such, disclosures that provide insight into acknowledgement, commitment and engagement with a just transition appropriately reflect the nascence of the just transition agenda even if they feel insufficiently ambitious.

TOPICS AND INDICATORS

For the WBA, a just transition envisions resilient and thriving workers and communities carrying out green and decent jobs while limiting global temperature increase to 1.5°C. In its 2021 Just Transition Approach Report, the WBA identifies “proposed just transition topics” and the “indicative scope of just transition indicators to be developed”. As will be shown, these can be used to inform the creation of a future framework as a starting point against which to consider actual project activity evidence, to inform a context-specific, evidence-driven framework for South African just transition activity. The WBA identifies six just transition topics:

Just transition planning

Social dialogue and stakeholder engagement

Green and decent job creation

Retaining and retraining/reskilling workers

Social protection

Advocacy for policies and regulations supporting a just transition

For each topic, it identifies existing WBA core social indicators that could be used for measurement, as well as a list of additional scope dimensions which could be included, and where direction on such scope could be sourced (figure 2).

The WBA work is less developed than that of Climate Action 100+ but covers many of the same elements, most notably the requirement to have a plan for a just transition, stakeholder engagement, and retention,

Just Transition Methodology, WBA, 2021b.

Proposed just transition topics (revised back on stakeholder feedback)

Company respects and promotes workers’ and human rights and plans for a just transition for workers and communities

Existing WBA core social indicators/ACT methodology indicators

Core Social: CSI 1 Commitment to respect human rights CSI 2 Commitment to respect the human rights of workers

ACT methodologies:

Automotive Manufacturing sector methodology, indicator 5.3, Electric Utilities sector methodology indicator 4.3. Oil and Gas sector methodology indicator 5.3 - Low-carbon transition plan

Indicative scope of just transition indicators to be developed

The company plans for how to ensure that the low-carbon/ net-zero transition will be just and equitable for workers and their communities (adapted from Climate Action 100+ NetZero Benchmark, LSE, UNFCCC).

Social dialogue and stakeholder engagement

Core Social: CSI 6 Engagement with affected and potentially affected stakeholders

CSI 12 Collective bargaining fundamentals

The company engages in social dialogue with workers and their trade unions to plan for the just transition. (ILO, B Team & Just Transition Centre). Tripartite dialogue between unions, the company and relevant government bodies is also strongly re-commended. (B Team & Just Transition Centre, SEI, UNFCCC, IHRB, OHCHR). The company engages with other stakeholders about the just transition. (BSR, LSE).

Green and decent job creation, including inclusive and gender balanced workforce

Core Social: CSI 19 Health and safety fundamentals

CSI 10 Living wage fundamentals

CSI 11 Working hours fundamentals

CSI 12 Collective bargaining fundamentals

The company has a commitment to/plans to create green and decent jobs (B Team & Just Transition Centre, LSE, UNFCCC). This includes a commitment to ensuring gender balance and inclusion of vulnerable groups (BSR, ILO, OHCHR).

Figure 2: WBA just transition topics and potential indicators.

Figure 1: Climate Action 100+ Just Transition Indicator.

retraining and reskilling measurement disclosures. An inclusion in the WBA approach not found in the Climate Action 100+ approach (but included in the JSE guidance) is the importance for private companies to play a lobbying and advocacy role in relation to government and trade associations.

Understanding that delivering a just transition will be a multistakeholder effort involving the public sector, private sector and civil society the proposed indicators suggest that the private sector work with government to ensure appropriate public sector interventions to create an enabling environment for private sector just transition activities as well as public sector income support measures. As with the Climate Action 100+, ICMA and JSE indicators, the WBA indicators are additive to an extensive set of existing social indicators relating to sustainability and climate action.

The ICMA provides only a passing, but (nevertheless) explicit, mention of just transition disclosure in its 2020 Climate Transition Finance Handbook guidance for issuers. The handbook seeks to provide clear expectations to capital market participants on the practices, actions and disclosures to be made available when raising funds for climate transition related purposes. There are four key disclosure recommendations falling under issuers: strategy and governance; business model environmental materiality; climate transition strategy and implementation transparency.

Under implementation transparency, the ICMA suggests that a company disclose planned capital and operational expenditure decisions which will deliver its proposed transition strategy. It suggests that such expenditure be broken down to not only include expenditure on “greening by”’ or “greening of” considerations but to also include just transition considerations. It states that “where a transition may have negative impacts on workers and communities, issuers should outline how they have incorporated considerations of a just transition into their climate transition strategy”.

The ICMA-suggested disclosure relates to actual expenditure set aside for just transition implementation. This is a far higher ask of companies than the WBA and Climate Action 100+ disclosure suggestions, which are more focused on acceptance and thinking and planning for a just transition rather than actual implementation and money on the table. In the absence of more work on what a just transition entails and how it is measured, it is unlikely that issuers will have clarity on exactly what just transition considerations (and hence expenditure) need to be counted and disclosed.

South Africa is in the vanguard of thinking about a just transition, just transition finance and just transition disclosure. In 2022, the JSE published its Sustainability and Climate Disclosure Guidance It is an enormously comprehensive guidance based on a review of all peer literature globally (and obviously learning from the examples cited above). The guidance suggests that firms disclose using narratives of a company’s governance, management, strategy and metrics, targets and performance related to sustainability. It then looks at metrics divided into the categories of environmental metrics, social metrics and governance metrics.

Within each category are core metrics (which are standardised and will apply to almost all companies) and leadership metrics (where the metric may be particular to the company/sector and/ or its sustainability activities). Leadership and core metrics are then listed in detail with a definition, unit of measurement, other international framework references and rationale presented.

Under the category of environmental disclosure metrics, the JSE guidance lists subcategories which include climate change, water security, biodiversity and land use, pollution and waste and supply chain and materials. The climate change category is further broken down into greenhouse gas (GHG) emissions, energy mix, science-based targets and just transition (figure 3).

South Africa is in the vanguard of thinking about a just transition, just transition finance and just transition disclosure.

Delivering a just transition will be a multi-stakeholder effort involving the public sector, private sector and civil society.

Existence and nature of a 'transition plan' that commits to stakeholder engagement with affected workers and communities (see the JSE Climate Disclosure Guidance for further detail).

Number of workers in the past year recruited, retrained, retrenched, and/or compensated due to implementation of the decarbonisation plan.

Number of engagements undertaken with affected parties by group and geography.

Nature of climate-related lobbying activities, and those of relevant associations and membership groups, and their alignment with the objectives of the Paris Agreement and Glasgow Climate Pact.

Figure 3: JSE environmental disclosure metrics.

As such, just transition disclosure in the JSE guidance is dealt with explicitly at the level of environmental disclosures related to climate change although many of the aspects of a just transition are in fact dealt with under its social metrics. This JSE example brings into stark relief the point made earlier that explicit just transition indicators currently being advocated must be read within broader articulations of climate change and sustainability indicators. The parameters of explicit just transition disclosure metrics is thus very fuzzy and creates layers of complexity in any proposed codification and tagging system.

JUST METRICS

The just transition understanding used by the JSE is based on the Paris Agreement’s notion of a just transition. As with all the above attempts at measuring just transition activity, the first core metric in the guidance is disclosure of the existence of a transition plan that commits the company to engage with affected workers and communities. In this way, the guidance goes some way to incorporating the Presidential Climate Commission (PCC) principle of procedural justice and the need for inclusivity. As with the other international measures, it does not detail plan implementation or the quality of engagements and planning around the wishes of communities and workers. It does, however, include a leadership metric measuring how many engagements occur.

A second core metric is for the company to disclose the number of workers recruited, retrained, retrenched and/or compensated due to the implementation of the company’s decarbonisation plan. The metric for this is the number of workers. This is a very specific metric, the quantification of which is well understood and easy to measure. This measure is found in both the WBA and the Climate Action 100+ frameworks. It must be noted that in all

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TCFD consultation WBA GRI 11 (Oil and Gas supplement)

The Paris Agreement incorporated the notion of a "just transition*, which originated in the labour movement, to signal the importance of minimising the negative impacts and maximising the positive opportunities for communities and workers as part of the shift toward a low emission economy. Given the importance of the just transition, it will be critical to pay increasing attention to the related risks and opportunities and ensure that social considerations are also addressed in decarbonisation and energy transition plans.

the approaches (including the JSE approach) the quality of jobs in the company are dealt with through labour standard metrics under the broader heading of social metrics. These usually cover jobs that pay at least the minimum wage, meet health and safety regulations, allow collective bargaining and protect human rights including working hours. As such these jobs are read as decent jobs as per the laws of the land.

