Tighten the ESG focus or face litigation

By Merlita Kennedy & Tobia Serongoane from Webber Wentzel

Litigation on Environmental, Social and Governance matters is rising in volume, both globally and domestically, but there are various steps that companies can take to mitigate the risks

Investor and social pressure on mining and energy companies to report on Environmental, Social and Governance (ESG) and consider renewable energy is immense. Recently, the South African state-owned power utility, Eskom, was named by the Centre for Research on Energy and Clean Air (CREA), as the world’s biggest emitter of the pollutant sulphur dioxide (SO2). Eskom on its own now emits more sulphur dioxide than China, the US, and the European Union’s power sectors combined.

According to the study by air pollution expert Mike Holland, these emissions contribute to high levels of ambient air pollution and to 2 200 air pollution-related deaths in South Africa every year. Most of these deaths are due to SO₂ emissions, which form deadly PM2.5 particles once released into the air.

The study poses a legal threat to the power utility, as climate change litigation is gaining momentum in South Africa, particularly in relation to air pollution.

Environmental, Social and Governance

ESG has risen to the top of the board agenda. Companies are increasingly aware that a failure to address these matters can be detrimental to the company’s business purpose, reputation, corporate values, approach to risk management, and relationships with host communities, investors, suppliers, customers, employees, and other stakeholders. As ESG continues to grow in importance, the number of ESG litigation matters will become self-perpetuating.

Companies and state-owned power utilities globally are employing ESG policies and procedures in the energy sector. Eskom, however, has lagged in this regard.

Litigation Risks

The consequences of falling behind can be severe and far‑reaching, for example by falling foul of climate‑change litigation (i.e. class actions). There is an increasing focus on whether a company is conducting its operations in a sustainable way, and without violating any human rights. In some cases, internationally and locally, both the state and a company were taken to task for not acting appropriately to improve air quality and thus the health and well-being of citizens.

Sharma and others v. Minister for the Environment – Australia

On 8 September 2020, eight young people filed a putative class action in Australia’s Federal Court to block a coal project. The lawsuit sought an injunction to stop the Australian Government from approving an extension of the Whitehaven Vickery coal mine. The court found that a novel duty of care is owed by the Minister for the Environment to Australian children who might suffer potential “catastrophic harm” from the climate change implications of approving the extension to the Vickery coal mine in New South Wales. Ultimately, the court ordered the Minister to pay costs.

Milieudefensie et al. v. Royal Dutch Shell plc – Netherlands

The environmental group Milieudefensie/Friends of the Earth Netherlands and co-plaintiffs filed a case against Royal Dutch Shell plc. (RDS) requesting the court to rule that the Shell group’s annual CO2 emissions and RDS’s failure to reduce them constituted unlawful acts toward the claimants; and order RDS to reduce, by end-2030, the Shell group’s CO2 emissions by 45% net, relative to 2019 levels.

In this ground-breaking decision, RDS was compelled to reduce its global group carbon emissions by 45% net (compared with its 2019 emissions) by 2030, with immediate effect.

In South Africa

In June 2019, the VEJMA and groundWork, represented by the Centre for Environmental Rights, launched landmark litigation against the state, asking the court to declare that the poor ambient air quality in the Highveld was a violation of Section 24 of the Constitution. On 17 May 2021, the Pretoria High Court for the first-time heard arguments in what has become known as the “Deadly Air” case: a case about the toxic air pollution on the Mpumalanga Highveld.

Mitigating the risks of ESG litigation

To manage and mitigate some of the risks of ESG litigation – the key is to be proactive and to:

  • involve legal counsel at an early stage to ensure ESG compliance with reporting and disclosure requirements;
  • conduct due diligence and environmental legal compliance with the suite of environmental laws;
  • point out possible exposure to liability under a changing environmental regulatory landscape;
  • audit the suite of contracts individually and ensure that they contain indemnification and other contractual terms to protect against the impact of environmental liabilities;
  • in the event of a breach, involve legal counsel to assist with crisis management;
  • undertake a feasibility study to see whether corporate structures and operations have the necessary resources and expertise to handle any ESG matters that may arise.
  • engage effectively with stakeholders, including regulators, investors, employees, consumers and communities; and
  • move beyond treating ESG as a tick-the-box exercise to ensuring robust governance and accountability at board level and integrating material ESG factors into strategic decision-making.

Also, any company should seek specialist legal advice before responding to any ESG litigation issues that they may face.

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Transition to low-carbon economy urgent – President Ramaphosa

President Cyril Ramaphosa says the country must urgently reduce its carbon and greenhouse gas emissions or risk experiencing negative social and economic consequences.

The President was addressing the nation through his weekly newsletter.

Carbon and greenhouse gas emissions are a product of the burning of fossil fuels, such as oil and coal, which contribute to global warming and changes in the Earth’s climate patterns (climate change). President Ramaphosa said the impact of climate change is already felt in some South Africans’ quality of life through drought and flooding.

“Several communities in Mpumalanga, for example, are affected by high levels of pollution, which increases respiratory illness and other diseases. Those who are dependent on the ocean for a living have already seen depleted fish stocks amid changing weather patterns and changes in ocean temperature,” he said.

The President warned that if the country continues its carbon-intensive production methods, the economy will bear some risks.

“As our trading partners pursue the goal of net-zero carbon emissions, they are likely to increase restrictions on the import of goods produced using carbon-intensive energy. Because so much of our industry depends on coal-generated electricity, we are likely to find that the products we export to various countries face trade barriers. In addition, consumers in those countries may be less willing to buy our products.

“The other economic risk is that investors will shy away from investing in fossil fuel-powered industries. Banks and financial institutions are already facing pressures from their shareholders not to finance enterprises that depend on fossil fuels to produce their products or services,” President Ramaphosa said.

A just power transition 

President Ramaphosa acknowledged that although the low-carbon economy transition is a necessary one, it needs to be “just” because some sectors will be negatively impacted. “There are several important sectors of our economy that will be negatively affected by such a transition, including agriculture, tourism, mining, energy, transport, manufacturing and the biodiversity economy.

“That is why a transition…must address the needs of workers in these industries and in affected communities. The process of transition needs to be based on the full involvement of organised labour and business in targeted programmes of reskilling and upskilling, creating employment and providing other forms of support to ensure workers are the major beneficiaries of our shift to a greener future,” he said.

Transforming communities and electricity sector

President Ramaphosa said government is already developing plans on a transition towards a low-carbon economy, starting with the electricity sector which, according to the President, contributes to 41% of the country’s emissions.

“It will be the quickest industry to decarbonise and will have a beneficial impact across the economy. We will be decommissioning and repurposing coal-fired power stations, and investing in new low-carbon generation capacity, such as renewables.

“We will also pursue ‘green’ industrialisation, such as manufacturing using green technology and a shift to the production of electric vehicles,” the President said.

In line with this, President Ramaphosa announced that the State power utility will transform a coal-fired power station into a renewable power production plant.

“Eskom will be undertaking a pilot project at its Komati power station, which is due to shut down its last coal-fired unit next year, to produce power through renewable energy. Komati will serve as a good example of how this shift from coal dependency could be achieved,” he said.

The President said in Mpumalanga’s mining towns, government is working with different sectors in pursuance of moving towards less dependence on coal, assessing its impact and making sure that “communities are protected against the risks and benefit from the opportunities presented by this transition”.

“There are economic challenges and risks. There are huge economic opportunities that we must seize. South Africa is endowed with abundant resources that can be harnessed to open up new frontiers of investment and growth and build a new economy in areas like green hydrogen. By pursuing these opportunities, we can ensure that our just transition yields new innovative opportunities that will create new jobs.”

Cooperation is key 

The President said in order for the country to meet its target of reaching net-zero carbon emissions by 2050, developed nations will be required to keep promises made to financially support energy transitions in countries like South Africa.

In this regard, government is working with international partners to secure a financing facility for the decarbonisation effort.

“This is not about charity. It is about fairness and mutual benefit. Countries with developed economies carry the greatest responsibility for climate change as they have historically been the biggest polluters, while developing economies are the worst affected. That is why wealthier countries have an obligation to provide significant financial support for developing economies to adapt to climate change and reduce emissions,” President Ramaphosa said.

South Africans too, are required to commit to the transition to a low carbon-emitting economy.

“The climate transition is something that affects every South African and we all need to be part of its design and implementation. We have undertaken widespread consultation and there is broad support among social partners for an ambitious, realistic and, most importantly, just transition.

“We have to act now if we are to achieve sustainable and inclusive growth, secure the health and well-being of our people and safeguard the future of our planet,” he said. – SAnews.gov.za

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Fossil fuels on fire

By Old Mutual Wealth Investment Strategists Izak Odendaal and Dave Mohr

These strange times have become even more unusual. Despite the enormous efforts to reduce the demand for carbon-emitting fossil fuels, their prices have shot up in recent weeks.

The upcoming COP26 Glasgow Climate Summit could ironically take place against the backdrop of coal and natural gas prices at record levels and oil at multi-year highs even though the share of renewables in the global energy mix has thankfully risen steadily.

Chart 1: Futures prices for coal, gas and oil, US$

Source: Refinitiv Datastream

A perfect storm

It is a perfect storm of events that got us here. On a positive note, demand for energy has increased from the lockdown-induced lows. For instance, IATA estimates a 26% growth in airline passenger numbers between 2020 and 2021, though they are still more than 40% below 2019 levels. However, this improvement in demand has not been met by rising supply. On the contrary, several factors have constrained supply.

One is simply the weather. Northern Europe relies heavily on electricity from wind, but it has been less windy than usual. Droughts in Brazil, China and the US mean hydro-electrical production has also been lower than normal. This has led to increased demand for natural gas and coal. However, natural gas inventory levels have been lower than usual at storage depots across Europe. This has created an opportunity for Russia, Europe’s main gas provider, to flex its geopolitical muscles and go slow on deliveries, although it has indicated a willingness to stabilise the market recently. With winter looming, natural gas prices in Europe have gone stratospheric, pulling up prices in other parts of the world.

