Green Stimulus Injection – A post-COVID 19 Solution – By Barbara Creecy
Under the rubric of #BuildBackBetter, governments are grappling with how long-term economic recovery promotes a more sustainable growth path that addresses the inherent contradictions and constraints to human development…
…this type of economic recovery can unlock enormous potential and investment opportunities for both developed and developing countries. It can enable economies to recover and grow; successfully service their national debts; and carry out governmental responsibilities to citizens. This can be done in a way that sustains both the natural environment as well as human health and well-being.
By Barbara Creecy, (ANC NEC Member and Minister of Environment)
Governments around the world are grappling with how to support their health systems to effectively manage the Covid 19 pandemic.
As the number of those affected rises daily and measures needed to manage it cause severe economic distress a new problem confronts policy makers. How can they finance short term economic relief and stimulus packages and develop long term recovery plans that also promote a more sustainable and inclusive growth path for all?
We in South Africa are confronted by the same challenges and choices. We too must balance how we save both lives and livelihoods. The pre-Covid constraints on our economy are well known: economic exclusion; unemployment particularly amongst young people; inequality; a concentrated economy with high barriers to entry for SMEs; import dependency; energy insecurity and the uncompetitive nature of many of our production processes.
The Covid 19 pandemic and the economic recession accompanying it will intensify many of these factors. The human cost will also deepen.
While facing these bleak prospects, it is crucial to also examine how the present moment provides us with unique opportunities to re-imagine our economy and our society and find ways to address our deep-seated problems. We must ask ourselves how to design our economic recovery so as to resolve some of the challenges we have not been able to overcome since 1994. A key means to achieve this is to define the questions we must ask that will help to identify the priority sectors that can drive our recovery.
These questions include: –
- How can our recovery ensure that those historically excluded from the economy find new areas for investment, ownership and employment?
- How can we ensure that those trapped in low paying work do not bear a disproportionate burden in a recessionary environment?
- How we can foster innovation and South African-owned intellectual property (IP)?;
- How can young people can benefit from new skills sets?
- How do we promote local manufacturing and decent jobs?
- How we can make our economy and our production processes more competitive so we are able to open up markets for our products particularly across the continent?
- Work out how to finance our recovery at lower interest rates that give us a better chance of repaying our debt so that it is not a burden to future generations and an inhibitor to future government spending and investment?
Around the world many societies are beginning to find similar answers to these questions.
Under the rubric of #BuildBackBetter, Governments are grappling with how long-term economic recovery promotes a more sustainable growth path that addresses the inherent contradictions and constraints to human development.
This is an important issue in our context, as a developing country that is highly vulnerable to climate related risks that include sustained drought and extreme weather events. As well as the fact that we are a country in which millions of our poorest people rely on natural resources for their livelihoods.
It is also relevant in the context of the growing worldwide push to reduce carbon emissions in order to save the planet from dangerous and irreversible climate effects. But all is not yet lost. There is still time to take decisive action to mitigate the worst impacts of climate change and to adapt to a warmer climate.
This year the Paris Agreement that falls under the United Nations Framework Convention on Climate Change (UNFCCC) comes fully into force. Our country is a signatory to the Paris Agreement and together with other signatories we are reviewing our contributions to reducing our emissions and building our resilience to the impacts of climate change, through our Nationally Determined Contribution.
This provides another opportunity for us to integrate our broader economic recovery plan with what we need to do to achieve a sustainable economy and future.
The recent Petersburg Climate Dialogue convened via video link on 27 and 28 April 2020 and attended by participants from across the world, focused on how economic recovery plans can put countries on a more sustainable and climate resilient growth path post COVID 19.
Countries as diverse as those of the European Union, India, China, Rwanda and Gabon all used the opportunity to announce investments in low carbon development, renewable energy and green technology to drive economic growth.
Major developed economies, such as the European Union (EU) bloc are speaking publicly of long-term economic recovery packages that embrace and support transitions to low carbon and sustainable economies.
In addition to this, China, India and Chile have also publicly announced commitments to promote low-carbon development and unlock investment into renewable energy to drive economic growth.
In Africa, a number of nations have embraced a greener and more sustainable economic recovery. Gabon, which is heavily dependent on its oil industry, has begun to diversify its economy and focus on green alternatives. Its government has sought to develop and promote the country’s agricultural potential, and is also expanding the country’s hydroelectric generation capacity.[1] It has also secured $150 million from the Norwegian government to battle deforestation and illegal logging, and in turn reduce greenhouse emissions.[2]
Rwanda is at the forefront of progressive climate policies and banned non-biodegradable plastic bags, and implemented sustainable agroforestry policies. It established a Green Fund that invests in public and private projects supporting climate resilience and which funds sustainable energy solutions, green housing and waste management.[3] It raised $130 million for strategic climate change investments, and created more than 137 500 green jobs in Rwanda.
To meet the challenges of providing electricity for a massive population and growing economy, India has embarked on a renewable energy campaign that aims to increase the share of renewable energy in the national energy mix to 40% by 2030.[4]
A supportive policy environment and government support for large-scale solar and wind energy projects has made India an attractive option for investors, and the country has marketed itself as a renewable energy hub.
It is acknowledged worldwide that this type of economic recovery can unlock enormous potential and investment opportunities for both developed and developing countries. It can enable economies to recover and grow; successfully service their national debts; and carry out governmental responsibilities to citizens. This can be done in a way that sustains both the natural environment and human health and well-being.
For South Africa, embracing a “green stimulus” as part of our overall economic recovery plan would have similar advantages. There are four key strategic advantages to including a “Green” and sustainable element in our overall economic recovery package.
