Distinguished Cabinet colleagues
Members of Parliament
Ladies and gentlemen
Today marks an important moment forward for us, in this first ever
Green Economy Summit hosted by government. Over the next few days, you will consider a range of issues that will fill out the economic component of our green agenda and show that going green makes good commercial and economic sense.
The summit is timely because it connects three important developments:
* It comes in the wake of the Copenhagen Conference on Climate Change where South Africa and many other nations pledged to reduce carbon emissions
* It comes at the start of a recovery from the recession in which a significant part of our response has been through a massive infrastructure build programme and it is well timed to inform the new growth path being developed in government.
The global economic crisis of 2008 has led to a wider rethink across the world of appropriate the economic models, as societies grapple with climate change, joblessness and growing inequalities.
Relevant to the work of this summit, there is now broad acceptance that
150 years of industrialisation that started in Europe, based mainly on fossil driven energy, has impacted on the climate and environment in very profound ways. And there is now a growing political will to act.
In South Africa, the period prior to the recent recession saw significant and robust economic growth. But important as economic growth is to help generate the resources we need, we recognised that it has not been sufficient for attaining all our national development goals.
There are big challenges that we face, in creating enough jobs for South
African's willing and able to work, in combating poverty and inequality and in ensuring sustainable development for this and future generations.
This has led government to work on a new growth path that seeks to be more labour absorbing, less carbon intensive and that connects the significant scientific and technological capacities of the society with the challenges of jobs and economic growth.
This growth path acknowledges the constraints that we face but also identifies the opportunities available to address those constraints.
We recognise there is highly unequal access to the economy, including access to energy, transport, water and land. We have a dry climate and a high reliance on dams, with most of our water resource already subscribed.
Two thirds of exports come from energy-intensive industry. Our spatial development is characterised by sprawl and segregation. Our electricity is carbon intensive, 93 percent from coal and our liquid fuels are one third coal based.
At the same time, South Africa has many comparative advantages, some of which remain under exploited, including: a wealth of biodiversity; a world leading resource of solar energy and a long coastline with significant wind energy potential; a sophisticated scientific capacity and a history of successful development of new technologies (like Sasol's coal-to-liquid process).
We are embarking on one of the largest expansions of physical and social infrastructure undertaken in South Africa, that can provide a spur to more sustainable growth and development and we are investing more than R1 trillion in this programme over the next five years.
In the new growth path, we are identifying the sectors and parts of the economy where more jobs can be created. One of the most important elements of the new growth path is the green economy and the enormous potential that it holds for creating decent work opportunities and lifting the rate of economic growth.
It is the economic development promise of the green economy that is concentrating our efforts and has led to consensus to place this opportunity at the very centre of our new growth path.
By the green economy we refer to activities and technologies that reduce the carbon emission by unit of economic output, and it includes activities across all sectors of the economy, from mining and agriculture, construction and energy generation to manufacturing and services.
The jobs potential for the green economy is very significant. Consider the experience of countries which have invested heavily in the new green technologies.
The Chinese government has invested a large part of its fiscal stimulus package into clean energy, calculations vary between $85 billion and
$200 billion if the supporting rail and grid infrastructure is included.
According to a recent article in the New York Times, China has become the world's largest manufacturer of wind turbines, overtaking Denmark, Germany, Spain and the United States and it is already the world's largest manufacturer of solar panels.
According to the government backed Chinese renewable energy industries association, there are 1.12 million jobs in the green energy sector, rising by 100 000 annually. There is major research in China into storing carbon emissions underground. An electricity levy, mandatory requirements on the mix of renewable energy, large investments and the use of stimulus package financing is driving this dramatic growth of the industry in China.
Europe and the United States have also invested heavily in green industries as part of their stimulus packages, placing billions of euros and dollars into building their capacity and greening their economies.
According to the United Nations, Germany now has in excess of 280 000 persons in renewable energy while France expects to generate 500 000 new green jobs between now and 2020.
