On the 24th of February President Zuma set out in a key speech the importance he places on the South African Renewables initiative in helping to catalyse the country’s progress along a green growth path.
In a message to the UN High Level Advisory Panel on Global Sustainability, delivered by the Minister of International Relations and Co-operation, Ms Nkoane-Mashabane, he said:
“And here I would like to pause, and focus for a minute on an ambitious initiative which has the potential of catalysing South Africa’s transition to a greener growth path. I am referring to the South African Renewables Initiative…Our vision is that SARI will act as a vehicle to deliver an integrated industrial, technology and finaning strategy that could unlock South Africa’s green growth potential.
There are multiple challenges in bringing this initiative to fruition. In the early conceptualisation phase, we were faced with two possible approaches. We could either introduce renewables in an ad hoc way, in which it does NOT become part of the broader energy mix, in which there is NO localisation, and in which renewable energy remains on the margins of the South African economy. Or we could be bold and ambitious, and introduce renewable energy in a systematic way, as part of the energy mix, as part of the institutional matrix, and at critical scale so that it delivers industrial development along the value chain. The key challenge, which we are still working on, is to find an innovative solution to financing the incremental costs of renewables, so that we can achieve critical mass with minimum burden on the South African economy and its domestic energy consumers. Our vision is that SARI will act as a vehicle to deliver an integrated industrial, technology and financing strategy that could unlock SA’s green growth potential.
This is an ambitious programme, and I mention it only because it has raised a number of very practical challenges which I believe are not unique to South Africa, and which are central to the issues that the Panel is addressing. These are challenges which require an economic, technology, financial and institutional analysis to inform the strategic design of any programme or initiative that underpins a transition to a greener and more resource efficient economy.
- An economic analysis must ask the question: what are the economic and industrial benefits at scale, of introducing this programme? The answer must be embedded in national industrial strategy.
- A technology analysis must ask the question: what is the cost and benefit profile of different technologies over time?. And further, what is the optimal technology mix? The answer must be embedded within the national technology policy and strategy.
- A financial analysis must ask the question: what are the incremental cost implications of this technology mix,? And further, how can these costs be reduced, and how can appropriate financing be secured for all stages of the process – from pioneering to fully commercial.
- An institutional analysis must ask the question: What are the potential risks in all phases and dimensions? What institutional arrangements are needed to adjust for, and manage the risk? In addition what institutional arrangements are needed to facilitate the policy and legislative reform that may be needed – and to underpin the technology development process as well as the financial flows.
Excellencies, each of these steps has the potential to be an area of significant policy and institutional reform, and each step has to be conceptualised, developed, and brought to fruition. These are the kinds of challenges that, developing countries in particular are facing in the transition to a lower carbon and more resource efficient economy. And in my view, these are the kinds of practical questions that this Panel should be addressing, drawing on lessons learned from all parts of the world.”