In China, flooding has disrupted domestic coal production. China is already the biggest consumer of coal in the world, but demand has increased recently, and with it, its price. Geopolitics play a role here too. China blocked Australian coal imports, about a tenth of its total last year, after Australia questioned the origins of the coronavirus. Imports from Mongolia have also been disrupted by Covid.

Chinese electricity prices are heavily regulated, and utilities cannot freely pass on the cost of higher coal prices to customers. Many have opted to cut back on production, rather than sell at a loss. Beijing has now announced that selling prices will be allowed to rise somewhat. All this has happened at a time when local governments were already reducing electricity production from coal to curb air pollution and carbon emissions. The net result is something South Africans know well: widespread load-shedding.

Finally, in terms of oil, OPEC (along with Russia) has largely maintained the production cuts it put in place last year to prop up the oil price. In other words, there is no fundamental shortage of oil. Supply is being deliberately held back. OPEC can increase supply if it worries that high prices will choke off demand, but for now, its members seem comfortable with the revenues flowing in. Importantly, the price increase has not yet led to the associated increases in American shale oil production as has been the case over the past decade. Shale producers have largely abandoned the old production-at-all-costs mindset in favour of maintaining profitability and shareholder returns.

Chart 2: US oil prices and production

Source: Refinitiv Datastream

An associated factor is that these companies and their peers face increased difficulty in accessing the funding needed to increase short-term (in the case of shale) and long-term production (in the case of the oil majors). Banks and asset managers across the world are phasing out exposure to fossil fuels and some have already cut all ties. This has contributed to steep declines in capital expenditure by fossil fuel producers. 

In other words, the big move among global investors towards embracing environmental, social and governance (ESG) principles might have the unintended consequences of higher fossil fuel prices until such time as renewable sources reach critical mass.

Chart 3: Capital expenditure by listed oil, gas and coal companies

Source: Refinitiv Datastream

The good news is that elevated fossil fuel prices do create a strong incentive to increase investment in alternatives. This is where ESG can play a big role to make sure the alternatives are green, not brown. Economists have long argued that the best way to tackle climate change is to put a tax on carbon emissions. This is because the price we pay for a tank of petrol, for instance, covers the cost of production and distribution but not the cost of the associated air pollution. Since the cost of this externality is not included, petrol is too cheap. This leads to excessive demand. A carbon tax raises the price to its “correct” level and lower demand. The recent price increases could therefore achieve a similar effect.

A tax on your houses

Increased energy prices act as a tax for most consumers. Most of us have no choice but to fill up our car. If you live in the snowy Northern Hemisphere, you have little choice but to heat your home with gas.

In other words, this will be a drag on global consumer spending, the question is just for how long will prices remain elevated. It is somewhat compensated for by the excess savings that households in the rich world have built up, but it also appears that most of the excess savings are concentrated in the hands of more affluent households. Meanwhile, it is lower-income households that are most exposed to increases in energy prices and associated rises in food prices. Nonetheless, it is worth pointing out that at around $80/barrel, the oil price is nowhere near the $150/barrel record set in 2008 on the eve of the global financial crisis, or the $100+ levels that prevailed between 2011 and 2014, especially adjusted for inflation or growth in incomes.

The other complication is that these price increases come at a time when inflation rates are already elevated. The global production and delivery of goods are already severely constrained by Covid-related disruptions, shortages of inputs and labour, and logistical bottlenecks. But now production in China, the world’s factory, has to contend with electricity blackouts. This is likely to worsen the supply chain problems already besetting the world economy.

People often confuse higher fuel prices with inflation. Fuel prices are very visible since most motorists have to fill up at least once a month. But inflation refers to sustained price increases in a broad range of consumer goods and services. Energy is a component in consumer price indices and therefore higher energy prices do have a direct short-term impact. But the big question is whether firms can raise their selling prices to compensate for higher input costs. In this way, higher energy costs ripple through the economy. If workers then demand higher wages to compensate, we have the beginnings of a wage-price spiral. This clearly requires pricing power on the part of firms and bargaining power on the part of workers that have been absent for many years. However, in the current Covid-distorted global economy, there have been signs of both.

Winners and losers

There are clear winners from this energy crunch. Net exporters of coal, gas and oil are clearly smiling, particularly countries such as Nigeria that have really struggled until recently.

In contrast, many countries are energy importers and face not only higher inflation rates, but also potentially balance of payments problems as they need to cough up more of their scarce dollars for each barrel of oil. Compounding matters, this comes at a time when the US Federal Reserve is planning to scale back its monetary stimulus, which has put upward pressure on the dollar. Some developing countries, therefore, face a triple whammy of higher energy costs, a weaker currency, and domestic central bank interest rate hikes aimed at stabilising exchange rates and inflation.

South Africa has one leg in this camp as an importer of petroleum products. The rand has been on the back foot in recent weeks, and this means a big petrol price increase is on the cards for next month.

However, we are also the world’s fifth-largest coal exporter (behind Australia, Indonesia, Russia and the US) and the rising export revenues limit downward pressure on the rand. Coal exports would be even higher if not for the capacity constraints on the Transnet rail corridor from the Highveld to the coal terminal at Richards Bay.

It also helps that inflation has been relatively stable in South Africa, with price increases excluding food and energy costs running at only around 3%. The SA Reserve Bank’s latest forecasts suggest that inflation should stay close to the 4.5% midpoint of the target range over the next two years. However, the risks are clearly to the upside. A gradual interest rate hiking cycle is therefore likely to commence in the next few months. How gradual will depend on where energy prices settle and how the rand responds. The Reserve Bank will also keep a close eye on what other central banks are doing, particularly the US Fed.

Oils well that ends well?

In summary, it is a delicate moment for the global economy, and could end up being a long, cold winter for people in the Northern Hemisphere. The big risks are a slowdown in consumer spending, further disruptions to production and persistent inflation that forces central banks to tighten monetary policy sooner than they’d like. None of this is good for markets.

However, it is worth repeating that the underlying cause is the strong recovery in demand as the world gradually puts the pandemic behind it. This is good. Moreover, energy prices are notoriously volatile. In April last year, a key oil futures contract briefly traded at a negative price. Traders were willing to pay to get rid of the oil rather than take delivery. The most recent price moves in gas and coal also have all the hallmarks of panic-driven trading, and therefore are unlikely to be sustained over time. Investors in diversified portfolios should similarly avoid making panicky moves in response to the recent dramatic headlines. The current situation is the result of a nasty confluence of events, and some of the contributing factors on the supply side could ease.

Finally, in the current context, it might be worth remembering that 13 years or so ago, “Peak Oil” was a dominant investment narrative. It was believed that the global supply of oil would peak and this justified prices surging to $150/barrel and beyond. The opposite turned out to be the case. Today, we’ve probably already passed the point of peak oil demand due to the rise of electric vehicles. Demand for coal could prove stickier, while natural gas could increase in importance as a “bridging fuel” while the world transitions to renewable sources. However, short-term price movements are clearly going to remain unpredictable.

This is relevant when thinking about investments more broadly. Dominant narratives can lead you astray. Just because you read about a “megatrend” or “structural change”, whether it is ESG, clean energy, blockchain, biotechnology, or demographic shifts, doesn’t mean that there is easy money to be made. It could be priced on already, or simply overhyped. You could be way too soon or too late already. Maintaining appropriate diversification across different asset classes and within each asset class remains the best way of investing, even if it sounds boring.

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High Court Ruling on Mining Charter 2018: “Once Empowered, Always Empowered”

Once empowered [is] always empowered [after all] – this is the effect of the judgment handed down by the High Court, Pretoria on 21 September 2021 in the matter between Minerals Council of South Africa vs Minister of Mineral Resources and Energy and thirteen others [Case No.20341/19] (the “Judgment“) in relation to the challenge to the Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (“Mining Charter III“).

The Minerals Council of South Africa instituted its application to review and set aside certain provisions of the Mining Charter III (the “Review Application“) in terms of section 6(2) of the Promotion of Administrative Justice Act, 2000, alternatively in terms of the principle of legality as set out in the Constitution on the basis that:

  • the Minister of Mineral Resources and Energy (“Minister“) lacks the power to publish Mining Charter III in a manner that suggests that it is a legislative instrument, and doing so amounted to the Minister assuming the functions of the legislature;
  • the clauses are unauthorised by section 100(2) of the Minerals and Petroleum Resources Development Act, 2002 (“MPRDA“) and therefore the decision to publish them as part of Mining Charter III was materially influenced by an error of law.

A copy of our bulletin on the salient features of the Minerals Council’s challenge is available here.

The High Court Judgment

The full bench of the High Court (Gauteng Division, Pretoria) characterized the question in dispute that had to determined as concerning the ambit of the powers of the Minister under section 100(2) of the MPRDA to make law in the form of subordinate legislation, and the legal nature and role of the Mining Charter III in the context of the MPRDA. Therefore, at issue, was whether the Mining Charter III constitutes law or policy.

The Minerals Council contended that the Mining Charter III is a formal policy document developed by the Minister in terms of section 100(2) of the MPRDA. To this effect, it argued that the Mining Charter III is binding on the Minister whenever he considers an application for a mining right by virtue of the provisions of section 23(1)(h) of the MPRDA. This provision only permits the Minister to grant a mining right if, amongst other things, the grant of such right would be in accordance with the charter contemplated in section 100(2) of the MPRDA.

To the contrary, the Minister argued that section 100(2) of the MPRDA empowers him to make law through the development of the Mining Charter III, hence that the charter (which he developed) constitutes a sui generis form of subordinate legislation which is directly binding on holders of mining rights.