Two leadership metrics in the JSE guidance also suggest just transition disclosure. These leadership metrics allow for differing levels of applicability and timing based on sector and other issues which may impact the materiality of the disclosure.

The first leadership metric relates to the nature of climaterelated lobbying activities undertaken by the firm. In this metric, the JSE mirrors the work of the WBA and Climate Action 100+ which both see private sector lobbying and advocacy as a necessary component to achieving a just transition to net zero. Again, the metric (in all examples) is activity-based not impact-based, reflecting the nascence of the concept and its measurement.

The second leadership metric is the number of engagements undertaken with affected parties (communities and workers) measured by group and geography. This is a potentially hazardous metric as it could make engagements as envisaged in the just transition plan a tick-box exercise, measured by meetings which have limited tangible outcomes and impacts in line with the preferences expressed by workers and communities. It is, however, a first step in what will be a journey of increased granularity, specificity and hopefully implemented activities which result in meaningful impacts.

The sample of explicit possible just transition measurements, metrics and disclosure advice is small. As shown above, qualification and measurement options remain both nascent and high level. Specificity, granularity, thresholds and eventually impacts will all need to be added as just transition activity and associated financial flows become more prevalent, better understood and developed. The early adoption of the just transition topic as an additive and unique category requiring definition, measurement, tagging and tracking over and above more mainstreamed sustainability measures is, however, a positive step in the right direction and a building block for future thinking.

*This article is an excerpt from the report RESEARCH TO SUPPORT THE FUTURE DEVELOPMENT OF A TAGGING SYSTEM FOR JUST TRANSITION FINANCIAL FLOWS | Trade & Industrial Policy Strategies (TIPS) [October 2022]

This report considers how the multiple projects, programmes, measures, initiatives and investments that have been proposed to support a just transition for affected workers and communities in South Africa can be used to inform i) thinking about appropriate context-specific codification and tagging; and ii) estimating just transition financial flows.

TIPS supports policy development through research and dialogue. Its areas of focus are industrial policy, trade and regional integration, sustainable growth and a just transition to a sustainable inclusive economy.

Specificity, granularity, thresholds and eventually impacts will all need to be added as just transition activity.

GREEN HYDROGEN

Southern Africa’s time is now

BY KEARNEY CONSULTING*

By 2030, global hydrogen demand is expected to reach 130 Mt, an almost 45% increase from today’s demand of 90 Mt, although the future demand remains uncertain with a broad range of demand scenarios possible. Low-carbon hydrogen could comprise up to a third of this supply.

With Europe and East Asia prioritising hydrogen in their energy transitions, the two regions are expected to emerge as the dominant demand centres for low-carbon hydrogen in the first wave of the green hydrogen industry’s development. Other economies such as North America are expected to follow quickly, also driven by recent regulatory changes such as the US Inflation Reduction Act.

Most green hydrogen demand centres, such as Germany, the Netherlands, Japan and South Korea are projected to have sizable demand gaps, exceeding 1 Mt in most cases, thanks to renewable

electricity costs that are expected to remain high amid undesirable climate conditions for optimal renewable capacity. A joint study by Kearney and German utility Uniper shows that imported green hydrogen in Germany can be more cost-competitive than locally produced green hydrogen, with imports offering a cost advantage of about 30% when importing from countries with favourable renewable energy costs.

As demand grows, Europe is likely to remain a major importer of green hydrogen. To capitalise on the emerging import centres, more than 60 international hydrogen trade projects have been announced (see figure 1). Export routes can be developed wherever the cost of green electricity is lowest, with transport costs being a low-impact variable on the levelized cost of hydrogen regardless of the distance from production centre to import area.

Generated from renewable energy and capable of decarbonising industries that traditional renewables cannot tackle alone, green hydrogen has been getting a great deal of attention. In fact, the world’s steadily growing demand for hydrogen is expected to exceed supply by 2030, making now an ideal time to invest.

TO TRANSFORM OR NOT TO TRANSFORM

Green hydrogen’s ability to store renewable energy holds one especially intriguing possibility: it can be transported when transformed into a portable product such as ammonia, methanol or an e-fuel. Simultaneously, work is under way to develop a way to transport liquified green hydrogen over long distances without having to transform or reprocess it. Therefore, geographies with promising conditions for renewable energy production, such as southern Africa, will be able to store renewable energy and export it to areas where renewable energy production is technically or economically limited.

Southern Africa has some of the world’s most attractive sites for generating renewable solar electricity. Together the best onshore and offshore wind conditions, this makes it an appealing option for high-capacity and scalable renewable energy for green hydrogen production. And some parties are already well-aware of this: publicand private-sector support is on the increase, including a political commitment with Germany pledging €40-million to Namibia for green hydrogen development. Three EU countries are interested in importing Namibian green hydrogen.

There is also interest in South Africa’s potential to produce green hydrogen: Sasol is entering into an agreement with the Northern Cape Development Agency to conduct a feasibility study production in Northern Cape. South Africa and Namibia have both joined Egypt, Kenya, Morocco and Mauritania in the Africa Green Hydrogen Alliance, which is designed to support the energy transition with green hydrogen.

Although southern Africa has a major opportunity to produce green hydrogen, the region’s demand is projected to be lower than in Europe and Asia. For example, South Africa, the region’s most industrialised country, is projected to reach a demand of only 238 kt

by 2030, according to South Africa’s national road map. With the region’s relatively low demand, the favourable production climate and the limited impact of transport costs southern Africa is poised to become a green hydrogen export hub.

Looking beyond the theoretical merits of green hydrogen to the tangible strategies to meet global demand, five moves can put market entrants on the path to success as they seek to establish green hydrogen production facilities in southern Africa.

GOVERNMENT SUPPORT

Government has a central role in the energy transition, with market entrants’ success impacted by the level of government buy-in and a clearly defined strategy. Governments set the policies that impact both the speed and the direction of the transition, and they create the regulatory environment that supports the development of production facilities and the attractiveness of the location for investors.

Furthermore, export trade routes are typically facilitated by intergovernmental agreements. For potential entrants into the southern African market, choosing a location is key. For example, Namibia is prioritising hydrogen development with appropriate policy instruments and a conducive environment for investors thanks to policy certainty.

With hydrogen as an emerging piece of the energy puzzle, there is no universal, well-defined government policy yet. So far, South Africa is the only country in the region that has published a hydrogen strategy. Potential market entrants will need to collaborate with local regulators and governments to assess and shape national hydrogen strategies.

According to best practices in exporting countries such as Chile and Australia, governments can use three mechanisms to build an attractive environment for producing green hydrogen: Diplomacy. Government diplomacy can be a vital part of forming international offtake agreements. By building relations with demand centres and establishing beneficial trade routes, supply quotas, and investments, governments can set the scene for successful export agreements. These agreements will allow the incorporation of specified volumes over a long period of time, and volume commitments can lock in demand to establish even more certainty.

Early agreements will allow flexibility in establishing the hydrogen pricing mechanism with demand centres. A variety of mechanisms are being evaluated with large demand centres preferring a price

With hydrogen as an emerging piece of the energy puzzle, there is no universal, well-defined government policy yet.

Figure 1: Dozens of new hydrogen trade projects will open a variety of global trade routes.

Source:

between fixed supplier cost and buyers’ willingness to pay in the short term amid the market’s nascency. There will be a longer-term shift toward market-based pricing once the market develops.

Incentives. Government incentives can stimulate green hydrogen production by encouraging both direct funding and capacity building supporting the development of local production facilities and consequently an export capability. Simultaneously, incentives that drive up demand for local green hydrogen can establish immediate offtake locally to support the emerging industry.

Regulations. Government regulations should focus on standardising green hydrogen certification and streamlining the approval processes. Efforts are being made to align on an international green hydrogen certification system to provide clarity on the requirements for market entrants while validating safe and corruption-free production processes for importers.

Apart from these best practices, lessons learnt from other energy industries highlight the need for a clear governance structure and regulatory body to ensure mechanisms are followed fairly, strengthen trust in international relationships, and avoid over-regulation and disincentivising investments.

