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The Green Economy National Climate Change Response Strategy

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Title: The Green Economy National Climate Change Response Strategy


1
The Green EconomyNational Climate Change
Response Strategy
Status Report Briefing Note to Portfolio
Committee of Water and Environmental Affairs 07
June 2012 Cape Town
11
2
Climate Change an EDD Perspective
  • The Mandate of the Economic Development
    Department
  • Promote economic planning and co-ordination
    through economic planning proposals
  • Provide oversight and policy co-ordination of
    identified development finance institutions and
    economic regulatory bodies.
  • Contribute to the development of the Green
    Economy
  • Purpose The Green Economy provides a unique
    opportunity for South Africa to create a large
    number of sustainable jobs by, developing new
    industrial sectors, while addressing concerns
    about climate change.
  • Process The country can draw on its
    technological research and manufacturing base to
    generate new process and products, it is the
    responsibility of government to create an
    enabling environment and for citizens and
    business to do things differently
  • Outcome Combined efforts of all constituents
    will be harnessed to achieve the goals of
    creating at least 300 000 jobs in the Green
    Economy by 2020. (green economy accord, EDD,
    2011)

22

3
The Challenge to Green Economy

33

4
Managing the Transition
  • Fundamental Problem The transition to greener
    growth is economically costly for South Africa,
    because, alternatives to externality intensive
    production are few and expensive . Policy should
    focus on reducing externalities (carbon
    intensity, water use) of economic activities
    through the development and diffusion of low
    carbon technologies (carbon taxing vs tax
    credits, incentives, rebates)
  • All new policies should be assessed in terms of
    their likely impact on growth, employment and
    resource use to ensure coherence in policy design
    and implementation
  • Policies should be phased out over time to permit
    adaptation to ensure change in long-term
    behaviour without overburden on current economic
    output. (balance between jobs, economic growth
    and climate change mitigation) (The cost of going
    green vs not going green)
  • In South Africa, market-based approaches alone
    are insufficient due to unequal impact of on
    stakeholders such as the poor. Need to focus on
    complementary polices such as regulations
    standards, RD investment, labelling. -
    dissagregation

44

5
Managing the Transition
Time to phase out, time to market, time to
innovate
55

6
Key Designated Areas of GE
  • Energy generation, which pertains to the
    generation of energy from sustainable, renewable
    and/or alternative sources with low or no carbon
    emissions
  • Energy efficiency, which captures initiatives
    aimed at reducing energy consumption through
    green buildings, solar water heaters, industrial
    equipment, public transportation and others
  • Emission and pollution mitigation, relating to
    the utilisation of technologies aimed at reducing
    the harmful emissions associated with highly
    polluting industries, including air pollution
    control, electric vehicles, cleaner stoves,
    recycling, carbon capture and storage and water
    treatment and
  • Natural resource management, which covers the
    sustainable management and restoration of natural
    resources, specifically water, soil and land
    management, as well as the conservation and
    restoration of eco-systems.

66
6
7
USA Study
Dr Gordon Rands, Univ Western Illinois, 2010
77
7
8
SA Energy Mix
  • IRP2010 baseline revised balance scenario
  • Increasing Renewable contribution in energy mix
  • 3725MW for first allocation, phase 1 (2011),2,3
    (2013)
  • Wind, CSP and Co-gen are major energy players in
    the energy generation mix
  • These energy generators must satisfy the medium
    and long term job creation requirement of country
  • Technology shall follow the skills development to
    support these segments

88
9
Renewable energy and job creation
  • Job creation estimates as per IDC projects
  • (Currently under development)
  • Concentrated Solar Power
  • Permanent 0.9 job per MW
  • Construction 9.8 jobs per MW
  • Wind
  • Permanent 0.3 job per MW
  • Construction 1.4 jobs per MW
  • PV
  • Permanent 1 job per MW
  • Construction 4 jobs per MW

Total pipeline job creation expectation
5 500 jobs
  • IDCs current pipeline
  • 5 CSP
  • 19 Wind ca R 62bn
  • 18 PV (total project value)

Opportunities for job creation through
Manufacturing of components for RE
10
Potential Job Creation in RSA
  • Short term 2011 2012 - 97 000 jobs
  • Medium Term 2013-2017 - 250 000 jobs
  • Long Term 2018-2025 - 450 000 jobs
  • Natural Resources (44-51)
  • energy generation(16-26)