Kathree-Setiloane J (with Van der Schyff J and Ceylon AJ concurring), held that having considered the language of section 100(2) of the MPRDA in light of its ordinary meaning, the context in which it appears and the apparent purpose for which it is directed, section 100(2) of the MPRDA does not empower the Minister to make law.  In other words, the Mining Charter III is not binding subordinate legislation but an instrument of policy.

Therefore, in its decision, the High Court held that the Mining Charter III is a policy document and not law; and that such finding is dipositive of the main grounds of review that the challenged clauses of the Mining Charter III are unconstitutional because the Minister lacked the power to publish a charter in the form of a legislative instrument binding upon all holders of mining rights, the breach of which will be visited by the consequences and penalties provided for in the MPRDA.

Accordingly, the clauses of the Mining Charter III as challenged by the Minerals Council in the Review Application are reviewed and set aside.

Implication of the Judgment

The Judgment set aside a number of clauses in the Mining Charter, including amongst others:

  • clauses 2.1.1.2, 2.1.1.4, 2.1.1.5 and 2.1.1.6, which provided that the recognition of continuing consequences will not be applicable upon the renewal and/or transfer of a mining right and that a renewal of an existing mining right will be subject to the requirements imposed under Mining Charter III at the time when the renewal application is submitted (i.e. 30% BEE shareholding);
  • clause 2.1.3.2, which required that the minimum 30% BEE shareholding for new mining rights must comprise of a minimum of 5% non-transferable carriedinterest to each of Qualifying Employees and Host Communities, and a 20% effective ownership to BEE entrepreneurs (5% of which must preferably be owned by women);
  • clause 2.1.5.2, which provided that the prescribed minimum 30% target shall apply for the duration of a mining right;
  • clause 2.1.7.1, which permitted a mining right holder to claim the beneficiation equity equivalent against a maximum of 5 percentage points of a BEE Entrepreneur shareholding only;
  • clauses 2.2, which dealt with the provisions of Mining Charter III in relation to inclusive procurement, supplier and enterprise development targets;
  • clause 7.2, which provided that for mining right holders, the ownership and mine community development elements are ring-fenced, requiring 100% compliance at all times;
  • clause 9.1, which dealt with the penalty and enforcement provisions of the Mining Charter III in case of non-compliance.

Therefore, mining right holders who, at any stage during the existence of their mining right achieved a minimum of 26% BEE shareholding, and whose BEE partners exited prior to the commencement of Mining Charter III, will be recognized as compliant with the BEE requirements of the Mining Charter for the duration of the mining right; and such recognition does not lapse on the renewal or on the transfer of the mining right (the so called “once empowered always empowered” principle).  In other words, existing mining right holders’ historical BEE transactions will be recognised for the purposes of the renewal and transfer of existing mining rights and the applicant for renewal or the transferee, as the case may be, will not be required to comply with the BEE ownership requirements applicable to new mining rights.

Although applicants for new mining rights are still required to have a minimum of 30% BEE shareholding, such 30% BEE shareholding does not need to comprise of the 5% (minimum) non-transferable carried interest to each of Qualifying Employees and Host Communities, and a 20% effective ownership to BEE entrepreneurs (5% of which must preferably be owned by women).  Mining right holders are free to structure their BEE shareholding as they deem fit.

Moreover, non-compliance with the ownership and mine community development elements of Mining Charter III will no longer render a mining company in breach of the MPRDA, and subject to the provisions of section 93, read with section 47, 98 and 99 of the MPRDA. Accordingly, non-compliance with the Mining Charter III will not render a mining right subject to suspension and/or cancellation in terms of the MPRDA.

Conclusion

It must be noted that not all of the provisions of the Mining Charter III were reviewed and set aside. These clauses include amongst, that new mining rights must have a minimum of 30% BEE shareholding, the clauses which concern employment equity, human resource development, mine community development, and housing and living conditions. Given that the Court held that the Mining Charter III is a policy document rather than a legally binding instrument, mining right holders may, but are not legally obliged to, comply with the remaining requirements imposed under the Mining Charter III.  

It must be noted further that section 23(6) of the MPRDA provides that a mining right is subject to the terms ‘prescribed’ by the Minister. Section 23(6) of the MPRDA requires the holder of a mining right to comply not only with the terms and conditions of its right, but also the ‘prescribed terms and conditions’. The term ‘prescribed’ is defined in section 1 of the MPRDA to mean prescribed by regulation. In terms of section 107 of the MPRDA, the Minister may make regulations regarding “any other matter the regulation of which may be necessary or expedient in order to achieve the objects of this Act”. In light of the above, the Court indicated that the Minister is entitled to prescribe any regulations in order to achieve the objects set out in sections 2(c), (d), (e), (f) or (i) of the MPRDA.

Moreover, it is open to the Minister to impose elements of the Mining Charter III indirectly, through incorporating the principles as terms and conditions of a mining right.

As at the date of this bulletin, none of the respondents had yet to indicate whether they will appeal the judgment. 

 Courtesy: FASKEN

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Study shows SA is on track with EE standards

International study verifies energy savings potential of Standards and Labelling Programmes – and SA is on track

The International Energy Agency (IEA) and 4E Technology Collaboration Programme (4E TCP) have released a report on the effectiveness of Energy Efficiency Standards and Labelling (EES&L) programmes. Labelling electrical equipment such as, among others, residential appliances, electric motors, streetlighting, etc. according to their energy performance helps consumers to make informed purchasing decisions, saving them billions of dollars on electricity and avoiding more than 300 million tonnes of CO2 emissions each year. The South African National Energy Development Institute (SANEDI) reports that this international study has strengthened local EES&L programmes, through knowledge gained towards implementation, which are seeing success in South Africa in line with international findings.

The IEA report draws on nearly 400 documents and shows that the longest-running EES&L programmes have saved approximately 15% of their country’s total electricity consumption. Around two-thirds of these savings are seen in the residential sector, while savings in the services and industrial sectors each account for one-sixth.

“This is exciting news for South Africa, as the study echoes the experience that we have had with our local EES&L programmes,” says Barry Bredenkamp, General Manager: Energy Efficiency & Corporate Communications, SANEDI. A recent DMRE-SANEDI-UCT research report on electricity consumption in the South African residential sector shows that electrified households consume roughly 17% of the country’s total grid electrical energy.

SA on track for improving residential energy intensity

The country’s existing National Energy Efficiency Strategy (first published in 2005) included a target to improve residential energy intensity by 10% in 2015 compared to a year 2000 baseline. The mechanisms predicted for achieving this target included S&L of household appliances. Regulations requiring minimum energy performance standards and consumer labels for large residential appliances (including laundry, refrigerators, AC, and geysers) were introduced in 2015.

Bredenkamp says “research undertaken in 2019 concluded that our local S&L programme will reduce electricity consumption by 7,1 TWh by 2030, reducing residential utility bills in total by US$1.4 billion – $54 per household. The IEA report reinforces how effective these programmes are. These reductions bring benefits to consumers as well as lower emissions and lower energy demand.”

The report’s findings are drawn from evaluation studies covering 100 countries, including those with the longest running and strongest appliance policies, such as China, the EU, Japan, and US. It confirms that well-designed policies encourage product innovation and lead to economies of scale, which reduces the cost of appliances even without accounting for the efficiency gains or reducing the size or service of the appliance.

“Notably, South Africa is mentioned in this report. This is encouraging, given that we are the world’s 14th largest global emitter of greenhouse gases, because we rely on coal for energy generation,” says Ashanti Mogosetsi, Project Manager, EES&L Programme for SANEDI.

S&L programmes seeing global success

Findings from the study speak volumes. Figures 1, 2, and 3 are drawn from the report and demonstrate the effectiveness of standards and labelling programmes. Figure 1 shows the proportion of national electricity consumption reduction percentage from S&L programmes in selected countries. Figure 2 demonstrates the annual avoided electricity consumption from these programmes (TWh/year). Figure 3 shows the annual energy reduction percentage in new-product energy consumption from EES&L programmes.

“The report confirms that improvements to the energy efficiency of appliances and equipment are some of the lowest-cost options available today for reducing energy consumption and associated emissions. They show a typical society benefit to cost ratios of four to one,” says Bredenkamp. “These programmes provide net financial benefits to individuals and the community. Other benefits, include employment, product innovation, water savings, improvements in air quality and the reduction of public expenditure on health, add to the case for stronger and more widely implemented standards and labels.

“The evidence shows that EES&L programmes can deliver annual electricity demand savings equal to the annual production of renewable energy. Regular updates of EES&L policies are required to keep them in line with technological improvements, and to drive innovation in energy efficiency. This demands due diligence, such as industry consultation, and SANEDI is eager to participate in this process. To this end, South Africa has the started the process for S&L to be introduced to streetlights, electric motors and televisions; cost benefit analyses are at an advanced stage to prove this can work in the country” says Bredenkamp.

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International climate deal could solve SA’s energy and economy crisis

Some of the world’s richest nations recently met with South African cabinet ministers to discuss a climate deal that could see billions of dollars put toward ending the country’s dependence on coal.

The delegation is trying to hammer out an agreement that can be announced at the COP26 climate talks, which start in Glasgow, Scotland on 31 Oct, two people familiar with the talks said. The discussions with South Africa — the world’s 12th-biggest emitter of greenhouse gases — include representatives from the US, UK, Germany, France and the European Union.

While South Africa is under pressure to cut its dependence on coal, which accounts for more than 80% of its power generation, it needs finance to facilitate the transition to cleaner energy. Developed nations may also need to find a way to address the challenges faced by South Africa’s state-owned power utility, which is burdened by R400-billion of debt.