First and foremost it has a positive impact on job creation in new industries which offer potential for the creation of new enterprises using new technologies. Secondly, dedicated international “green funds” could fund these new industries. Thirdly, green bonds have been shown to be cheaper than traditional vanilla bonds. And, finally, investment in green and sustainable solutions offers us opportunities to promote our long term economic competitiveness and climate resilience.
Many economic sectors and activities can slot into a green recovery. The following are some of these.
The first area is the retrofitting of public and private buildings with measures that improve energy and water efficiency. Solar geysers and rain-water harvesting infrastructure has already been rolled out in some parts of the country. There is a potential for much more. This will both improve water resilience and improve the quality of life of the poor.
Extending this to schools, clinics and other public buildings would offer huge potential for the establishment of a sustainable value chain. Its advantages would include the potential to establish a South African based solar geyser manufacturing value chain. Likewise, manufacturing water tanks from re-cycled plastic, together with the associated tanks and gutter infrastructure would provide an important market for reclaimed plastics while protecting the environment.
Retrofitting is also labor intensive and provides significant possibilities for micro enterprise participation and for skills development of unemployed youth.
A second area for innovation is green hydrogen in combination with platinum fuel cells and battery storage technology. South Africa is the world’s largest platinum producer. We have a long- term commitment to mineral beneficiation. This is an obvious area where we should scale up our existing R+D and production initiatives.
A third area for localisation is the public transport sector. The CSIR has already developed a platinum fuel cell for use in buses. Fleet renewal and expansion for both municipal and BRT buses can provide a market for this proudly SA product and dramatically reduce carbon gases from our public transport system.
Several coal- fired power stations in Mpumalanga are due to be retired over the next 7 years as they reach the end of their useful lives. Many of these are the only source of livelihoods in the local communities. Retrofitting these power stations with renewable energy generation alternatives could save jobs, create livelihoods and ensure important grid infrastructure is revitalized. Research on the appropriateness of these geographical sites for solar energy generation has already been concluded and the feasibility studies are positive. The land surrounding this infrastructure could also be used for a range of productive purposes, including agriculture.
We are a water scarce country. We have referred to the importance of water harvesting in public institutions and private dwellings. Improved catchment management can yield up to six percent more water flowing in our rivers on a continuous basis. Our working for water programmes already provide 35 000 job opportunities in remote rural areas where other forms of employment are hard to come by.
Effective cross government co-ordination of water management programmes could potentially double employment opportunities and result in better water management in our strategic water catchments. A scaled up War on Leaks programme could provide tens of thousands of jobs and save huge quantities of non-revenue water with a huge savings for the fiscus.
Across the agricultural sector climate change risks more than 3 million livelihoods in the medium term. Scaling our agricultural climate resilience programmes and land use management could save jobs, ensure household food security and deliver more prosperous livelihoods to rural families. In addition, expanded introduction of drought resilient crop species, drip irrigation, soil erosion management, grazing management will all yield results for rural communities.
Another important sector is the wild-life or biodiversity economy which supports over 400 000 jobs in our country. It has been hard hit by the pandemic due to its reliance on tourism for both consumptive and non-consumptive activities.
While wildlife management and conservation are essential services, but now much of this sector has no revenue source during the pandemic. Work is currently underway to identify significant infrastructure programmes that could be implemented in both the economic relief and recovery phases to support those dependent on this sector. This infrastructure development could include the creation of fire breaks, fencing, tourism facility upgrades, road building and maintenance, all of which are labour intensive activities. These activities would ensure that the sector is better managed and has better offerings after the Pandemic.
Waste recycling and the transition to a circular economy offers huge opportunities for our country to dramatically scale up its interventions to create jobs, formalize informal micro enterprises, divert waste from landfills and the environment and improve our country’s overall system of waste management. The Waste Phakisa identified 27 waste streams where upwards of 120 000 jobs could be created through recycling and waste recovery and reuse. Initiatives are underway to ensure that voluntary industry schemes in these sectors get the green light soon.
These are just a few examples of the potential for job, livelihood and enterprise creation that could result from a well thought through “green stimulus” plan that would be part of the broader economic recovery plan. More research and consultation is needed to identify even greater set of opportunities.
To ensure our economy and our society fully benefit from the potential of a “Green Recovery Initiative”, two things need to happen. The first is proper feasibility and impact assessment studies on the areas mentioned above to enable government and industry interventions to unlock project execution.
The second area is to track domestic and international green funds and COVID response funds to prepare and articulate structured responses for prioritized applications.
To do this quickly and effectively, government will need to work across departmental silos and harness the collective energies of business, labour, and civil society. It is no small task and in the past we have sometimes failed to achieve our aims.
We have a unique moment in history to re-shape and re-boot our economy so that it is sustainable, resilient and offers greater opportunities to our people and society. The extreme distress and hardship facing our people demands we re-double our efforts. In the words of President Cyril Matemela Ramaphosa : “we must do whatever it takes”
ENDS/
[1] United Nations Economic Commission for Africa, Inclusive Green Growth and Structural Transformation Policies in Gabon, 2017, p. 37
[2] Dahir, A., “Gabon Will be Paid by Norway to Preserve its Forests”, https://www.weforum.org/agenda/2019/09/gabon-will-be-paid-by-norway-to-preserve-its-forests/, 27 September 2019, page accessed on 2 May 2020
[3] http://www.fonerwa.org/investments, page accessed on 2 May 2020;
[4] Sinha, S., “Here’s How India Became a Global Clean Energy Powerhouse”, https://www.weforum.org/agenda/2019/09/here-s-how-india-became-a-global-clean-energy-powerhouse/, 16 September 2019, page accessed on 27 April 2020.