Brazil has led the way in green technologies with the development of its
Ethanol based bio-fuels industry that employs about half a million persons in the bio-fuels supply chain. The adoption of pro-green strategies in South Africa will bring many benefits.
Our opportunities lie in many new areas, ranging from development of new energy efficient materials, to large solar and wind energy plants, to green manufacturing operations including of car manufacturing, ecotourism and waste management.
It will also stimulate investment in more modern and efficient technologies, buildings and vehicles, while reducing the consumption of precious commodities like water, electricity and oil.
A greener economy will also improve the competitiveness of the export economy, as green concerns increasingly influence standards setting and access to export markets.
Our spatial development goals can be furthered through carefully considered sitting of solar farms and wind farms. The case for the Northern Cape to serve as a key site for solar energy can help to create jobs and lead to more balanced economic development in a vulnerable province.
There is as yet no definitive target for the number of jobs that can be created in the green economy. One of the outcomes of this summit could be to develop such a target, building on the work done to date.
The Industrial Development Corporation (IDC) is now beginning to calculate the potential of the green economy. For energy generation, we have asked it to consider the number of jobs that can be created in construction, manufacturing and the operation and maintenance of the power plants.
The very preliminary results from the research, covering solar, bio fuels, small hydro and pyrolysis, suggest that up to 300 000 jobs can be created within 10 years, of which 20 000 is achievable within the next two years. These results will now be tested carefully so that the final figures will go into our formal targets. Your contributions and comments to the IDC in this summit will be very welcome.
To emphasise the potential of jobs, we should note that large numbers of green jobs will be created outside of energy generation. If South Africa is able to capture two percent of the estimated global green economy in the next five years, we can expect to create up to 400 000 jobs in energy, manufacturing, agriculture, mining and services.
These are not simply unrealised potential; we are beginning to invest in this potential using a wide tool kit that brims with instruments such as the resources of the development finance institutions, incentives and regulations from government departments, the entrepreneurship of the private sector and the tools of social dialogue.
There are some areas where the SA green economy footprint is already prominent, such as the catalytic converter industry, where we have about 15 percent of global production. This sector beneficiates locally produced platinum to help lower the carbon emissions from motor vehicles.
The Economic Development Department is working closely with the Industrial Development Corporation to help it become the "green industrialising" engine for the economy.
The IDC has budgeted R11.7 billion for investment over the next five years in green industries. This includes R8.3 billion for renewable energy generation and bio-ethanol, R1 billion for manufacturing of components related to green industries, R800 million for resource and waste management and R1.6 billion for energy management.
To date, IDC has committed R33 million for feasibility studies for several wind farms as well as solar thermal and photo-voltaic electricity generation. R800 million has been approved for bio-ethanol production, with the potential to increase to R3 billion.
A R5 million investment has been made in a project that captures methane gas from livestock manure and converts it to electricity.
In manufacturing, the IDC has supported companies in the green export market and in the assembling of photo-voltaic cells. The IDC has practical experience which we look to leverage for providing funding support for a solar water installation project.
In waste management, the IDC has approved several recycling projects across the country, as well as funding for projects manufacturing biomass pellets from wood for the export market.
In addition to the work with the IDC, the Economic Development Department is involved in efforts to strengthen the spatial economic development impact of green investment, promote competition and trade policies that support growth in the green sectors and identify ways to support small business funding in the green economy.
As we develop the policy framework for the green economy, it is necessary to ensure that the goals of greater youth employment as well as cooperatives development are promoted through the green economy.
Incentives should be customised to encourage small businesses to enter the green economy. One interesting example of a small business venture is the project to manufacture the "magic box" to conserve energy during cooking and to use the carbon credits to finance a reduction in the price of the product.
The industrial policy action plan announced by my colleague, Trade and
Industry Minister Rob Davies, contain a number of concrete measures to support green economy initiatives. These include support for the bio-fuel industry as well as measures to ensure that we develop the manufacturing capacity to supply many of the inputs and components required for the new green technologies.
This is vital if we are to realise the green jobs dividend from our investment in renewable energy and build the platform for a viable export industry that grows out of our immediate infrastructure needs.