The envoys met with South African ministers including Pravin Gordhan, the public enterprises minister whose portfolio includes oversight of power utility Eskom Holdings, Barbara Creecy, the environment minister, and Ebrahim Patel, the country’s trade and industry minister, the people said, asking not to be identified as a public announcement has yet to be made. Talks will be held with South Africa’s politically powerful labour unions, business leaders and the Presidential Climate Change Coordinating Commission, three people familiar with the arrangements said.

The South African ministers pressed for details on what finance was available, but the envoys favour an incremental approach and more commitments from South Africa, the people said. While Gordhan urged support for Eskom, other options such as transitioning South Africa and its car industry toward electric vehicles were also discussed, they said.

Albi Modise, a spokesperson for the environment ministry, confirmed that a group of ministers met with the envoys but declined to comment further, saying a statement will be issued later. 

Some senior members of South Africa’s government are pushing hard for climate mitigation measures. President Cyril Ramaphosa chairs the climate commission he created last year and its more ambitious emissions reduction target was adopted by cabinet this month. Creecy has said developed countries need to boost energy transition and climate-adaptation funding to developing nations.

“South Africa is well-positioned to obtain concessional finance both for the country-wide climate transition and the electricity transition in particular,” Gordhan said in a response to queries before the meeting.

Still, the pivot from coal faces opposition within South Africa. Gwede Mantashe, the country’s energy minister, has advocated for the construction of new coal-fired power stations. Mantashe, the former head of the National Union of Mineworkers, is the politically influential chairman of the ruling African National Congress.

The move to reduce South Africa’s reliance on coal comes as Chinese demand pushes prices toward record highs. The dirtiest fossil fuel, which was struggling against cleaner energy sources, is now seeing its biggest comeback ever, complicating international climate talks set to begin in just a few weeks. 

Courtesy of Bloomberg.

BY: BLOOMBERG

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Are net-zero goals realistic for South Africa?

By Vanessa Mathebula – Quantitative Analyst at Prescient Investment Management

The much-anticipated COP26 is fast approaching. This is the 2021 United Nation’s Climate Change Conference, where each participating country, including South Africa, is expected to set more deliberate and ambitious climate change goals.

With the introduction of the Asset Manager’s Net Zero Agreement, fund managers globally are also now able to join the movement. Interested parties can pledge their commitment to playing an active role in supporting similar climate change goals to those of the respective countries by 2050 or earlier. Globally, there are already great initiatives in place, such as green financing solutions (e.g., green bonds), but, given our many macro-economic challenges, where do we stand as a country? Can we realistically move to the same rhythm as the global players?

Committing to advancing the goals of the Paris Agreement shows our willingness to collaborate and play an active role in achieving climate-related goals. However, we might have bitten more than we can chew, especially given the expectations of upping the ante in the upcoming COP26.

Fossil fuels are still a crucial driver of the SA economy

As a country, we rely on fossil fuels. For instance, coal continues to be the primary energy source as it caters for about 77% of South Africa’s energy needs, according to the Department of Mineral Resources and Energy. Furthermore, no material changes in this trend are expected in at least the next two decades. Unfortunately, the coal dilemma stretches wider than the obvious coal mining industry.  As per the ripple effect theory, many other industries are, in fact, reliant on fossil fuels. 

Aside from the obvious coal mining and electricity-generating companies, transportation (e.g. Transnet as it transports coal) and financial sectors can also be indirectly linked to the coal industry. This, therefore, means that the majority of South Africa’s productive economy can directly or indirectly be linked to fossil fuels.

Admittedly, there are initiatives in place that are meant to shift the country to ‘greener pastures’. However, the transition to these alternative forms of climate-friendly options is relatively slow.  For instance, PWC’s Net Zero Economy Index shows South Africa is making minimal progress in decoupling emissions from GDP.

The country’s fundamental developmental challenges remain the main culprit. Not only do we lack the necessary infrastructure to enable such a transition, but the cost implications, especially for an overly indebted country like South Africa, coupled with the politics associated with such decisions, are other hurdles that cannot be ignored. We are, therefore, forced to acknowledge our shortcomings as a country and find ways to engage and promote realistic change.

In line with the Net-Zero goals, if asset managers were to restrict exposure to fossil fuel-linked companies and instruments materially, diversification and bottom-line investment performance would be materially affected. For instance, buying South African government bonds would be a questionable exercise as some of the proceeds are channeled towards assisting state-owned entities closely linked to the coal industry – e.g. Eskom. Bank paper would be questionable, too, as the average investor has no insight into the portion of the bank’s lending activities that are linked to the fossil-fuel industry.

This highlights the challenges we face as a country that still relies heavily on fossil fuels. Therefore, we are left with the question of whether we can materially limit exposure to the affected sectors without introducing any major adverse implications to the bottom line? Probably not! At least not any time soon, given the country’s sluggish progress towards introducing greener alternatives. However, this does not imply that we cannot take smaller strides each day towards having an overall positive impact from a sustainability standpoint.

A net positive contributor approach is a good start

One of the ways we can realistically advance towards achieving our sustainability goals, given the challenges we face, is to adopt a net positive contributor approach to overall Environmental, Social and Governance (ESG) factors. Not only does this enable us to factor climate-related factors into decisions in a less restrictive manner, but it also enables us to consider other sustainability factors, such as the social aspect, which is crucial for a country with a history of inequality like South Africa.

For instance, if we consider Eskom through a purely Net-Zero lens, no investor would touch it. However, once we accept that it is currently the primary producer of electricity, and thus supports economic activity countrywide and employs a notable portion of the country’s workforce, the scale would probably tilt to the positive for such a counter, keeping everything else constant. 

At Prescient, we continuously seek to invest in net-positive counters. We assess the overall contribution of a given counter from an ESG risk and opportunity perspective based on our in-house developed ESG risk scoring tool, the Prescient ESG Scorecard. The scorecard is quantitative and free from human biases. The derived scores are based on over 60 metrics and are free from sector and size biases as we also factor sector materiality and adjust certain metrics by the market cap of the given counter. The scorecard output is integrated across investment teams enabling us to play an active role in moving towards sustainability as we tilt our investments towards net positive contributors. Of course, this is nowhere close to where we want to be from an overall sustainability perspective. We, therefore, continue assessing how viable it is for the local market to transition to a comprehensive Net-Zero approach. Until we reach a point where this is possible, we will continue the search for greener alternatives that don’t undermine the economy at the expense of South African society.

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GBCSA congratulates Redefine on 40 new Green Star certifications

In a progressive contribution to transformation of the commercial green building space, JSE-listed South African real estate investment trust (REIT), Redefine Properties, recently certified/re-certified 40 buildings in their property portfolio, under the Green Building Council South Africa’s (GBCSA) Green Star Existing Building Performance (EBP) rating tool.

Rosebank Link interior

Redefine’s diversified property portfolio, which amounts to a value of R75.3billion, includes a mix of retail, office, and industrial space throughout South Africa, and retail and logistics property investments in Poland. The recent Green Star accolades include 16 office EBP re-certifications, and 24 new EBP certifications across Gauteng, Cape Town, Kwazulu-Natal, and Polokwane. This is the largest bulk Green Star EBP certification from anyone commercial property owner to date and represents a major milestone for green property in South Africa.

“Property owners, such as Redefine stimulate market transformation by pioneering and leading when they ‘walk the talk’ and commit significantly to certification,” says GBCSA head of technical, Georgina Smit. “EBP certifications extend far beyond just energy and water performance management to encompass a much broader and holistic approach to sustainability management at an operational level. As such, they represent a commitment to a wide range of sustainability issues by a property owner and manager.”

Sustainability consultant and Green Star accredited professional for the project, Sally Misplon, explains that there are numerous advantages for REITs and other kinds of property owners willing to certifying many buildings at once. These include aligning each building’s operations with the overall sustainable objectives of the fund, building capacity within the fund for continued implementation, economies of scale in implementation, and reporting of overall portfolio performance (linked to environmental, social, and governance -ESG- goals).

Independently verified green building certifications, such as GBCSA’s Green Star certification suite, are linked to improved financial performance of properties, according to the most recent MSCI SA Green Property Index results. Covid-19’s requirement for healthy indoor workspaces has also increased the demand for green office space, and there are benefits to be gained for commercial property owners and developers who commit to certifying their portfolios.

Smit says the MSCI SA data shows that “certified offices, in comparison to their non-certified equivalents, are attracting higher tenancies, higher net operating income per square meter, and lower risk ratings.” These benefits signal a growing appetite for green buildings and sustainability in the property market, and also in the greater global business context. Essentially, greener office spaces offer healthier work environments for employees and mitigate risks of increasing energy costs, and potential future water shortages (to name a few potential climate-related crises).

The EBP rating tool measures a building’s operational performance over a 12-month period. Covid-19’s unexpected arrival, and the subsequent lockdown in March 2020, posed some challenges to the measuring of the information. Misplon explains: “The EBP rating tool has some minimum requirements in terms of occupancy density where each building is required to be occupied at a minimum of 70% during the performance period. As a result, GBCSA issued Covid-19 guidelines to assist projects teams in finding a way around this which still gave credits meaning during these different times. For example, the most recent reliable and accurate ‘pre-Covid’ set of energy and water data were used to benchmark the buildings energy and water performance, and adaptions were made to certain indoor air quality audit’s criteria to make it applicable to Covid-19 times, all while keeping the original intent and integrity of the rating tool in place.”

Covid-19 aside, processing a large number of certifications simultaneously, is a massive undertaking. Timing and planning are critical, Misplon explains. “Staying on top of data collection and tracking everything well is pertinent to successful and high-quality submissions.” As is support from the technical team at GBCSA. Due to meticulous teamwork, a high number of the projects received their certification after round 1 assessment.