PARTNERSHIPS FOR PROJECTS

Due to the market’s nascency, any new development will have a variety of project and operational risks, making it more difficult to secure funding for the project itself and for any offtakers. To be successful, market entrants will need to establish three partnerships to attract funders and offtakers: public partners, offtakers and technology partners. Beyond setting the environment for investments, having active government partners for a project can strengthen the case for investors with formal government support, incubation funding and cementing offtake agreements.

With global trade a core part of establishing export agreements, obtaining a partner that is familiar with setting up complex global supply chains and delivering in key markets is essential to show this ability to funders and offtakers. Shipping hydrogen-based products is a complex undertaking; partnering with a company that has experience in chemicals and energy trading is crucial. Furthermore, a partner with access to the European and Asian markets strengthens the investment case considerably. In 2020, six of the 10 largest green hydrogen projects announced involved a partnership with a major trading, energy or petrochemicals firm.

Because green hydrogen is an emerging technology, establishing strategic partnerships with reputable technology suppliers rather than simply conducting tactical sourcing creates benefits for both the project and the technology partner. Technology partners gain a valuable opportunity to prove that their green hydrogen technology is viable at scale, an important consideration in this emerging

industry, while giving the project access to vital technical expertise and the latest technology. Selecting a technical partner with a sound manufacturing blueprint, technical know-how, a proven ability to scale, a suitable levelized cost of hydrogen road map, and crucially, experience in partnerships and a good cultural fit, including values and a purpose that aligns with the project team, will significantly reduce project risk and improve the investment appeal.

OBSTACLES AND OPPORTUNITIES

As with any major project, significant amenities are required. Sizable green hydrogen projects require vast areas of land to produce the renewable power. Finding sites with large areas of available land is often possible only in remote areas, where access to infrastructure is limited. When selecting a site, market entrants will need to consider not only climatic conditions, but also the strategy for site development and eventual export infrastructure.

An essential part of understanding the optimal export pathways and how best to undertake development, where required, is securing stable export demand. This will enable planning for transport considerations. Our analysis shows that shipping is the only viable solution when transporting any form of hydrogen more than 5 000km, for both technical and cost reasons, as would be the case when exporting green hydrogen from southern Africa to the European and Asian demand centres, so stable access to ports will be critical.

Establishing access to ports could pose various hurdles. In remote areas where road or rail access is not readily available, significant technical, financial and institutional barriers may need to be overcome. This presents an opportunity for strengthened government partnerships, where developing the required infrastructure will not only support the project, but also contribute to the area’s socioeconomic environment and industrial development.

By establishing the market entrant as a partner in creating public value as opposed to a project focused on extracting value for private benefit, strong government buy-in can be obtained. This can ultimately benefit the market entrant, accelerating infrastructure development through policies and regulations and strengthening relationships with local communities, whose support is a vital part of a successful project. It can also create the opportunity for industrial development in downstream chemicals and energy sectors, which can be integrated into the development of green hydrogen programmes.

SECURE FUNDING

As with any mega project, and more so for nascent technologies with inherent risk, securing adequate funding is complex. Funding from multiple sources is often required. Kearney’s market sensing study of the southern African renewables ecosystem identified the main archetypes for investors interested in financing renewable energy projects, each with a unique value proposition, risk appetite and expectations for a return on investment.

The investor archetypes are financial investors; lenders; original equipment manufacturers (OEMs); developers and engineering,

procurement, and contracting firms; as well as development financial institutions, multilaterals and export credit agencies. Financial investors typically require a high return on investment on equity with a longtime horizon, while lenders, OEMs and multilaterals tend to seek debt investments with advantageous terms to mitigate the risks, such as offtaker credibility, limited-to-no development risk exposure and lucrative project financing structures.

Obtaining sufficient investments often requires appealing to multiple archetypes. Large hydrogen projects are typically profiled as high-risk investments for financers because of the inherent risks associated with new technologies that are unproven at scale, the nascent offtake market and the general complexities of large capital projects, particularly those in remote areas. For southern Africa, political and economic factors escalate the risk profile. However, appropriate project phasing can contain the risks to levels that are attractive to investors. Green hydrogen projects can be broken down into component projects, which can be phased for scaling in accordance with three main models (see figure 2).

a small scale, building its success with limited product offerings and capacity before scaling the products and capacity over time. With the increase in the number of related large-scale projects year on year, investors can then be convinced to fund scaling initiatives.

Full-scale ramp-ups. This model comes with the most risk and entails executing all components at full scale as part of one megaproject and providing a variety of products from the beginning. This approach requires the most funding because investors are asked to back unproven technologies and the development of large-scale green hydrogen projects, which are less prevalent globally.

The first two models allow multiple investors to fund specific project components, satisfying their individual objectives and their appetites for risk along with enabling a funding model that allows for sufficient funding to be obtained while inherently de-risking the project.

JUST TRANSITION

Green hydrogen will be a fundamental part of southern Africa’s just energy transition, which the International Labour Organization defines as occurring “in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind”. Green hydrogen also has the potential to create jobs throughout the value chain, in addition to project developmentrelated jobs.

However, achieving a just transition is a complex undertaking. Developing the right skills will be essential. Early development of the green hydrogen industry in southern Africa creates an opportunity for skills to start developing now, allowing for a gradual transition away from coal. By partnering with local governments and educational institutions to create reskilling programs, a skills pipeline can be built while also strengthening community relationships.

Green hydrogen could play an instrumental role in reindustrialising the region. Developing the industry in southern Africa and opening access to affordable green hydrogen at scale would support the creation of a variety of related industries, including green chemicals, mobility and transport, power as well as mining – in turn supporting socioeconomic development and improving local environmental outcomes.

Lower-risk ramp-ups. This model creates opportunities to secure investments from various investor archetypes. These ramp-ups implement the low-risk project components first as a pilot and then scale them over time as the market matures. For green hydrogen, this begins with the tried-and-tested component of renewables.

Because there are multiple ongoing mega-scale renewable energy projects worldwide and existing proven technologies, starting with the production of renewable energy significantly lowers the project’s risk profile and increases the likelihood of obtaining the required earlystage funding. Once these low-risk project components are mature, the project owners can begin to add project components that are currently viewed as higher risks because of their nascency, such as the green hydrogen production facility.

Modular ramp-ups. This model carries higher risk while still packaging project components to align with risk levels that are attractive to investors. These ramp-ups establish the full value chain at

Visualisation of hydrogen as the fuel of the battery of the future.

Figure 2: Green hydrogen projects can be scaled up based on three models with varying levels of risk.

Green hydrogen energy production.

Source: Kearney analysis

Green hydrogen will be a fundamental part of southern Africa’s just energy transition.

These opportunities are already being recognised in the region. A reliable green hydrogen supply can support this, driving meaningful socioeconomic and sustainable development in the region.

Ultimately, green hydrogen production is fundamental to southern Africa’s just transition away from coal. With an eye on realising shared value, the strategies discussed in this article can be achieved with an integrated approach – achieving commercial success while also locking in a variety of social benefits.

PSG THINK BIG SERIES | The future of traditional fuels and green hydrogen | PSG Konsult | [2022]

The national drive to a greener economy will require large-scale collaboration. Success will call for resilient partnerships between sector leaders. This was the perspective of president and CEO of Sasol Fleetwood Grobler in PSG’s recent Think Big webinar, which forms part of a series of dialogues around the country’s most pressing issues.

As Grobler explains, a focus on green hydrogen is a vital component of this strategy but needs to be seen “through the lens of the long-term” rather than as a “quick fix”. The Global Hydrogen Council predicts that the world will need about 400-million tons to be supplied over long distance by 2050, which emphasises the opportunity for South Africa to become an exporter. This is even before considering the potential of re-industrialising South Africa through initiatives locally.

Leveraging this “symbiosis” in a deliberate move towards pooling the country’s resources is how South Africa can leapfrog ahead in the green energy game, argues Grobler. However, the industry must present a unified voice to government, ensuring that regulation and infrastructure are prioritised to create an enabling environment for the energy sector. While he sees enormous potential ahead for the country, successfully leveraging these opportunities is a big task that may stretch beyond the abilities of a single company. As he explains: “Collaboration will be the name of the game going forward. The days of ‘closed corporate strategies’ are behind us and players in renewable energy cannot afford to ‘go it alone.’” In Grobler’s estimation, the establishment and smooth running of this part of the economy will take between six and eight years to come to fruition due to the complexity and bankability of these types of projects. In the short term, the task at hand for players like Sasol is to secure off-take agreements with parties in countries in the European Union and Asia to reach the levels of scale and economic viability needed to ensure the feasibility of the projects.

