Monday, 6 July 2015

The transition to a low-carbon economy in South Africa: using the decarbonisation of the German economy as a case study.

Historically and currently South Africa’s economy is carbon intensive and has been driven by resource intensive industries which include mineral extraction and petroleum and chemicals processing due to the large mineral reserves available.  These industries were and still are supported and incentivized by government through the supply of relatively cheap electricity generated from the extensive coal reserves (Brent et al., 2002).  Since the 1990’s the secondary (manufacturing) and tertiary (services, transport) economic sectors have surpassed these resource intensive industries in total contribution to GDP, however the electricity and fuel supplied to these sectors remains very carbon intensive.  Thus even with the transition to a value adding secondary and tertiary economy, these sectors remain very carbon intensive.

The transition to a low carbon economy forms part of the South African National Development Plan – Vision 2030, the National Strategy for Sustainable Development and Action Plan (2014) and the New Growth Path (2020).  Furthermore the Green Economy Accord was agreed to by the government, labour unions, civil society and the private sector with the aim of creating 300 000 new work opportunities in the green economy by 2020 (Department of Environmental Affairs and Energy, 2013).  This green economy approach supports growth and low-carbon development which South Africa has included in the country’s future development plans to foster an inclusive and sustainable economy.

The four critical economic sectors identified for investment in this South African Green Economy Model (SAGEM) are:

  • Natural resource management
  • Agriculture
  • Transport and
  • Energy

So is this transition to a low-carbon economy already happening before any formal investment?  Figure 1 shows the relationship between CPI linked GDP and CO2 emissions (Real GDP/MtCO2) each year since 1990.  What is clear is that the carbon intensity of the South African economy peaked around 1995; has decreased slowly since then and is projected to continue a downward trend as seen in Figure 1. 

 

Figure 1: Real GDP to CO2 emissions relationship for South Africa (“IEA - Report”, n.d.)

From further investigation, one of the main reasons for the downward trend is due to real GDP more than doubling (108% increase) in the period 1990 – 2012 (“Statistics South Africa”, n.d.).  Thus by fitting the curve in Figure 1 there has been a decline/decoupling of carbon intensity and economic growth which has mainly been due to the increasing GDP as the CO2 emissions in millions of tons has increased by 48% from 1990 - 2012.  The main contributors to this increase being energy production, industrial processes and AFOLU (Agriculture, Forestry and Other Land Use) and Waste (Letete, Guma & Marquard, 2010).  One can argue that with CO2 emissions increasing, this ideal transition is not happening and that a true or absolute decoupling has not taken place.  However, the economy has been growing without carbon emissions increasing at the same rate which does indicate a gradual de-coupling of GDP and carbon emissions.  However, this is not sustainable growth path.

To accelerate this transition to a sustainable low carbon economy, strategic objectives have been put in place based on the SAGEM modelling exercise in 2013 which followed a system dynamic modelling approach (Department of Environmental Affairs and Energy, 2013):

·         Natural Resource Management

This objective includes investment in land restoration including virgin land rehabilitation and alien vegetation eradication will increase water availability and not reduce land available for agriculture.  This will in turn create more jobs in this sector especially in restoration of water ecosystem services and biomass for energy (from alien vegetation).

·         Agriculture

Investments in conservation agriculture and the use of organic fertilizer which has the benefit of increased crop yield with minimal impact on ecosystems and water sources is encouraged.

·         Transport

This sector requires investments in improving energy efficiency in transport systems (improved public and goods transport systems) which translates to less energy consumption and decreasing the carbon intensity of fuel production (Sasol, 2014). 

·         Energy demand and supply

The modelling exercise recommends a 2% of GDP investment into all industry sectors to increase energy efficiency and thus reduce overall demand going forward.  Also the diversification of the energy mix to increase renewable energy sources to 33% of total mix by 2030.

·         National development

With the increase of investment in the transition to a low carbon economy in all 4 sectors the energy and agricultural sectors will show the largest job growth which is the first priority of the country.  Other benefits are the much needed sustainable and long term economic growth and lowering of GHG (Green House Gas) emissions.
 

Germany is a prime example of an ongoing successful transition to a low carbon economy.    The focus up until now has been on the energy sector as this contributes more than 80% of total GHG emissions (United Nations Climate Change Secretariat, 2012).