The work of the Department of Science and Technology outlined by Minister Pandor earlier today, places high priority on innovation and tapping into the technical expertise available in South Africa to develop cutting-edge technologies to drive the green economy.
One of the key challenges we face is research and development of carbon capture and carbon reduction technologies. With our current large coal exposure and investment, it is a smart thing to do.
The Department of Public Works is planning a significant retrofit programme on public buildings to reduce the energy requirements and leads government work to introduce new building regulations to mandate certain energy saving measures, including solar water geysers in new houses that are being built.
It is also placing environmental components into the expanded public works programmes, to repair the environment and create jobs in the process.
The Department of Environmental Affairs is developing our national framework around climate change, the nation's international obligations and the long term strategy for the mitigation of climate change.
The Department of Energy leads the work on the integrated resource planning and matching the country's long term energy needs with a sustainable supply, which will include clear targets for renewable energy.
These targets will create the key market or demand for green energy that can encourage private sector investment in this area.
The Department of Higher Education is developing a new skills development strategy more focussed on the needs of the new growth path and of industrial policy action plan (IPAP), and in this context will focus on the skills needed for the green economy.
The Department of Transport is expanding the mass transport system, including through the improvement of inner-city transport and high speed rail links, all of which are intended to also reduce reliance on car usage and the consequential high carbon emissions.
The National Treasury is central to the development of sustainable financing and risk sharing models in the transition to a low carbon economy.
We are also building strong international partnerships, with efforts across government, to use the know-how and resources that are available elsewhere.
International experience has shown that the most significant immediate carbon reduction can be effected through programmes aimed at the built environment.
Yesterday, the International Labour Organisation (ILO) and the United Nations environment Programme (UNEP) co-hosted a high level workshop with the Economic Development Department and the Construction Industry Development Board (CIDB) to consider greening of the construction industry and the economic opportunities available. The workshop committed to finding ways to connect the social imperative of decent jobs with the environmental imperative of a green industry. Green jobs were described as the bridge between the social and the environmental.
Colleagues and friends
The economic development potential of the green economy is large and provides a key means to create decent work and grow the economy in a sustainable manner. To fully realise this potential, we will need to do a number of things well. My Cabinet colleagues have spoken to many of these.
First, we are in the process to finalise the percentage of renewable energy that would be mandated and financed through a commercially viable feed-in tariff.
Second, we are speeding up the industrial policy measures to develop local manufacturing capacity with a supportive skills programme.
Third, we should mobilise financial resources, local and international, to back our bold efforts to green the economy.
In this context, the proposal for a green development bond to help finance some of the proposed investments may need to be considered, as part of the broader development bond proposal. We will need to rely also on more traditional financing instruments using private capital markets, given the sheer scale of investment that will be required.
Fourth, we look to strengthen coordination between government departments and with state owned enterprises (SOEs) and DFIs to realise the opportunities. For example, the procurement conditions of Eskom for its build programme and the feed-in agreements need to be synchronised with industrial financing that is available through the IDC.
Fifth, it will be necessary to build partnerships between business and labour on our green vision and tap into their resources and capacity to realise our national goals.
The private sector must be a key driver of investment and entrepreneurship in the green economy. The potential to develop a social pact on the green economy will need to be considered, covering inter alia skills, small business development, youth employment and financing mechanisms.
Sixth, we need to ensure adequate investment in research and development in the new materials and technologies. Such investments will drive long term sustainable advantage jobs, beyond the period of the infrastructure spend.
Finally, we will need to move with speed since many countries are competing to take a slice of the green jobs that are available and scale up our efforts beyond small projects into large scale energy generation and manufacturing activities.
Government is ready to take on the defining challenge of industrialisation in the years ahead, to balance the needs of today with the needs of tomorrow and to find economic and employment opportunities in that balance. We call on the private sector and organised labour to join us in this vital venture.
I thank you.
Issued by: Department of Environmental Affairs
20 May 2010
Source: Department of Environmental Affairs (http://www.environment.gov.za/)