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Hydrogen atom.

*Authors: Igor Hulak, Prashaen Reddy, Sumit Mitra (partners), Romain Debarre, managing director, Kearney Energy Transition Institute.

A NEW DAWN FOR CCUS

After five decades of ups and downs

Carbon Capture, Utilisation and Storage (CCUS) is recognised as one of the key technologies to achieve global climate goals, tackling emissions from energy and industrial sectors, as well as removing CO₂ from the atmosphere. But, despite the critical importance of the technology and substantial development to date, CCUS deployment has been slower than anticipated.

BY DR HYDRA RODRIGUES, IDTechEx

Regardless of the near fourfold growth in the past 20 years, the current deployment of CCUS is still limited. CCUS capacity growth has been around 2.3-million tons per annum (Mtpa) of added capacity since 2010, with annual capture capacity reaching 41Mtpa of CO₂ in 2020. This is 86% short of the ambition the International Energy Agency (IEA) set a decade prior. The current global CO₂ capture capacity is equivalent to 0.1% of overall emissions.

THE IMPORTANCE OF CCUS

CCUS refers to the set of technologies that strip carbon dioxide (CO₂) from waste gases and directly from the atmosphere, before either storing it underground or using it for a range of industrial applications. The goal is to prevent CO₂ emissions from accumulating in the atmosphere, which is one of the main causes of global warming.

Global CO₂ capture capacity (in Mtpa) operational, announced and expected by year. Note: the radius of each circle has been scaled based on the capture capacity it represents. Dashed circles represent expected capacity.

After years of a declining investment pipeline, there has been significant acceleration in the sector for the past two years, with multiple announcements of new integrated CCUS facilities. Most of these are in North America and Europe, but projects are also planned in Australia, China, Korea, the Middle East and Chile. Still, the industry needs to grow more than 35-fold by 2030 to reach the capture capacity required for net-zero emissions as per the IEA’s Net-Zero Emissions (NZE) by 2050 Scenario (IEA, 2021 ).

The first industrial large-scale CCUS project commenced operation about 50 years ago at the Val Verde natural gas processing plant in Texas, US. Instead of being vented, the CO₂ captured was compressed and transported through a pipeline and then injected into the SACROC field for Enhanced Oil Recovery (EOR). Natural gas processing plants supplying CO₂ for EOR became the standard of the CCUS industry, with some of the largest integrated CCUS projects in the world being a combination of these two Europe was the second continent to see CCUS projects appearing, with Norway’s Sleipner project for dedicated storage purposes in 1996.

After a plateau during the 2000s, the number of CCUS projects in operation has taken off since 2010, but the CCUS industry saw highprofile project cancellations and government funding programs that failed to deliver. IDTechEx’s research indicates that more than 60% of proposed projects have been cancelled on average, notably in the power sector. The failure of the Kemper County carbon capture facility in 2017 and the mothballing of the CCS retrofit unit at the Petra Nova plant in Texas in 2020 have brought into question the CCUS industry’s ability to deliver large-scale projects that are profitable and low carbon. Delays have also been commonplace.

Several factors contributed to these obstructions, but they were mostly due to economic reasons (fluctuating markets, insufficient financial support), technical issues (flow assurance, solvent degradation, insufficient storage capacity), and lack of public acceptance. Additionally, as the western world has moved away from coal, many large-scale projects of coal power plants that were meant to be fitted with CCS capabilities never came to fruition.

In the last decade, the CCUS industry focus shifted from power towards industries considered “hard to decarbonise” (cement, iron and steel industries), the emerging hydrogen economy as well as new negative emission technologies (NETs).

MOMENTUM BUILDING

There has been great momentum behind CCUS in 2022, with projects, new policies and funding announced. Building up to this year’s developments, the UN’s Climate Change Conference (COP26) in 2021 reinvigorated net-zero targets and fostered multi-country partnerships in CCUS. That same month, the US passed the Infrastructure Investment and Jobs Act, providing a combined US$15-billion to support CCUS and low-carbon hydrogen production.

TRANSITIONAL TECHNOLOGY

In many industries, CCUS is considered a transitional option to get carbon-intensive assets to their end of life or to serve as a steppingstone to more sustainable technologies that are still under development. Ultimately, CCUS can create a demand for captured CO₂ until carbon prices are sufficiently high. CO₂-EOR has been an on-ramp for CCS and, more recently, for DAC and may continue to do so alongside other emerging uses of CO₂ as a feedstock for chemicals, fuels and building materials.

KEY CCUS APPLICATIONS

• Hard-to-abate sectors with inherent process emissions such as cement, iron and steel, and chemicals. Renewable fuel switching and efficiency improvements will not be enough to decarbonise these industries.

• Blue hydrogen production, where CCUS safely disposes of the CO₂ produced during traditional steam methane reforming. Blue hydrogen is set to play a key role in creating new markets for hydrogen as a clean energy carrier, acting as a bridge for green hydrogen once electrolyser capacity catches up.

• e-Fuels production, where CO₂ from emissions can be converted into hydrocarbons using renewable energy. e-Fuels can take care of legacy internal combustion engine vehicles while electric vehicles gain market share and of long-haul transportation (planes, ships, trucks), while battery technology advances and becomes lighter.

CARBON DIOXIDE REMOVAL

While carbon capture may play a crucial role in the energy transition, carbon dioxide removal (CDR) may be needed beyond that. CDR is present in every credible, long-term climate scenario to take and maintain the world at the net-zero level of emissions. Given its potential, there has never been more focus on removing CO₂ from the atmosphere using NETs such as direct air capture (DAC). Venture capitalists have poured more than US$1-billion into the nascent DAC industry in 2022, with the biggest slice of the pie going to Climeworks’ latest funding round worth US$650-million: more than the total amount invested in DAC in the past five years.

Global outlook of CCUS capacity by CO2 endpoint: operational in 2022 (left) and announced to date (right).

Challenges in CCUS.

DAC players are racing to drive the cost down to US$100 per net ton of CO₂ removed and to reach the gigatonne scale of annual removals. Both milestones are complementary, as scale and cost will likely evolve in tandem. Standardising a robust methodology for monitoring, reporting, and verification (MRV) of carbon removals will be essential to achieve those goals.

FUTURE PROSPECTS

The fundamental role of CCUS is to provide an infrastructure capable of securely and permanently isolating millions of tons of CO₂ away from the atmosphere. CCUS will be critical in enabling the level of decarbonisation required to achieve the net-zero emissions targets stipulated in the Paris Agreement. But for this, it needs to scale.

Despite the fair level of maturity, carbon capture technologies remain costly, energy-intensive and underdeveloped. Questions remain around the willingness of governments to ensure a proper price for carbon through cap-and-trade or other incentive schemes and of investors to financially support large-scale CCUS projects. Meeting CCUS’ ambition to slow down climate change requires a step-change in policy and coordinated global action that is shaping up, but it is yet to be fully realised.

Source: IDTechEx

*This article is an excerpt from the IDTechEX report Carbon Capture, Utilization, and Storage 2021-2040

The first industrial large-scale CCUS project commenced operation about 50 years ago.

Ultimately, CCUS can create a demand for captured CO₂ until carbon prices are sufficiently high.

Merits of ASSESSING CARBON IMPACTS early

Under increasing pressure and incentives to reduce their carbon footprint, projects in the infrastructure and industrial space need to start early in their lifecycle to find optimal mitigation and adaptation strategies.

BY SRK CONSULTING

Speaking at the International Association for Impact Assessment (IAIA) symposium in Cape Town recently, SRK associate partner and principal scientist Philippa Burmeister highlighted that an options analysis at project concept stage is vital.

“This allows developers to consider alternative layout, equipment, processes and technologies,” Burmeister said. “These options could contribute significantly to reducing greenhouse gas (GHG) emissions.”

Choices could include more efficient or low energy technologies, specialised electric vehicles or reduced travel distances. There are also replacement options to consider, which open possibilities to consider various energy options – from traditional to renewable sources.

“Considering alternatives and designing for reductions upfront enable reductions with potential economic benefits,” she explained. “Once infrastructure is in place without such planning, retrofitting alternative and technology is substantially more costly and difficult.”

For waste management facilities such as landfill sites, for instance, methane created by waste degradation is a powerful GHG that can be captured. If this option is embraced at concept stage, with the appropriate design and budget, GHG emissions at a landfill can be reduced while also creating a valuable energy product.