Substantial portfolio certification, such as Redefine’s recent move, acts as a catalyst to other property owners who operate in the same space, says Misplon. Head of ESG at Redefine, Anelisa Keke, elaborates: “The benefits of green buildings run deeper and wider than what’s obvious at first glance. Besides the water and energy efficiencies, reduction of emissions and waste that come through sustainable design, construction, and operations, at Redefine the certification is a testament to our drive to create, manage, and invest in spaces in a manner that changes lives. Looking ahead, creating spaces that support the health and well-being of our customers, tenants and employees, as well as the economy and environment, will be vital to accelerating sustainable development and delivering a better standard of living.” 

Typical sustainability features across most projects

  • Indoor environmental quality testing to recognise the monitoring and control of indoor pollutants and help sustain the comfort and wellbeing of building occupants
  • Development and implementation of a Building Operations Manual, Building Users’ Guide and Preventative Maintenance Management Plan, Landscaping Management Plan, Hardscape Management Plan and Pest Management Plan
  • Development of a Solid Waste and Materials Management Policy to encourage sustainable waste management and recycling
  • Green Cleaning Policy in line with the Green Star requirements
  • A green procurement plan compiled and implemented to encourage and guide the property and facilities management teams to select the most sustainable products available on the market
  • Publication of green operational guidelines for tenants
  • Glare control devices are mandatory in occupied spaces to reduce the discomfort from glare and direct sunlight
  • Each building’s energy and water consumption benchmarked against other buildings of the same building type to encourage the reduction of greenhouse gas emissions and the burden on potable water supply and wastewater systems, associated with the use of energy in the building operations
  • A Green Travel Plan introduced to encourage the use of alternative modes of transport to and from work
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Solar PV and the value of your home

We offer a new perspective on the potential long-term value you can create by installing a solar PV system in your home.

Authors: Matthew Capes, Sean Moolman

To provide context we elaborate on why the reliability, affordability, and sustainability of solar PV make it a viable and valuable addition to your home. The trends in the South African residential property market and the current challenges caused by Eskom’s service are also discussed. We then move on to the focal points of Saleability and sales premium. To get insight into how solar PV systems can improve the saleability of South African homes, we spoke to two local residential property experts: Sandra Gordon, Senior Research Analyst, Pam Golding Properties, and Anthony Stroebel, Head of Business Development, Pam Golding Properties and Director of the Green Building Council of South Africa.

We conclude with a method designed to help you calculate an estimate of the potential home sales premium unlocked by installing a solar PV system in your home.

Read time: 4 minutes

The Context: Declining Grid Reliability and Increasing Cost

The transition to clean energy is critical to securing a sustainable future for humanity. 

In an ideal world, this would be at the top of everyone’s to-do list, but each day brings its own challenges.

Especially in sunny South Africa.

Note: EAF = Energy Availability Factor

For example: How do I manage to keep up with rising electricity and water bills? How do I cook dinner, have a hot shower, or watch some TV with my family, when persistent load-shedding and unexpected blackouts leave us in the dark? 

Solar PV has become an increasingly affordable, reliable, and sustainable solution to these issues.

*Annexure A includes more detailed information and references for the above illustration*

As a South African you are certainly aware of the challenges Eskom brings, and you may already be familiar with the reliability, affordability and sustainability provided by solar PV.

There are solutions to the current challenges faced by many South Africans.

But what about the future? 

An important reality often overlooked, is that the solar PV system becomes part of your home once it is installed (solar PV panels are routinely guaranteed at 25 years or more).

This begs the question: can a solar PV system add future sales value to your home?

International research suggests that it can, however, we sought insights closer to home. A lekker local perspective if you will.  We spoke with Sandra Gordon (Senior Research Analyst at Pam Golding Properties) and Anthony Stroebel (Director at GBCSA, Head of Business Development at Pam Golding Properties) about two forms of value:

Saleability is the extent to which the home can be easily sold or rented.

Sales premium is the ability to command a higher sale or rental price.

At the end of this article, we provide a guideline for estimating your own home sales premium.

Let’s begin with saleability.

Gordon and Stroebel note, “Saleability is always relative to that particular moment in time i.e what else is on the market that would be competing for the same buyers. Certainly, at this point in time, when solar PV has not necessarily reached any degree of critical mass, it is likely that solar homes will be competing with non-solar homes and will definitely, therefore, have a ‘value edge’.”

Let us elaborate on what that “value edge” is.

Independence from Eskom     

Stroebel and Gordon anticipate that despite the lack of local research on the matter, the fact that South African electricity tariffs are rising steadily and load-shedding is set to continue for the foreseeable future, it is extremely likely that any measures which reduce utility costs and increase a home’s independence from state utilities would increase its saleability.

They explain: “With a large, young population – and with utilities becoming more erratic and expensive – new mixed-use developments typically include energy and water efficiency features, solar power and – in some cases – rain harvesting, etc. These features are undoubtedly attractive to the majority of potential homebuyers and, based on international trends, will be particularly important to younger buyers (who are an important source of housing demand in South Africa).”

Securing the value of your home means you should consider who the buyers are likely to be and what would attract them to your home.

Millennials in the Market

Research conducted by COGNITION Smart Data found that Millennial home buyers have “a strong ethic of sustainability” and are looking for “smart homes that are sustainable, efficient and healthy”.

Adds Stroebel, “Millennials want homes with the latest and greatest – and most environmentally compatible – technology.

“According to this research, millennials have a high level of interest in solar technologies to reduce their carbon footprint, reduce their energy bills and increase self-sufficiency. Trends which rising local tariffs and increased instability in delivery are likely to reinforce.”

So, they are young and they want to save the planet… and money too.

Environmental and Financial Sustainability

According to research conducted by CoreLogic, “Surveys have demonstrated that millennials tend to be more environmentally conscious, so it is no surprise that they are the ones driving the green revolution in housing.

Solar panels will continue to be more popular on single-family homes, each unit with its own battery and power management system”.1

Green features such as a solar PV system also provide financial sustainability in the form of direct savings on energy costs, improving the saleability of your home and a potential home sales premium.

In a 2018 survey by the Pam Golding Property group, “70.3% of its agents estimated that homes with green features record a price premium of up to 5%, while 54.4% of agents stated that buyers are showing an increased interest in green features.” 2

According to Ooba, “Energy-efficiency has become a buzzword for house-hunters – not just because of load shedding, with homeowners around the globe trying to go green. A home that is less dependent on the grid makes for a sound investment opportunity.” 3

What does this all mean?

A smarter and more sustainable home can offer you cost savings and certainty through independence from Eskom – and these solutions will undoubtedly make your home more attractive to prospective buyers.

All these factors (and more) combine to create a perception of the value in prospective home buyers’ minds.

As they say in marketing, perception is reality.

So, does this perception of enhanced value translate into real value?

Listed in Table 1 (below) are several estimates from reputable international research for quantifying the potential home sales premium as a result of having a solar PV system installed.

Table 1: Sources of international research on solar PV and home sales premium

The Appraisal Journal cited researchers Ruth Johnson and David Kaserman“Value increase of about $20 for every $1 saved on annual energy costs.”
A study by the Lawrence Berkeley National Laboratory“$5,000 resale value increase for every kilowatt (kW) of solar installed.”
The National Bureau of Economic Research (NBER)“Price premium of up to 4% (depending on size and age/condition of system).”

Reference – 4

Using the methods in Table 1, we created a rough guideline on how to estimate your home’s potential sales premium by having a solar PV system installed. *Please see Annexure B*

The estimates from the National Bureau of Economic Research (4%) in Table 1 and the aforementioned Pam Golding Properties survey (5%) are close enough to provide a basis for estimating the potential home sales premium in South Africa.

In the following illustration, we depict a range of potential sales premiums made possible by installing a solar PV system in a South African home.

Please see Methods and Assumptions

Acknowledging the limitations of applying these methods and estimates is pertinent, especially considering the lack of local data.

With that being said, we want to leave you with a final thought. Put yourself in the prospective buyer’s shoes. Imagine you have narrowed your choices down to two houses on the same street. The selling price is similar and so are the houses. The only major difference is that the owner of one house decided to install a solar PV system.

The houses don’t seem so similar anymore. One of them is smarter, more sustainable, and offers independence from ever-increasing electricity tariffs and protection against load-shedding.
 
Which house would you be more interested in buying or be willing to pay a premium for?


*We would like to extend a special thank you to Sandra Gordon and Anthony Stroebel. We greatly appreciate your time and effort spent on providing us with invaluable insights.

ANNEXURE A

We know that solar PV can offer independence from Eskom’s unreliable service.

Although we were in lockdown most of the year, South Africa still experienced its worst year ever of load-shedding in 2020with a total of 1798GWh shed and 859 hours of outages.

To put that into perspective, there are 8 760 hours in a year.

We had load-shedding almost 10% of the time in 2020.

Eskom has not been off to a good start in 2021 either. According to data from Eskom se Push we had already seen 560 hours of load-shedding in the first half of 2021.5  

Will the situation improve?

According to a technical report by the CSIR, Eskom’s coal fleet’s Energy Availability Factor (EAF) has declined from 94% in 2002 to 57% in 2019. Degrading infrastructure, scheduled maintenance, and unexpected breakdowns exacerbate the rate at which the coal fleet’s EAF declines.

This means the situation is likely to get worse (at least, before it gets better).6

Solar PV has also become much more affordable, whereas Eskom is progressively more unaffordable. From 2007 to 2019, Eskom’s average electricity tariffs increased by 446%. Over that same time period, the price of solar PV modules decreased by more than 90% from R57,4/Wp  to  R5,32/Wp. 7


For the 2021/2022 year, the average monthly electricity bill is about R1 508 across all income groups in the four major metropolitan areas (Cape Town, Joburg, City of Tshwane and eThekwini).*B

Solar PV is dramatically more environmentally friendly too.