1010
11
Job Types
  • Energy generation prominent job contributor
  • Short term biofuels, waste-energy, co-gen
  • Medium term biomass, combustion
  • Long Term Wind, solar PV, CSP, Gasification

1111
12
Job Types
  • Less contribution by energy and resource
    efficiency
  • Natural Resource and Energy Generation are major
    contributors Sustainability
  • BRT, SWH, Green build programs support job
    expansion

1212
13
1313
14
Key Challenges
  • Regulatory Framework public sector
    co-ordination
  • Lack of readiness, timescales, uncertainty,
    investment impact (REFIT, BIOFUELS)
  • Skills shortages
  • Commitment and Readiness to ensure growing Green
    demand
  • Localization industrialisation
  • Beneficiation, local manufacture, value add,
    imports, jobs
  • Financing and investment costs
  • High capital cost of projects, REFIT, carbon
    financing, Climate of uncertainty, certainty of
    demand, fuel price, bankability, lack of
    comprehensive financing strategy
  • Sustainable resources
  • Water supply, licensing, pollution, GHG emission
    commitment, human and industrial need, recycling
  • Immature Technologies
  • Old vs new integration, gas-powered vehicles,
    marine power, carbon capture, storage sites,
  • System weaknesses
  • Ability to manage, integrate consolidate and
    direct.

1414
15
Actions
  • EDD is increasing its activity and function in
    national projects and programs under the purview
    of the NGP in activities such as,
  • SARi- South African Renewable Energy Initiative
    with dti , DOE and NT as part of the oversight
    steering committee- Lead departments are
    preparing a draft declaration being compiled with
    ODAs by COP17.
  • Strategic support for Provincial Climate
    Innovation Centre by Gauteng for SMME and green
    innovation incubation
  • Evaluation of solar farm bids as part of the bid
    team through CEF

1515
16
EDD Actions
  • Signing of national green economy accord- pledge
    by business labour, government and communities _at_
    COP17, Dec 2011.
  • Green Jobs Report commissioned by IDC and DBSA
    launched December 2011 outlining key job areas in
    green economy over next 20 years including
    renewable energy generation, energy efficiency
    activities and waste and water management
    technologies, including biofuels and
    bio-technologies as key areas.
  • Green Growth Economic Cluster Committee formed in
    Q1 2012- policy leadership- objective to
    formulate an economic green growth strategy
    including implementation of national climate
    change response strategy NT, dti, EDD, DEA

1616
17
SWH implementation
  • Project Steering Committee established (EDD, DOE,
    DTI, DPE, DST, DPW, Eskom, IDC, NT, DHET)
  • Committee discussed the following
    issues/challenges
  • Localisation plans
  • Even provincial distribution
  • Youth employment
  • Funding proposals
  • Amendments to regulations/regulatory
    interventions
  • Guarantees for installed solar heaters (in event
    installers go out of business)
  • Set-asides for cooperatives (installation)
  • Scale-up financial support for achievement of the
    target of a million solar water heaters installed
    by 2014,
  • Different financial programs for LP and HP
    systems using either contractual (combination of
    carbon tax pool and IDC support)or SOP (employed
    on REIPPP) model is being simulated for
    workability and achieving objectives.
  • Increase local production of components mandatory
    in selection process
  • IDC ESKOM partnership in CDM project with World
    Bank creating 500 jobs
  • By Dec 2011, Eskom rolled out up to 200 000 units
    with Eastern Cape leading the rollout
  • 2012/2013 approved MTEF allocation R4.7Bn to
    rollout with 80 for LP

1717
17
18
SWH workstreams

1818

19
Designation
  • Cabinet Approved minister can designate for
    special strategic support key sectors.
  • Influence state procurement programs in order to
    effect required impact
  • December 2011, first round of Designated
    (sub)sectors
  • Dti Department of Trade and Industry mandated
    area- study completed May 2012
  • Seek to apply for new round of 1 million geyser
    rollout
  • Study completed- identifies component and system
    designation potential
  • up to 11 million units as market potential