The opportunities to apply decarbonisation strategies to a project decrease substantially once it evolves beyond concept and design stage. Once prefeasibility or feasibility stage is reached, the priority is to accurately quantify the alternative options for reducing GHG emissions. This includes developing an inventory of GHG emissions for the project and identifying their most significant sources.

“Alternatives can then be proposed for the most significant sources,” she said. “Using a GHG emissions inventory, project developers can demonstrate reductions in carbon intensity as a result of alternatives.” This is a vital step considering GHG risks such as carbon taxes and energy cost increases.

“By the time the construction phase is reached, most clients do not have control over related emissions,” added Burmeister. “All they can do is to give preference to carbon-conscious contractors and suppliers, during their selection. They can choose companies who have demonstrated commitment to reduce their own carbon footprints.”

By the time the construction phase is reached, most clients do not really have control over related emissions.

Philippa Burmeister, associate partner and principle scientist, SRK Consulting.

In the construction tender documentation, for example, GHG reporting and continual improvement can be included. There is also some scope to further reduce emissions in selecting energy efficient equipment alternatives like air-conditioner models or LED light bulbs.

At operations stage, the annual reporting of the GHG emissions inventory is a positive way to reflect the achievements of emission reduction targets and identify opportunities for future reductions.

“As technology evolves and creates options for decarbonising, projects can consider retrofitting energy efficient or low emission equipment,” she said. “In most infrastructure or industrial processes, however, it is often impractical to completely replace key elements before the end of life. For existing infrastructure, the focus therefore is usually on the replacement of energy sources (from traditional to renewable) rather than on reduction strategies.”

At the closure stages – and even post-closure – there remain some opportunities to reduce carbon emissions. Carbon sequestration can also be considered, such as revegetating options that would capture the most carbon.

Burmeister pointed out that carbon taxes are driving many of the corporate efforts towards decarbonisation, but there are also growing ESG awareness and sustainability reporting requirements.

“Investors are commonly asking companies for GHG reporting and reduction planning,” she said. “The carbon intensity of products is also becoming a consideration by customers as it impacts the customers’ Scope 3 emissions reporting.” Increasingly, end-use consumers are also becoming aware of their carbon footprint and the carbon footprint of their preferred brands.

Projects need to consider not only their impact on the environment, but how the changing climate will have direct effects on the project itself. These will range from extreme weather conditions – causing flooding, drought, heat waves, heavy winds and fires – to socioeconomic impacts on nutrition and livelihood opportunities. Companies need to adapt by making the necessary preparations for how their staff, communities and supply chains will be affected.

An

MITIGATION AND ADAPTION

Addressing the critical climate change issues of both mitigation and adaptation, SRK associate partner Philippa Burmeister made two presentations at the recent international of the International Association for Impact Assessment symposium. Under the theme Celsius 1.5, the event referenced the negative impacts forecast in relation to global temperatures rising 1.5 degrees above preindustrial levels.

In one presentation, authored jointly with SRK principal scientist Ashleigh Maritz, Burmeister addressed Decarbonisation through the project lifecycle. Initiatives to decarbonise operations are an important aspect of mitigating impact. At a preceding workshop on Climate Change and Urban Planning, she presented on the tools available to anticipate risk – as part of organisations’ efforts to adapt to climate change.

Air quality index.

Projects need to consider not only their impact on the environment, but how the changing climate will have direct effects on the project itself.

Methane created by waste degradation is a powerful GHG that can be captured in waste management facilities.

options analysis at project concept stage is vital to reduce carbon from the outset of a project.

ECO-EFFECTIVE INGENUITY leads the way on Sappi’s decarbonisation journey

BY SAPPI

When we set our decarbonisation targets in 2020, approval by the SBTi was the gold standard we were reaching for, so when we became only the fifth company in South Africa to have our targets approved it sharpened our focus, ambition and responsibility to decarbonise across our global business.

Our validated target is to reduce Scope 1 and Scope 2 GHG emissions 41.5% per ton of product by 2030 from a 2019 base year. Sappi Limited also commits that 44% of its suppliers in spend will have science-based targets by 2026.

“Realising these plans requires marshalling the expertise and creativity of our people like never before. But it’s a challenge that our teams are embracing with a spirit of eco-effective ingenuity that’s unique to Sappi,” says Dr Tracy Wessels, group head of sustainability and investor relations at Sappi Limited

“Climate change is already affecting every country on every continent through changing weather patterns, rising sea levels and more extreme weather events. As an early supporter of the Paris Agreement, our overarching aim in terms of science-based targets is a clearly defined pathway to future-proof growth.

“With decarbonisation plans in place and investments flowing into emission reduction projects at a number of our mills, there is a lot of

momentum across the company. Now with validated science-based emission reduction targets, we have even more precision on our longerterm 2030 targets. Additionally, through our new Scope 3 target, we look forward to advancing collaboration with our value chain partners focused on climate action,” says Dr Wessels.

“This news is also accelerating our efforts to build a thriving world by unlocking the renewable power of wood fibre. Our responsible land and forestry management practices along with our pulp, paper and biomaterials provide value-adding solutions in a carbon-constrained world. Our Research and Development teams are showing that carboncutting breakthroughs in paper science are within reach today and getting even better tomorrow,” she adds.

ACTIONING COMMITMENTS

Our SBTi approved targets are part of Sappi’s much larger global and regional commitments to the United Nations Sustainable Development Goals (SDGs). In our South African operations, we have prioritised nine of these SDGs and we are making significant strides in also attaining these objectives. In this regard, we are taking SDG17: Partnerships for the Goals to heart as we recognise that by collaborating on a broad range of issues, we can achieve much more than when working alone. We collaborate with a wide range of stakeholders who share our vision of a thriving world.

A GHG inventory is the foundation for companies to understand,

At Sappi, the need to shift to a zero-carbon economy is front and centre of our decarbonisation journey and our recently validated science-based targets by the Science Based Targets initiative (SBTi1) has given us a clear roadmap to reach this objective.

Solar panels at Ngodwana Nursery.

track, report and manage their land-use emissions and removals. A comprehensive GHG inventory can assist companies to identify areas where emissions should be reduced.

Dr Jacob Crous from Sappi Forests is working with the World Resources Institute (WRI) to develop a comprehensive measurement tool. “What isn’t measured cannot be managed. The agriculture, forestry and other land use (AFOLU) sector alone accounts for approximately 25% of human-induced greenhouse gas emissions and that’s why we are collaborating with the WRI to compile a GHG inventory for companies to track their land-related emissions and removals,” says Dr Crous.

In line with our commitment to SDG7: Renewable and Clean Energy and SDG13: Climate Action, we are steadily moving away from the use of fossil fuel and reducing our greenhouse gas emissions. In addition, the researchers and scientists at Sappi Forests are finding innovative, leading-edge ways to overcome the challenges of climate change.

• In navigating the challenges of a carbon-constrained world, we are increasing our use of solar power and renewable energy.

• Currently, 43.8% of the energy we use in South Africa is renewable, mostly from own black liquor (89.9%).

• We are working to reduce our carbon footprint by making process changes, installing Best Available Technology (BAT), reducing purchased energy (electricity and fossil fuel) by increasing our use of renewable energy: an approach that ultimately results in a reduction in carbon dioxide (CO2) emissions.

We are doing this in the following ways:

• The recently commissioned Ngodwana Energy is the first biomass project under the South African government’s Renewable Energy Independent Power Producer Programme (REIPPP). The project uses biomass from Sappi’s Mpumalanga plantations to generate 25MW energy, which is being sold to the national grid, thereby expanding the percentage of renewable energy available on the grid.

• Our decarbonisation objectives at the Sappi Saiccor Mill in KwaZuluNatal were recently significantly boosted with the installation of the world’s largest sulphite recovery boiler and the conversion of the calcium cooking line to more sustainable magnesium bisulphite technology. This formed part of the R7.7-billion environmental improvement and capacity expansion project where the investment in new technology has increased production by 110 000 tons per annum (from 780 000 to 890 000 tons per annum) but the upgrades allows the Saiccor Mill to use its own wood by-products to minimise its reliance on fossil-based fuels minimising use of external power. Described as a “closed-loop system”, the application of BAT means fossil fuel emissions will be cut in half, gas emissions will be reduced significantly, water efficiency will be increased and waste-to-landfill reduced.