Several lifecycle greenhouse gas (GHG) emissions studies show that solar PV, at only 50g of  CO2-eq./kWh, has a fraction of the lifecycle GHG emissions of coal (948g  of  CO2-eq./kWh). 8

Remember, most of the electricity generated by Eskom comes from coal-fired power plants.

These studies analysed the emissions over the entire lifecycle of each technology, from the mining of raw materials to manufacturing to operation to decommissioning at the end of its useful life.9 

ANNEXURE B

*We adjusted the monthly electricity cost and solar PV system cost estimates from the methods in Table 1 to reflect those in South Africa rather than America.


Using the methods from Table 1, we begin our calculation with R2 034, the average monthly electricity bill for lower-middle to upper-income groups (LSMs 5 to 10) for the 2021/2022 year.*B

According to the Appraisal Journal, a solar PV system can enable a home sales premium of up to R20 for every R1 saved on annual energy costs.

To calculate potential annual savings, we multiply the R2 034 average monthly electricity bill by 12 months, which equals about R24 000.

Next, we multiply R24 000 by R20 which gives us a potential sales premium of R480 000.

To get to that same R480 000 but using the Lawrence Berkeley National Laboratory method which estimates R75 000 sales premium for every kW of solar installed – you would need to have about a 7kW solar PV system installed. *C and D

According to a 2021 BusinessTech article, having a 5kW solar PV system installed will cost about R110 000.

This equates to R22 000 per kW installed, thus we can expect the 7kW system mentioned above to cost about R150 000.10

If our potential sales premium is about R480 000 and the cost of our solar PV system is about R150 000, we arrive at an arbitrage opportunity of R330 000.

We must consider that, if the potential 4% sales premium is R480 000, the total starting price of our home would need to be R12 000 000.

Since most of us don’t have a home valued at R12 million, let us work out the sales premium using the average selling price of houses in South Africa for property in the lower-middle (R638 200) income group to luxury value property (R2 300 000).11

In 2019, the average selling price of houses for the above groups was about R1 300 000. Subsequently, the 4% sales premium would be about R52 000.

Green Economy Journal Issue 48

REFERENCES

1 – https://www.corelogic.com/intelligence/the-top-four-ways-millennials-are-changing-the-housing-market/

2 – https://blog.pamgolding.co.za/greener-living-rise/

3 – https://www.ooba.co.za/resources/living-off-the-grid/

4 – https://www.solarreviews.com/blog/do-solar-panels-increase-home-value

5 – https://www.timeslive.co.za/news/south-africa/2021-06-09-dark-times-weve-had-560-hours-of-load-shedding-so-far-in-2021/

6  –  https://researchspace.csir.co.za/dspace/bitstream/handle/10204/11483/Wright_2020_edited.pdf?sequence=7&isAllowed=y

7 – https://ourworldindata.org/grapher/solar-pv-prices

8  –  https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_chapter7.pdf

9  –   https://reinvestproject.eu/wp-content/uploads/2019/11/OR_RE-INVEST_Life-cycle-GHG-emissions-of-renewable-and-non-renewable-electricity.pdf

10 – https://businesstech.co.za/news/energy/313854/this-is-how-much-it-will-cost-to-install-solar-panels-in-south-africa-based-on-the-size-of-your-house/

11 – https://www.intergate-immigration.com/blog/cost-of-living-in-south-africa-ultimate-guide/

Methods and Assumptions

*A – We want to make it clear: The ranges shown in the “Real Value: An Overview of Estimates” illustration, as well as the more detailed sales premium estimation guideline found in Annexure B, are based on rough international data which we further adjusted to make it more relevant in the South African context.

With many variables, some of which have changed drastically over the last few years, these sales premium ranges and estimation guidelines are rough at best. They are only intended to give a basic idea of how a solar PV system can potentially lead to a home sales premium.

*B – Average residential electricity consumption data was obtained from Goliger, A. and Cassim, A. (14 and 15 July 2017). Tipping Points: The Impacts of Rising Electricity Tariffs on Households and Household Electricity Demand. 3rd Annual Competition and Economic Regulation (ACER) 2017 Conference, Dar es Salaam, Tanzania. Last accessed: 21/08/2017.

*B – Average effective residential electricity tariffs were calculated from the published 2021/22 tariffs of the following four metropolitan municipalities: City of Johannesburg, City of Tshwane, City of Cape Town and Ethekwini, using the average electricity consumption values for LSM5-10 obtained from the above references.

*C – The solar PV systems as discussed in this article include battery back-up and are thus either hybrid or off-grid residential solar PV systems. Grid-tied systems do have some form of backup (AC grid power) and provide cost savings with solar energy they do not have a back-up in the case of load-shedding. Thus, in our estimations, we focused on hybrid and off-grid solar PV systems.

*D – At the time of writing the exchange rate was R15 to the Dollar

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How To Put It Back Together Again

Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
Four-score Men and Four-score more,
Could not make Humpty Dumpty where he was before

Samuel Arnold Juveline Amusements, 1797[i]

BY LLEWELLYN VAN WYK, B. ARCH; MSC. (APPLIED), URBAN ANALYST

Humpty Dumpty is a character in an English nursery rhyme, probably originally a riddle and one of the best known in the English-speaking world. He is typically portrayed as an anthropomorphic egg, though he is not explicitly described as such. Its origins are obscure, and several theories have been advanced to suggest original meanings. I thought it particularly appropriate to describe the following article – what are the impacts on the global economy and how does it recover.

Impact and Response

Many commentators and economists are focusing on how governments go about rebuilding their national and city economies once the world has passed through what Christopher Joye calls the Global Virus Crisis (GVC).[ii] According to The Economist, policy response has generally been swift and decisive.[iii] Globally central banks have cut interest rates since January 2020 and have launched new and substantial quantitative-easing schemes (creating money to buy bonds) while politicians are opening the fiscal taps to support the economy.

In the US, America’s Congress passed a bill that boosts spending by twice as much as President Barack Obama’s package in 2009. Britain, France, and other countries have made credit guarantees worth as much as 15% of GDP, seeking to prevent a cascade of defaults. On the most conservative measure, the global stimulus from government spending this year will exceed 2% of global GDP, a much bigger push than was seen in 2007-09. Even Germany, whose fiscal rectitude is a cultural cliché, is spending more.[iv]

The analysts at The Economist caution though that to focus just on the quantitative changes misses something crucial, which is that there are important qualitative changes underway in how policymakers manage the economy—the responsibilities they have assumed for themselves, what is seen as a legitimate action, and what is not, and the criteria used to judge policy success or failure. On these measures, the analysts note, the world is in the early stages of a ‘revolution in economic policymaking’.

Central banks have in effect pledged to print as much money as necessary to keep down government-borrowing costs. The European Central Bank is promising to buy everything that governments might issue thereby reducing the gap in borrowing costs between weaker and stronger euro-zone members, which widened in the early days of the pandemic.

The analysts note that politicians, too, are ripping up the rulebook. In past recessions, enterprises could go bankrupt and people, too, become unemployed. Even in normal economic times, roughly 8% of businesses in OECD countries go under each year, while 10% or so of the workforce lose a job. Now governments hope to stop this from happening entirely. President Emmanuel Macron reflects the view of many when he vows that no firm will “face the risk of bankruptcy” because of the pandemic.

Boris Johnson, Britain’s prime minister, contrasts his government’s response with the one during the last financial crisis: “Everybody said we bailed out the banks and we didn’t look after the people who really suffered”. Larry Kudlow, the director of America’s National Economic Council, calls America’s fiscal stimulus “the single largest Main Street assistance programme in the history of the United States,” comparing it favourably with Wall Street bailouts a decade ago.

To that end the analysts note that governments across the rich world are channelling vast sums to firms, providing them with grants and cheap loans to preserve jobs and keep their doors open. In some cases, the government is paying the wages of people who cannot work safely: the EU has embraced this policy, while the British state will pay up to 80% of the wages of furloughed workers. The American package includes loans to small businesses that will be forgiven if workers are not laid off. Households across the rich world are being given temporary relief on mortgages, other debts, rent and utility bills. In America, people will also be sent cheques worth up to $1 200.

Most economists support these measures. Nominally they are temporary, designed to hold the economy in an induced coma until the pandemic passes, at which point the world is supposed to revert to the status quo ante. But history suggests that a return to pre-Covid-19 days is unlikely.

Two lessons stand out:

1. Governmental control over the economy takes a large step-up during periods of crisis.

2. The forces encouraging governments to retain and expand economic control are stronger than the forces encouraging them to relinquish it, meaning that a “temporary” expansion of state power tends to become permanent.5

Road to Recovery

The extent of the economic damage and the time it will take for the economy to recover is subject to a high degree of speculation, and new models have been created to project a recovery trajectory. For example, the recovery can be V-shaped (after the downward fall the recovery will follow a straight line back to the original growth trajectory); U-shaped recovery (like V-shaped but with a longer turnaround period); VU shaped recovery (an initial pop, or sugar hit (the V), which is then superseded by a second, much slower growth phase (the U) due to a huge increase in debt repayment burdens and big creative destruction-induced output gaps (or excess productive capacity) as the virus forces the global economy to effectively rewire itself); Z-shaped (recovery follows the V-shaped trajectory but overshoots the original trajectory due to pent-up demand before falling back to the original trajectory); W-shaped (recovery begins buts fall back before climbing back up again); and L-shaped (growth recovers but ends up lower than that of the pre-C-19 economic growth).

In a survey of 106 economists and real estate experts conducted by Pulsenomics and Zillow, 41% of panellists expect the US recovery to follow a “U” shape, with the recession lasting several quarters before returning to growth.[vi] This prediction is in line with how the experts expect the US economy to recover overall. Forty-one percent said they think the economic recovery will follow a “U” shape, and 33% say it will be a bumpy, multi-year return to trend growth. Both patterns are characterised first by a sharp decline and then match how experts see transaction volume recovering, with the consensus generally being a more gradual journey back to normal.