Figure 2: Green House Gas emissions by sector in Germany (excluding Land Use, Land Use Change and Forestry) (United Nations Climate Change Secretariat, 2012)

 In order to achieve this low carbon growth path a transformation of the energy industry to have renewables as the primary energy source by 2050 was key.  The concept was put together in 2010 (Energy Concept) and specific targets were put in place with a monitoring process and financing plan called the ‘Energiewende’ (transition of the energy system) (“German Missions in the United States - Climate and Energy Policy”, n.d.).  The main actions and objectives of this initiative are:

·         Renewable energies as a cornerstone of future energy supply:

·         Energy efficiency as the key factor

·         An efficient grid infrastructure for electricity and integration of renewables

·         Energy upgrades for existing buildings and energy-efficient new buildings

·         Energy for transport system transformation

·         Energy research towards innovation and new technologies

·         Energy supply in the European and international context

·         Acceptance and transparency

Since the start of the ‘Energiewende’ initiative which is a 40 year project, the share of renewables in electricity supply reached 25 percent in 2012 and is still growing. In only the last 10 years, renewable energy in the electricity sector has quadrupled and after one year from the start of the ‘Energiewende’ initiative, the grid system and overall power capacity has coped well with the system shift and the shut-down of 8 nuclear power plants. Future plans include the development of new and smart grids and storage systems.

In Figure 2, the GDP to CO2 emissions relationship of both South Africa and Germany also indicates a downward trend for Germany which should accelerate further with the ‘Energiewende’ initiative.













 


Figure 3: GDP to CO2 emissions relationship for Germany and South Africa (“IEA - Report”, n.d.)

The big question remains, in the aftermath of the green economy modelling exercise for South Africa, whether there has been any monitoring of progress and has any progress been made?  The OECD Economic Survey report for South Africa in 2013 found that the policy framework for addressing climate change and water scarcity is sound but the implementation and eventual monitoring of these policies has been slow due to inadequate administrative capacity (OECD, 2013).   Compared to global pricing, the prices for energy and water do not cover total costs or reflect environmental externalities.  As part of the National Development Plan (NDP) South Africa will need to start monitoring the environmental outcomes, especially water usage and national GHG emissions to build up a database for benchmarks and to inform further policy decisions which is the process followed by the ‘Energiewinde’ initiative for the energy sector in Germany.  A further recommendation is that SA can start monitoring a limited set of headline indicators as set out in the OECD’s Green Growth Indicators (OECD, n.d.).

The main recommendations put forward by the OECD Economic Survey Report 2013 to accelerate the decoupling of economic growth and GHG emissions are as follows:

  • Reduce implicit and explicit subsidies for energy and coal consumption, and use other instruments, such as cash transfers or supply vouchers, for protecting the poor;
  • In designing climate change mitigation policies, favour broad and easy-to-implement instruments with limited demands on administrative capacity, such as a simple carbon tax;
  • Apply the carbon tax as broadly as possible, including the electricity sector;
  • Regularly revisit and revise the Integrated Resource Plan (IRP) to take into account new information about technologies, costs and demand.
  • Increase the emphasis on energy efficiency in construction and industry and;
  • Give responsibility for monitoring progress on the various objectives relating to climate change to a single institution, making that institution accountable to parliament via regular reporting.

Once the monitoring body has been put in place the implementation of these policies with feedback mechanisms can build the foundation to a faster decoupling of economic growth and carbon emissions in South Africa.  Up until then no progress will be evident.

 

References


Brent, A.C., Rohwer, M.B., Friedrich, E. & Blottnitz, H. Von. 2002. Status of life cycle assessment and engineering research in South Africa. The International Journal of Life Cycle Assessment. 7(3):167–172. DOI: 10.1007/BF02994051.

Department of Environmental Affairs and Energy. 2013. South African Green Economy Modelling Report (SAGEM). DOI: 10.1038/320390c0.

German Missions in the United States - Climate and Energy Policy. n.d. Available: http://www.germany.info/Vertretung/usa/en/06__Foreign__Policy__State/02__Foreign__Policy/05__KeyPoints/ClimateEnergy__Key.html [2015, July 06].

IEA - Report. n.d. Available: http://www.iea.org/statistics/statisticssearch/report/?&country=SOUTHAFRIC&year=2012&product=Indicators [2015, May 12].

Letete, T., Guma, M. & Marquard, A. 2010. Information on climate change in South Africa : greenhouse gas emissions and mitigation options.

OECD. 2013. OECD Economic Surveys - South Africa. DOI: 10.1787/eco_surveys-jpn-2009-en.

OECD. n.d. Towards Green Growth: Monitoring Progress - OECD Indicators. DOI: 10.1787/9789264111318-en.

Sasol. 2014. Climate Change and Energy Insecurity. DOI: 10.1680/ensu.2011.164.2.161.

Statistics South Africa. n.d. Available: http://www.statssa.gov.za/.

United Nations Climate Change Secretariat. 2012. Summary of GHG Emissions for Germany. Available: http://unfccc.int/files/ghg_emissions_data/application/pdf/deu_ghg_profile.pdf.

  

No comments:

Post a Comment