• Our Ngodwana Nursery requires heating for root initiation, faster rooting and improved hedge growth during winter months. Our solution was to install a solar heating system where the heat is collected during the daylight hours by 216 solar evacuated tube systems and stored in an insulated 300m3 water storage tank for reticulation to the nursery’s hot ring main pipe. Water temperatures of 70°C are achieved and the system delivers an average of 4 000kWh per day during winter months.

These are just some of the examples that have been successfully implemented, recognising the role that industry needs to fulfil to be part of the solution in responding to climate change. By reducing our greenhouse gas emissions and scaling up nature-based solutions, we are increasingly part of the solution to climate change.

REFERENCES

1 STBi is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the Worldwide Fund for Nature (WWF).

What isn’t measured cannot be managed.

Our decarbonisation objectives were significantly boosted with a R7.7-billion environmental improvement and capacity expansion project at the Sappi Saiccor Mill.

Ngodwana Energy is the first REIPPP project that uses biomass.

NCPC-SA TURNS

BY NCPC-SA

Conference stakeholders were invited to celebrate their contribution to 20 years of using resource efficient and cleaner production methodologies and tools to facilitate South Africa's just transition towards a low-carbon and climate resilient economy.

The National Cleaner Production Centre South Africa (NCPC-SA) was set up in September 2002 at the World Summit on Sustainable Development (WSSD) in partnership with the United Nations Industrial Development Organisation (UNIDO). It was established within the Council of Scientific and Industrial Research (CSIR), which still manages the Centre today.

The WSSD brought together thousands of participants, including heads of state as well as international and national representatives of business, non-governmental and religious organisations and civil society to focus the world’s attention and direct action towards promoting sustainable development globally.

One of the outcomes of the WSSD discussions was the establishment of the NCPC-SA, originally to promote cleaner production processes in local industry.

The international network of cleaner production centres was led jointly by UNIDO and United Nations Environment Programme (UNEP). Together they sought to advance sustainable industrial as well as sustainable consumption and production in developing and transitioning countries.

The National Cleaner Production Centre South Africa celebrated its 20th year anniversary at the Industrial Efficiency Conference 2022.

The NCPC-SA drives the transformation of industry to a green economy through the pursuit of excellence, empowering people, generating impact and welcoming collaboration.

2015 Industrial Symbiosis workshop in action.

Mpe-mpe Monyane, the dtic, and Mashudu Mavhetha, NCPC-SA.

The NCPC-SA became a flagship centre; a programme that would proactively engage industry to improve efficiencies, enhance sustainability and drive competitiveness. Through the application of the resource efficient and cleaner production (RECP) methodology in industry, the Centre has supported almost 2 000 companies to do business in a more efficient and sustainable manner. RECP contributes to significant resource savings with surprisingly little investment – and often quick wins can pave the way to even greater savings.

The NCPC-SA marked its 20 years with two other significant industry events. Earlier this year, the 5th biennial Industrial Efficiency Conference shared methodologies, case studies and opportunities for industry improvement. In September, almost exactly 20 years since the end of WSSD 2002, the NCPC-SA hosted a colloquium of presentations by sustainable development experts, examining the changing face of sustainability in the past two decades.

For future events visit the NCPC-SA website.

CONTINUED NATIONAL RELEVANCE

Following the initial three-year pilot phase with UNIDO, the NCPC-SA has continued as a national industry support programme funded by the Department of Trade and Industry (the dtic)

Gerhard Fourie, chief director: green industries at the dtic explains that the department’s role as the core funder of the NCPC-SA is to

SUCCESS IN NUMBERS

provide strategic direction to ensure that it is aligned to South Africa’s industrial policy and environmental objectives. One of the NCPC-SA’s focus areas, he said, has always been to contribute to the improvement of companies’ bottom lines and productivity by improving their resource and energy efficiency.

“I want to congratulate the NCPC-SA on its success during these two decades and thank it for making our job easier to get funding to support the initiative going forward. The success of the NCPC-SA has encouraged donor funding from other governments, including the UK, Switzerland, Germany and the Government of Flanders,” Fourie added.

FREE INDUSTRY TOOLS AND RESOURCES

The NCPC-SA aims to further the support South African industry and businesses through the RECP journey by providing tools on the website (tutorial videos, downloadable booklets and posters), technical advice, assessments and implementation

Resource efficient and cleaner production has assisted industrial companies to save 6 500GWh of energy, which translates into R5.3-billion in financial savings. Through these energy savings, as well as over 500 000 tons of waste diversion by industrial symbiosis, 8.1-million tons of greenhouse gas emissions have been mitigated. RECP resulted in 6 400 professionals, 320 experts and 200 local trainers trained; as well as seven occupational qualifications registered with the National Qualification Framework; and 13 original training courses developed

Matimba Makhani, quality assurance and Victor Manavhela, programme manager.

Bongani Memela, CSIR impact area manager hosted programme.

Ndivhuho Raphulu, NCPC-SA director. Julie Wells, NCPC-SA comms and marketing manager.

The NCPC-SA comms and marketing team: Kelebohile Sedieane, Constance Mokhoantle and Lesego Hlaletwa.

Threat or opportunity? HYBRID WORK

Busyness

Transcending every sphere of society Blocking quiet and self-reflection Making lists only to check the box An unexamined life emerges And One Day by Judy Jenkins

This think-piece examines the structural shifts occurring in the commercial real estate sector, and to what extent they open new opportunities from a sustainability perspective.

BY LLEWELLYN VAN WYK, B. ARCH; MSC (APPLIED), URBAN ANALYST

As noted in a recent report by the International Monetary Fund (IMF), the Covid-19 crisis hit the commercial real estate (CRE) sector hard and increased uncertainty about the outlook for some of its segments due to possible structural shifts in demand1

Covid-19 containment measures affected economic activity causing global commercial property transactions and prices to slump. The IMF believes that several of these impacts on the retail, office and hotel segments may be permanent as certain activities move online while others relocate to new satellite offices at the edge of cities in what some companies refer to as a “more distributed workforce”.

STRUCTURAL TRENDS

The IMF report argues that the pandemic has exacerbated preexisting structural trends in various segments in the market. One of these segments is retail where demand for traditional brick-andmortar trade had been gradually eroding even before the pandemic, as consumers increasingly migrated toward e-commerce.

Similarly, the pandemic may also lead to persistent unfavourable effects on the demand for offices as businesses migrate toward teleworking and adopt more progressive work-from-home policies including the use of online meetings in place of large, in-person

Social Distancing in the Mission. Jennifer Potter, San Francisco [2020].

gatherings. Given these factors, the IMF argues that the CRE sector is confronted by challenges in both the near-and longer term which will create a “highly uncertain outlook”.

The Economist argues that the paper-based nature of work – the raison d’etre of the office in the first place – has no ongoing validity. Instead, they argue that the long duration of the office reflects a market failure. Developing this further, The Economist suggests that work requirements may have forced the world into a “bad equilibrium” and that the pandemic presents the opportunity for correction.

THE DOG ATE MY HOMEWORK

Brent Neiman of the University of Chicago presents three factors which prevented the shift to homeworking previously. The first relates to information – bosses simply did not know whether an office was really required or not. Now they do. Secondly, it would be difficult for individual companies to make the transition because it would have placed them out of step with their clients and suppliers. The pandemic forced everyone into the transition. Thirdly, few companies would have been prepared to make the technology investment needed to enable workers to work from home. The pandemic forced that decision on to them.

GLOBAL CRE SECTOR RESPONSES

Return to offices are developing differently in different markets. The first global report looking at the impact of the future of work on real estate and cities over the medium term found that a strong feature of the market will be a focus on flexibility demanded by both workers and corporates2. The Urban Land Institute survey found that real estate professionals overwhelmingly expect increased remote working, including more home working (96%), more remote working away from home (72%), and the greater use of satellite offices at the edge of cities (67%). Of particular interest is their statement that “the resulting ecosystem of workplaces will accelerate a blending of uses between residential, hospitality and office spaces, as well as a shift in language from ‘office’ to ‘workspace’.” From a demand point of view over half of the respondents forecast a decrease in office space needs, with a small percentage envisaging no change (37%). A clear majority (94%) expected an increasing demand for healthy building amenities and for more space for collaborative work (81%).

Employers are also taking different positions on remote workers –Bloomberg in London is reportedly offering its workers a stipend to return to office.