Whatever the final shape may turn out to be, Eswar Prasad and Ethan Wu, writing for the Brookings Institution, warns, “The world economy is on the precipice of its worst crisis since World War II. As the newly updated Brookings-FT TIGER (Tracking Indexes for the Global Economic Recovery) makes clear, economic activity, financial markets, and private-sector confidence are all cratering. And if international cooperation remains at its current level, a far more severe collapse is yet to come.”[vii]

A wide variety of economic and survey data suggest that the economy will recover slowly even after the government begins to ease limits on public gatherings and allow certain shuttered restaurants and shops to reopen. Many economists and business owners say there will be no rapid economic rebound until people feel confident that their risks of contracting the coronavirus have fallen, either through widespread testing or a vaccine.[viii]

Prasad and Wu argue that while the current extraordinarily sharp downturn could prove to be relatively brief, with economic activity snapping back to previous levels once the Covid-19 contagion curve is flattened, there is good reason to worry that the world economy is heading into a deep, protracted recession. In their view, much will depend on the pandemic’s trajectory and whether policymakers’ responses are sufficient to contain the damage while rebuilding consumer and business confidence. They do not believe that a rapid recovery is likely due to ravaged demand, extensive disruptions to manufacturing supply chains, and a financial crisis already underway.

They, like many other commentators, draw a distinction between the 2008-09 crash, and Covid-19. Unlike the 2008-09 crash, which was triggered by liquidity shortages in financial markets, they point out that the Covid-19 crisis involves fundamental solvency issues for firms and industries well beyond the financial sector. In addition, they note, the current shock is simultaneous and universal. During and immediately following the 2008 crisis, some emerging markets, not least China, and India, continued to register strong growth, pulling the rest of the world economy along. But this time, no economy is immune, and no country will be able to lead an export-driven recovery.

Today’s collapse has increased deflationary and financial risks in the advanced economies and struck a significant blow to commodity exporters.

On top of it all, oil prices are plunging even more than they otherwise would, due in large part to Saudi Arabia and Russia flooding the market. In their view all told, the economic and financial carnage wrought by the coronavirus could leave deep, lasting scars on the global economy. While they recognise that central banks are stepping up to the challenge, they point out that central banks cannot offset the fall in consumer demand or stimulate investment by themselves. With both conventional and unconventional monetary-policy tools already stretched to the limit, fiscal policymakers will have to do more.

They suggest that well-targeted fiscal measures can soften the blow to consumers and businesses—especially small and medium-sized enterprises, which typically have minimal financial buffers—thereby helping to sustain employment and demand. In these desperate times, such measures should be fully embraced by all governments that currently benefit from low borrowing costs, even if they already have high levels of public debt.

They also emphasise that low- and middle-income countries that have inadequate health systems will need substantial support from the international community, potentially including concessionary debt relief.

But there is an elephant in the room: unfortunately, the world’s inability so far to forge a common front attests to the erosion of international cooperation, which is further damaging business and consumer confidence. They too, like many other commentators, call for this to change.

The world urgently needs honest and transparent information-sharing by national leaders, coupled with aggressive steps to contain the pandemic, extensive stimulus to mitigate the economic fallout, and a carefully calibrated strategy to restart economic activity as soon as it is safe to do so.

Christopher Joye agrees with the sentiments expressed by Prasad and Wu. Joye sees the global economy being burdened by a great deal more public and private debt because of the enormous fiscal policy responses that will need to be serviced through tax revenue and corporate/household earnings. This he argues will drag on future global growth after the initial pop in activity as businesses restart and the working-age population gets back into their day jobs.

On the matter of whether this precipitates a sovereign debt crisis, he believes that ultimately the central banks can cauterise this problem by continuing to do what they are currently doing: i.e., funding their domestic treasuries by buying government bonds via quantitative easing (QE).

After all, he notes central banks were originally created to fund governments during times of war (that term again), and that is arguably where the world finds itself now in terms of response.

On the question of inflationary shock, he expects the deflationary impulse of the GVC via the huge sudden increase in labour supply to overwhelm the inflationary impulse of the crisis over the short-to-medium term (in the next year or two) noting that the near-term inflation pressures obviously come through supply-chain rigidities as labour is taken temporarily offline.

He foresees a key consequence of the GVC as compelling much greater internalisation of supply-chains, especially those that service critical infrastructure and security-sensitive goods and services. In terms of changes, it is suggested that the GVC will result in permanent economic damage akin to a form of creative destruction where the virus kills off weak companies as well as unproductive employees. This he suggests is because many businesses will come back looking different, shedding low-quality workers, and closing unprofitable activities/subsidiaries.

Some industries will be permanently changed in both positive and negative ways, for example, entire communities are being forced to get much more comfortable with online shopping and the associated delivery process, reducing at the margin the demand for traditional retailing.

The cinema industry will be irreversibly damaged as consumption shifts away from theatres to on-demand digital platforms like Apple and Netflix, which will, in turn, allow these distributors to capture more of the value-chain in the same way Amazon did with bricks and mortar retailing. The commercial property sector is also likely to feel this change as there is a possibility of a permanent decrease in the demand for both office and retail space. Many companies may conclude they can save overhead by remaining disaggregated (not renting office space). This will result in a decline in the value of commercial properties, and the risk associated with commercial property debt could increase sharply.

Commercial property lenders’ LVRs might suddenly jump because of this. Indeed, he argues that a lot of distress in commercial property debt portfolios can be expected over the next 12 months.

The embedding of Zoom, or cheap video conference technology may dissipate the value of face-to-face meetings and result in a permanent decrease in the demand for expensive business-related travel and accommodation, adversely impacting airlines and hotels, as companies seek to enhance their operating efficiencies.

Creative destruction

All this creative destruction could result in unemployment rates not returning any time soon to their pre-GVC levels which will, in turn, place downward pressure on wages. Ultimately, he concludes that this will result in a battle between the shock of the new – a virus that derails life as we knew it – and the opportunities presented by the gigantic stimulus afforded by fiscal and monetary policy.[ix]

Some commentators are not as pessimistic: Paul Krugman, one of the world’s most influential economists and 2008 Nobel prize winner, is pretty upbeat about the economy. In a Q&A session with Noah Smith from Bloomberg, he suggests that even though this crisis is different from anything seen before, there is a rather good handle on the economics. In particular, he argues, enough is known to understand why conventional responses like stimulus or tax cuts are inappropriate, and why we should be focusing on safety-net issues.

On the issue of duration, Krugman argues that data would suggest a fast recovery once the virus is contained. But he provides some big caveats. One is that the duration of the pandemic is not known: if countries open too soon, it will extend the period of economic weakness. The second is that even if there were not big imbalances before, the slump may be creating them now. Business closures will require time to reverse. He also wonders how much long-term change will be experienced because of the virus. If there is a permanent shift to more telecommuting and less in-person retail, then there will be a shift of workers to new sectors, which will take time. All that said, he does not see the case for a multi-year depression.[x]

Analysts at The Economist believe that some economies will suffer much more than others because economic crises expose and exacerbate underlying structural weaknesses.

They argue that three factors should help separate the bad economic outcomes from the dire ones:

1. a country’s industrial structure; the composition of its corporate sector; and the effectiveness of its fiscal stimulus. Regarding the first, those countries that depend on labour-intensive activities will be harder hit. This includes countries reliant on their construction and tourism sectors. Conversely, those industrial structures that enable more people to work from home should not be hit as hard.

2. Economies with a large share of small firms are likely to be hit harder because smaller enterprises tend to have few if any cash buffers, making it difficult for them to survive a drop in revenues.

3. The ability of the country to roll out large stimulus packages. Some countries have provided significant packages while others, especially those with high debt levels, are more constrained. The design of the stimulus also plays a part: some countries are providing support directly to households while others are subsidising wages.

Post-C19 Economic Structural Reforms

Analysts do not generally support government pledges to protect jobs as it prevents workers from moving from failing sectors to new emerging ones, thereby slowing the recovery. If the lockdown ends early some economies will be able to resume production quickly.[xi]

A huge question remains however: what will be the lasting effects of Covid-19? Every day, in ways small and large, the spread of the coronavirus is reshaping politics.

John Cassidy, in a piece in Bloomberg.

As the death toll rises and the economic fallout spreads, he argues that measures once considered unthinkable are being adopted, and not just in the public-health sphere.

Analysts from The Economist believe that the size of the state will alter. In the short term, they foresee government debt rising sharply as spending jumps and tax revenues collapse. Thereafter, government attention will turn to repaying the debt.

They also see central banks’ innovations having lasting consequences. They, as do many other economists, do not see inflation rising any time soon, but do have a concern about deflation especially as central banks are pressured into lowering interest rates to zero to support government borrowing.

Then they see the possibility that this novel idea that the government needs to preserve firms, jobs, and workers’ incomes at practically any cost may become embedded in government, especially if the intervention proves successful in narrow terms. Although the policy may formally end once the pandemic has passed, political pressure for similar support schemes—from the nationalisation of tottering firms to the provision of a universal basic income—may well be higher the next time a sharp downturn comes along. If politicians can preserve jobs and incomes during this crisis, many people will see little reason why they should not try again in the next one.

In the same vein, they see calls for a more activist fiscal-monetary government coming against a backdrop of structurally higher demand for state spending. The public sector tends to provide labour-intensive services in which productivity improvements are difficult, such as healthcare and education, yet it must match the salaries of workers in other sectors to retain its own, even as they become less productive relative to the overall economy—a phenomenon which raises the cost of provision. Governments focus on social support during C-19 might raise expectations that it is the new normal, especially in the health sector. In the US, net support for Medicare for All—those who support it minus those who oppose it—has risen by nine points.[xii]

In another significant development, the mass layoffs that have resulted from the pandemic have also laid bare the iniquities of the gig economy, in which Uber drivers and other online-platform workers, temp-agency workers, and a whole variety of freelancers do not have access to health insurance, sick leave, or unemployment insurance. During an appearance on CNBC, the investor James Chanos said he was selling short the stocks of gig-economy companies because their business model, which is based on classifying workers as self-employed to avoid giving them costly benefits, is likely to be challenged by both political parties.