1919
19
20
Biofuels rollout
  • The Biofuels Industrial Strategy aims to
    facilitate job creation and rural development
  • Cabinet memo October 2011 in support of the dti
    and other departments.
  • Bio-ethanol - Cradock project
  • IDC partnership in pilot project
  • Phase 1 - 6000 hectares of grain sorghum and
    sugar beet (2nd phase) DRDLR land
  • Creation of in excess of 2000 jobs
  • Phase 2 double capacity and create up to 20 000
    in total
  • Implementation issues
  • Feedstock
  • Regulations on blend mix published for public
    comment
  • Agricultural vs Industrial Water Licenses
  • Strategic support/subsidy measures for growers
    and refineries
  • Fuel levy exemptions for bio-diesel be increased
    and for bio-ethanol be introduced
  • Streamlining licensing for small producers
  • However, the latest taskteam meeting in March
    2012, the DOE advised that Biofuels was put on
    hold until they had concluded industry
    consultation and a study on the impact of
    blending regulation and break-even study for the
    industry as a whole. This put a hold on the
    project and outcomes are still awaited from DOE
    on the matter. In the interim, due to apparent
    lack of clear next step from DOE, the IDC has
    suspended its funding for the project.

2020
20
21
Biofuels rollout
2121
21
22
Bio- diesel
  • The Economic Development Department has assisted
    Phyto Energy (Pty) Ltd develop a biofuels
    project in the Eastern Cape. 2011- German
    Technology, biodiesel from phytoplasm
  • The rationale for EDD s involvement in the
    project is that the project is expected to
    stimulate the rural economy and SMME development
    as small holder farmers are expected to supply
    feedstock for the project
  • Working with DRDLR small scale co-operative
    feedstock farming

2222

23
IDC investment in the Green Economy
  • The IDC has aligned its sectorial focus areas
    with the requirements of IPAP2 and the NGP.
  • The IDC will use a value chain approach with the
    emphasis on industrial development (including
    localization) and job creation.
  • The IDCs role in growing the Green Economy would
    be through investments in
  • clean production,
  • clean energy,
  • energy efficiency,
  • demand side management interventions,
  • emission and pollution mitigation,
  • waste reduction and
  • bio fuels.
  • IDC has created an enabling environment by
    securing cheaper funding, with long debt tenures
    to act as a catalyst in the Energy Efficiency
    Markets.
  • Green Energy Efficiency Fund was launched
    recently that offers the market debt at
    concessionary rates with debt tenures up to 15
    years by partnering with the German DFI KfW.
  • IDC has structured the repayment of these loans
    to effectively match the savings profile of the
    technology installed. eg. On a Roof Top PV the
    savings over 15 years are equivalent to the debt
    service repayment and hence the facility of 15
    years is then proposed. Hence not an out of
    pocket expense for the company.

2323
24
Developing Renewable Energy in South Africa
  • IDC has pro-actively sourced and developed
    projects for Renewable Energy
  • Significant pipeline of projects that are bidding
    under the Renewable Energy Independent Power
    Purchase Procurement Program (REIPPPP) introduced
    by by the DOE on a capped tariff basis.
  • The Bid structure effectively was on a
    competitive bidding process whereby a TARIFF CAP
    was set for each technology. A total of 3 725MW
    will be available under the program with 5
    bidding rounds.
  • IDCs portfolio of projects for round 1 (4
    November) of this process was in excess of 800MW
    and ca R27 Billion project value.

25
REIPP Procurement Programme RfP Highlights
  • Up to 5 Phased Bid process pending subscription
    by Bidders of total allocation of 3 725MW spread
    across renewable energy technologies
  • First phase submission November 2011
    announcement December 2011, June 2012- Financial
    closure 1 416MW - R46Bn
  • Second phase submission early Mar 2012,
    announcement of preferred bidders May 2012
    1043.9MW - R28Bn
  • Third Phase Expected August 2012 - 1 165.9 MW
  • 100MW from 3 725W set aside for small lt5MW
    projects
  • Key qualification criteria Project Structure,
    Legal, Land, Financial, Environmental, Technical,
    Economic Development, Bid Guarantee
  • Proven technology - equipment must have been
    installed on two previous projects
  • Track record of contractor - must have
    constructed two similar projects
  • A bid bond of R100k/MW must be provided with the
    bid, increasing to R200k/MW when the Project is
    selected as preferred bidder
  • If Qualification is met the bid will be evaluated
    mainly against Price (70) and Economic
    Development (30)
  • Price not to exceed price caps for each
    technology
  • Economic development matrix with focus on Jobs,
    local content, community and skills development.

26
Green Economy Catalyst through investment in RE
by IDC
IDC participation summary (preferred bidder
status round 12)
Total community funding approved R1,5bn in all
projects
27
Thank you/Siyabonga!
2727
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