The pandemic, for all its ill-effects, offers a rare opportunity to rewire the world of work.

How successful these attempts will be remains uncertain. Working from home seems to suit many white-collar employees, and it is not necessarily fears related to workplace safety that is driving this. As lockdowns have eased people have returned to public places like restaurants. Data suggests that only 50% of people in Britain, Spain, Italy, Germany and France spend every workday in the office while a quarter remain at home full-time. This preference for homeworking is also not new: a paper published in 2017 in the American Economic Review found that workers were willing to accept an 8% pay cut to work from home. One of the drivers for this preference relates to a dislike for commuting – a study done in 2004 found that commuting was one of the respondents’ least enjoyable activities.

UNITED KINGDOM

It is estimated that London’s population may have dropped by 700 000 during the pandemic. A decreasing population lowers demand for a whole range of goods and services. Clearly this raised fears for London’s economy with some commentators suggesting that it could impact on potential GDP growth. There are fears that longer-term remote working trends could prove a bigger threat to the capital. If workers do not return, there will be a knock-on effect on the supply of restaurants, bars, clubs and other service providers.

A report by Bloomberg notes that more than 85% of UK finance workers no longer view the office as their main place of work. The YouGov survey of more than 500 finance executives from across the UK found that just 14% now consider their office their main workplace compared to 42% for the home and 44% for a hybrid arrangement. Despite many companies refashioning their offices and offering financial incentives to workers to return, most workers want to work under a hybrid model.

As Bloomberg notes, hybrid working arrangements are here to stay whether bosses like it or not.

USA

Responses to uncertainty around growing office vacancies caused by the work-from-home trend instigated by Covid-19 varied from the “death of the office” to building a Covid-19 resilient office space.

After the first wave of work-from-home passed in 2021, it was suburban office markets that recovered faster than downtown markets across the US, according to new data. Throughout the pandemic there was much speculation about the future of the downtown office and a suspected increase in interest in suburban

offices. This trend has come to fruition, largely on the back of health concerns but also because of shorter commute times and a desire for more living space. It will be interesting to see if this trend continues.

The Urban Land Institute predicted that the pandemic would accelerate the move toward more health-related features in facilities, suggesting that employers would place more emphasis on healthrelated issues over energy savings or aesthetic considerations when considering new office space requirements. In a similar move, the US Green Building Council (USGBC) released four new Safety-First Pilot Credits that outline sustainable best practices aligned with public health and industry guidelines relating to cleaning and disinfecting, workplace re-occupancy as well as HVAC and plumbing operations.

One of the first office buildings in the US to be engineered for Covid-19 resilience was a Chicago office building under construction at the time of the outbreak. Design strategies aimed at maximum social distancing, touch-free operation as well as air and surface sanitisation. The owners anticipated a move away from large floorplate buildings filled with multiple companies on each floor sharing bathrooms, corridors and public areas.

ASIA

Unlike major cities in the US and other western cities, workers in some of Asia’s largest cities such as Hong Kong and Singapore are returning to office in droves. Western city leaders should take note of the reason: the ample presence of public transportation, making office commute times dramatically lower than in many western cities. A less savoury reason is that more than a quarter of Asian businesses would not permit remote working anyway 3

SOUTH AFRICA

All indications are that the South African CRE sector is not immune from changes to the workplace. Over half of respondents to a poll conducted by BusinessTech in June 2022 indicated that they are still working from home.

In an article appropriately titled “Big shift coming for South Africa’s richest square mile as more people work from home”, the writer points to the conversion of Barlow Park into a megacity with 4 100 residential units. The development is cited to include an urban forest, a business centre, a 5 500m2 retail space, a medical centre, a recreation centre, restaurants and a school. In short, this sounds like a small town.

As Sarah-Jane Meyer notes, the conversion of commercial spaces into residential units is nothing new in South Africa. Malusi Mthuli, KZN provincial head of FNB Commercial Property Finance, argues that one of the driving forces behind this conversion is the continual offloading of office stock by property funds. These funds, he suggests, consider office stock less viable from a returns point of view vis-à-vis other property sectors. This has provided new building stock into the residential sector where there is demand for well-located residential properties that suit the evolving lifestyles of the working population.

Work requirements may have forced the world into a “bad equilibrium”. The pandemic presents the opportunity for correction.

Not surprisingly, this shift to work from home has impacted on the financial results of Growthpoint Properties, South Africa’s largest domestic office landlord with 161 properties. Growthpoint notes that this shift in work locations is creating uncertainty about future space requirements although they suggest that the trend may reverse as new hybrid work models develop. Growthpoint notes that technology has made it easier for people to work at home, although this is not without its own challenges specifically energy security and social isolation. Looking forward they anticipate changes to the office environment especially regarding traditional high parking ratios which may be able to be more effectively repurposed in the future.

This repurposing is providing new solutions for traditional parking challenges, such as the sale of vacant parking bays in areas where finding on-street parking is a challenge.

DISCUSSION AND FINDINGS

Responses to new work-from-home trends by developers and policymakers vary.

One of the early responses was to sanitise the workplace. Thus far this approach does not seem to have convinced workers to return to the office even as they are willing to return to other public venues.

Another response was to adopt the view expressed by the Property Council of Australia and urging, if not demanding, the return of office workers to the Central Business District (CBD) because of its support for CBD-based businesses. This approach is predicated on the dependency of CBD-based businesses on the CBD workforce for their viability. This sentiment was shared by the then government (subsequently replaced in the national elections held in 2022) who urged corporate Australia to follow the government’s lead and urge workers to return to their offices in a bid to “get our CBDs humming again” as it put it4. It does not assess whether a local population residing in repurposed office buildings would not achieve the same outcome, if not more.

This view relies on the traditional notion of a CBD and, by implication, the requirement for transport systems to move people from their place of residence to a centralised place of work.

The sustainability of this approach is questioned as the workfrom-home pendulum seems to be swinging toward a hybrid work model. However, numerous commentators believe that the hybrid work model will remain and that the conversion of office space to residential is one likely to continue.

Bear in mind that this only refers to white-collar workers in upmarket office buildings. Statistics South Africa’s latest unemployment data shows that professional employees are more likely to be working from home than any other worker group in the country. There is very little data on what is happening to B- and C-Grade office space and even less on trends in less developed economies. So, this debate is happening between privileged workers.

Nonetheless, as The Economist argues, the pandemic, for all its illeffects, offers a rare opportunity to rewire the world of work. The critical component in this statement is that the world of work has dominated our city form for decades, and consequently a systemic change to how that world is perceived, may well facilitate a new urban form. The Urban Land Institute’s view that “the resulting ecosystem of workplaces will accelerate a blending of uses between residential, hospitality and office spaces– whether this is the 10-minute city, or New Urbanism – holds much promise in terms of finally restructuring a resilient and sustainable urban environment.

Let’s hope that planners and planning authorities take note and build this into their consenting requirements going forward.

REFERENCES

1

3: Commercial Real Estate. April 2021.

2 Urban Land Institute 2022. “The Future of Work 2020.” Urban Land Institute and Ernest and Young.

3 CBRE 2022. Spring 2022 Asia Pacific Occupier Survey. CBRE Group, US.

4 Boucher, D. 2020. “CBD workers slowly return to office.” In The Urban Developer. September 11, 2020.

Hybrid working arrangements are here to stay whether bosses like it or not.

Deghi, A., Fendoglu, S., Gan, Z., Khadarina, O., Mok, J., and Tsuruga, T. 2021. “Financial stability risks during the Covid-19 crisis and beyond.” IMF: Global Financial Stability Report: Pre-empting A Legacy of Vulnerabilities: Chapter

TESTING FOR MICROPLASTICS AT THE NATIONAL METROLOGY INSTITUTE OF SOUTH AFRICA (NMISA)

Plastic features so prominently in our daily activities and the undesirable results of its use, especially on the environment and human health, is often not an immediate consideration. One of the dangers of this material is its debris – microplastics.

Microplastics are defined as small pieces of plastic that measure smaller than 5 mm. These plastic pieces are found in the environment as fibres, fragments, pellets and or beads. These are the result of three major causes; when large bits of plastic break down into tiny pieces unclear to the eye, when fibres are shed from fabrics during use and washing and form microbeads. The third are types of microplastic specific to cosmetics and household cleaners.

Items in our daily lives that contain microplastics include products that contain microbeads such as some toothpaste, face and body scrubs, shampoo and or conditioners, laundry, dishwasher pods/ tablets, etc. Scientific research has also found microplastics in food and substances such as salt, seafood, honey, beer, and water, to name a few.

The manufacturing industry is generally one of the biggest exacerbators of plastic pollution globally. Through the continued production and usage of microbeads, particularly in the cosmetic industry, the intentionally added microplastics/microbeads contribute to microplastic pollution. After use, these microbeads are washed down the drain and end up in the water treatment plants and then in our waterways. To end this, some

countries have already banned the usage of microbeads in cosmetics. The manufacturing of single-use plastic items such as food packaging is also considered one of the most visible contributors to microplastic pollution as the majority of these plastic items are not degradable.

Microplastics are also a result of plastic littering in the environment. Plenty of plastic items that are produced are designed for single use and thrown away almost immediately. Most of these items are not biodegradable, so with time, they break down into smaller fragments.

The exact impact of microplastics on human health has not been fully determined, despite the call from the World Health Organization (WHO) for the rigorous scientific

exploration of this. The WHO has called for a further assessment of microplastics in the environment and their potential impact on human health and has highlighted the need for further research to obtain a more accurate assessment of exposure to microplastics. These include developing standard methods for measuring microplastic particles in water; more studies on the sources and occurrence of microplastics in freshwater; and the efficacy of different treatment processes.

Microplastics have become a food contaminant of growing concern and scientific data is the cornerstone of any discussions and debates around legislation and regulations of the use of intentionally added microplastics in consumer or professional use products. Scientific data may have a far-reaching effect on marine trade in the future.

include pyrolysis gas chromatography-mass spectrometry, thermal analysis, Fourier transform infrared spectroscopy, scanning electron microscopy and particle size distribution. Method development work is currently underway for microplastics in fish and water samples, and in the next two years, the institute will expand its capabilities to other food matrices.

To date, there is very limited information on the effects of microplastics on the environment in South Africa. As with many emerging pollutants, the measurement methodologies and state of the art equipment are not readily available either in routine laboratories or relevant research facilities. However, NMISA has initiated a study to determine the status of microplastic measurements in South Africa and determine areas of concern or where no capability currently exists. Method development in this area will likely become critical and routine to ensure that South Africa meets export requirements for seafood, with the changing regulatory environment internationally.

In future, NMISA aims to support the industry by offering comprehensive microplastic measurement services.

The Department of Trade, Industry and Competition (the dtic) has launched the Aquaculture Development and Enhancement Programme aimed at stimulating investment in the aquaculture sector. The National Metrology Institute of South Africa (NMISA), in support of governments’ key priorities, is implementing a project relating to the expansion of export opportunities for the fish sector under the African Continental Free Trade Area (AfCFTA).

As part of our ongoing efforts in addressing the challenge of microplastics in South Africa, NMISA, is currently developing analytical capabilities for microplastic testing in food matrices. Analytical techniques

For additional information, to collaborate on this initiative, or to start ensuring that your company considers its microplastic residue when manufacturing before legislation is promulgated, contact Dr Nontete Nhlapo on +27 12 947 2833 or via email at organic@nmisa.org

Read more about NMISA at www.nmisa.org or follow us on:

Facebook: NMISouthAfrica

Twitter: @NMISouthAfrica

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YouTube: National Metrology Institute of South Africa

ENERGY LIBERALISATION

to raise SA’s energy availability levels

Having exceeded 150 days of loadshedding in 2022, South Africa’s economy continues to feel the strain of the energy availability factor, which is not able to reach the required levels. SAWEA acknowledges that while the problem is simple, developing solutions for the energy crisis is complex and requires the right expertise for planning.

BY SAWEA

At the heart of the plan, the South African Wind Energy Association (SAWEA) is advocating for “Energy Liberalisation” underpinned by several mechanisms. Specifically Demand Side Management where new generation capacity for own use, must be considered as a mechanism to reduce demand and increase supply.

“We believe that while the Electricity Regulation Act amendment bill is the right policy intervention to support a liberalised energy market in South Africa, the removal of the license requirement for own use projects will not have the desired outcomes if not implemented efficiently and effectively,” explains Niveshen Govender, CEO of SAWEA.

He adds, “Policy alone is not enough, we must manage and improve the bureaucracy of the process required to build new generation and renewable energy capacities specifically.”

The Association believes that there needs to be more and better coordination between stakeholders and that political will and regulatory frameworks should be forthcoming. The industry is calling for a clear,

transparent and documented process to guide a number of blockages to delivering new generation.

“Our industry needs grid connection application, and wheeling conditions need to be standardised and finalised nationwide; as well as permitting requirements and processes that are accessible and practical,” says Govender.

Acknowledging that energy solutions will largely be funded privately, typical investor conditions should be encouraged to create investor confidence.

Private Power Purchase Agreements are new territory for South African IPPs and at this point still represent a fairly high risk for the producers, with contention around risk allocation between parties.

“Once we have the first few projects over the line, the industry will be able to iron out several issues at play, but as it stands the industry needs to unpack a number of requirements for the private off-take market to achieve bankability,” concludes Govender.

The industry is calling for a clear, transparent and documented process to guide a number of blockages to delivering new generation.

Niveshen Govender

Golden Valley Wind Energy Farm.

By the people, FOR THE PEOPLE

Direct 2 The People is at the cutting edge of green tech where we deliver sustainable, mixed-use, closed-loop, agri-living communities to developing countries throughout the world.

Our housing communities will be net-zero carbon, passive homes using zero energy from the grid. Such buildings will be light on the land, replacing concrete foundations with composite ground screws. Not having to rely on the setting for the concrete, the ground screw can immediately be loaded with our fibre glass reinforced pultrusion (FRP) composite lightweight, high-strength frame.

The EEZI frame not only gives the structure the strength to withstand hurricanes, earthquakes and tornados but allows the fully complete modular floor, wall and roof to be inserted into the frame onsite. This eliminates the use of heavy equipment and cranes on site.

The EEZI hemp floor, wall and roof, all external and internal cladding, electrical wiring and conduits for fibre optic, television cables and airflow throughout the structure are assembled at the factory.

The factory-finished structure is inserted into the EEZI lightweight composite frame which adds extreme rigidity and strength to it. This frame is designed fit-for-purpose for such building for the specific site where it is constructed. The hemp walling system is a net-zero carbon modular walling system which meets the requirements set by the passive building standards.

The EEZI thermal modular alternative building system excels in its thermal and acoustic performances as well as fire rating. This walling system is alive, breathes and absorbs CO2 gas emissions over the entire life of such building. Hemp walling systems have been in existence for hundreds of years and have stood the test of time.

In addition to these achievements, the buildings are 100% airtight, thus ensuring that we eliminate any airflow containing water vapour which causes rot and mould.

This unique alternative building system achieves these characteristics as the system uses no traditional building elements. These are sand, stone, concrete, cement, bricks, blocks, steel, aluminium, wood, glass, wooden trusses, cement roof tiles and gypsum ceilings.

All modular separate toilets, showers, baths and vanity glass are delivered to site completed in their predetermined position in the

PEOPLE NOT POLITICS POLLUTION POLL

building. Due to the factory finished floor, wall, roof and pods, a 65m² house can be completed in one day on site.

This ground-breaking alternative building system is combined with our Direct Art of Living model, which includes an economic methodology that can contribute to the communities’ wellbeing through the Direct 2 The People community way of life, allowing for the following savings in capital and living costs:

• Capital cost of buildings reduced by 30%

• Energy and electrical cost reduced by 75%

• Water use reduced by 64%

The biggest saving will not only be the exclusion of rampant inflation but also in lowering the cost of living to between 40% and 60%.

This community agri-living model is the future of smart living, where production takes place at the place of consumption by the local community resulting in food being produced “by the people for the people”.

Direct 2 The People believes that the Fourth Industrial Revolution (4IR) will see the uprising of the people, where the people’s voices will be heard.

Companies and shareholders polluting the planet will be judged by people rather than politics. Those on the list of polluters will be boycotted and immediately feel the financial losses of polluting. We are now able to track all polluters in a real-time basis, making it possible to reveal this information to the discerning public so they can decide whether to support and purchase goods from polluters. Certification standards will regulate products and goods in terms of pollution.

For this very reason, Direct 2 The People is launching the EEZI thermal modular composite building system in Q1 of 2023.

Due to the factory finished floor, wall, roof and pods, a 65m² house can be completed in one day on site.

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