The Economist’s analysts believe that the likely economic effects of the pandemic reach far beyond the role of the state. Countries could become even less welcoming to immigrants based on an argument that it will reduce any likelihood of infection from foreign arrivals.

Using the same logic, resistance to the development of dense urban centres could mount, thereby limiting the construction of new housing and rising costs. More countries may seek to become self-sufficient in the production of strategic commodities such as medicines, medical equipment, and even toilet paper, contributing to a further rollback of globalisation. However, they argue that the redefined role of the state could prove to be the most significant shift noting that the rules of the game have been moving in one direction for centuries.

Their conclusion: another radical change is looming.[xiii]

Trend transformation

Scholars from the Brookings Metropolitan Policy Program on the other hand believe that a major transformation is unlikely and point out instead that the Covid-19 crisis seems poised to accelerate or intensify many economic and metropolitan trends that were already underway, with huge implications of their own.[xiv]

One of those trends they foresee is automation. Mark Muro, one of the scholars, notes that while automation in the workplace has been spreading over the last decade, it will likely surge in the coming years because as firms’ revenues decline, workers become relatively more expensive. In this case, Covid-19 won’t so much change the automation trend as amplify it, increasing the vulnerability of young people, people of colour, and those with less education and further dislocating jobs in food service or cashiers as they become automated.

Another trend they ponder is whether the trauma of social distancing and the rise of telework will finally empty out the ‘superstar’ cities and lead to a decentralisation of the nation’s hyper centralised urban map. They believe this might happen.

Then there is the continuance of Big Tech itself: while it seems natural to assume that virtually every industry will be humbled by Covid-19, they think it is likely that the big tech titans—Amazon, Facebook, Google, Microsoft, Apple, Netflix, etc.—will emerge from the crisis stronger than ever.

These titans previously captured dominant market shares in the decade following the last recession and are likely to further capitalise as stay-at-home workers rely on their remote work tools, video calling, e-commerce, and video streaming. They point out that these giants are sitting on huge piles of cash and will be ready to snap up any choice tech or other properties that stumble.

Tracy Hadden Liu, another team member, argues that retailers, their landlords, and suppliers were already responding to multiple industry-wide trends before the coronavirus struck, including tariffs, a shift in consumer demand from products to experiences, e-commerce, and the sharing economy. The resulting strains that were already motivating these players to innovate or exit are simply accelerating the need to be creative and embrace new models to deal with the disruption arising from the pandemic.

In the property market, it is suggested that a 10-year commercial lease in a single-use building will no longer be standard: seasonal retailers were already experimenting outside of the big box, including markets and pop-ups in flexible spaces.

So were office tenants through WeWork and other co-working spaces. In addition to new formats and lease terms, profit-sharing leases will become an increasingly important tool to help new businesses get started, survive slowdowns, and provide a return to landlords who invest in their tenants’ success.

In the food sector, convergence and hybridisation will accelerate in food retail, which will return to be a revitalising force in urban life. Liu points out that IKEA was already a furniture showroom, warehouse, and restaurant. High-end grocers were encouraging shoppers to have a beer prior to the outbreak of the pandemic.

Restaurants were increasingly not just dine-in, but fast-casual or mobile food trucks. Whether through app-based delivery or prepared food from wholesalers’ people will return to eating much of their food prepared outside the home. In 2017, jobs in leisure and hospitality (which includes all bars and restaurants) grew to outnumber jobs in retail trade.

Liu believes that for commercial real estate and local governments, food retail will continue to grow in importance. Restaurants, in whatever format, will continue to be a growing share of tenants and sales tax generators as other storefronts are impacted by tariffs and e-commerce oligopolies. And the more people eat out, the more proximity to food retail will shape office and residential tenant demand, as well as home sales. Her summation: the pandemic is a setback, but not a reset.

Another pre-Covid trend raised is the housing crisis. Martha Ross and Jenny Schuetz, two members of the team, note that in the best of times—for example, when unemployment is below 4%— tens of millions of workers still earn barely enough to live on, meaning that basic costs like housing were already a stretch for these and other workers. More than 75% of low-wage workers are ‘housing-cost burdened,’ i.e., they spend more than 30% of their income on rent. The typical low-income renter household spends more than half of its income on rent.

In the Covid-19 era—with mass layoffs in hospitality, retail, and entertainment—earnings have simply disappeared for millions of workers and many households that previously strained to pay rent will now find it impossible.

People commonly reduce housing costs by “doubling-up” with family or moving into lower-quality housing. Given the thin financial reserves held by renter households, many people will be forced into one of these options. Notwithstanding a halt on evictions in some countries, stronger and more direct financial assistance will be required for households. While the housing affordability crisis predates the current health crisis, it will worsen in the short run if governments are slow to respond.

Inequality increases among older Americans is another trend identified by Annelies Goger and Nicole Bateman. They note that 40% of workers over age 62 earn low wages. Covid-19 is likely to have eroded savings across the board which means that many older workers may have to stay in their job out of necessity. It is possible that labour outcomes could worsen for older workers who lose their jobs in the sense that it will take much longer for them to find another job, and generally that will come with a pay cut too.

Covid-19 will accelerate yet another trend namely the declines in microbusiness employment. Microbusinesses with under four employees are only half as likely to add jobs as larger businesses already. Recent statistics demonstrate how microbusinesses have been on the losing end of long-run structural shifts in the US. The team estimates that about 2.9-million microbusinesses are in industries at immediate or near-term risk from Covid-19. How many of those microbusinesses survive will depend, they think, on the duration of social distancing measures and the success of countervailing policies. They do stress that without a robust policy response to not only mitigate small business damage in the immediate term but also support entrepreneurship more robustly in the recovery, the pandemic will accelerate the structural decline in microbusiness employment.

Humpty Dumpty Economies

At a more fundamental level, Kallis G., Paulson, S., D’Alisa, G., and Demaria, F. argue that the pandemic has laid bare the fragility of existing economic systems, and what will be required to become more resilient to crises – pandemic, climatic, financial, or political – is to build systems capable of scaling back production in ways that do not cause loss of livelihood or life: “We need degrowth” they suggest. Their argument is based on the observation that current economic systems are organised around the constant circulation, where any decline in market activity threatens systemic collapse, provoking generalised unemployment and impoverishment.

While they point to commentaries made by publications such as Forbes, the Financial Times and the Spectator who have been quick to claim that the pandemic has revealed the ‘misery of degrowth’, they argue that what is happening is not degrowth, but purposefully slowing things down in order to minimise harm to humans and earth systems and to reduce exploitation. In their view, degrowth is a project of living meaningfully, enjoying simple pleasures, communing, sharing, and relating more with others, and working less, in more equal societies.[xv] 

New Green Deal

There is widespread support for the recovery spend to be used to simultaneously address the other elephant in the room – climate change. Many argue that the pandemic must not be a reason to weaken the commitments to net-zero emissions. In fact, the argument is made that climate action is vital protection against further global shocks, especially as governments plan their post-pandemic stimulus packages.

It will be tempting for some governments to overlook the climate change challenge in the rush to restart the economy. Anna Skarbek cautions that some governments are already eyeing the fossil fuel sector as a beneficiary of any post-Covid-19 stimulus. Not all governments have responded to a rising chorus of voices demanding a green economic recovery.

The International Monetary Fund has been tracking national stimulus and economic recovery plans. So far, only a handful of them directly targets climate change, the IMF reports. On the contrary, some spending is headed in the opposite direction through government fuel subsidies and other fossil fuel-friendly measures. The IMF’s Covid-19 recovery tracker notes a lot of global spending on electricity cost relief. Other measures the IMF has noted include fuel price discounts for aviation. Some governments are buying fuel for their fishing fleets, while others are extending economywide fuel subsidies instead of eliminating them as the United Nations’ top leadership has called for.[xvi] The energy minister in Australia is flagging gas-fired power to stimulate the economy.[xvii]

There is particular concern over how China will design an overall economic recovery plan. Following the global financial crisis of a decade ago, Beijing launched a massive round of infrastructure spending that saw its greenhouse gas emissions soar to new heights. China is now by far the world’s largest producer of heat-trapping emissions. In a recent study published in the journal Nature Sustainability, scholars in Malaysia and Australia expressed concern over China’s vaunted Belt and Road Initiative, noting that Beijing has already directed nearly $575-billion overseas in efforts often aligned against sustainability objectives. They see more to come and are urging receiving nations and financing arms to put restrictions on the funding to ensure greater protections for biodiversity and other “indicators of environmental governance,” according to the research team, led by University of Queensland professor Divya Narain.[xviii]

For many countries, the lockdown response to Covid-19 has presented a horrific binary choice: economy at the expense of climate change, or climate change at the expense of the economy.

The socio-economic devastation the virus has inflicted is a reminder of our systemic vulnerability, and the importance of prevention and mitigation. As Anna Skarbek stresses, Covid-19 provides fresh evidence of the scale of economic shock the world faces if it fails to meet the targets of the Paris Agreement.

In a major study published in Nature Communications last month the dollar value put on the cost of climate inaction was between US$150-trillion and US$792-rillion by 2100 making the global shock even more financially catastrophic than coronavirus.[xix]

Fortunately, there is a third way out of this binary choice: Don Hall posts that one of the most hopeful things he has stumbled across since this crisis began is A Green Stimulus to Rebuild Our Economy: An Open Letter and Call to Action for Members of Congress which was published by a team of 11 prominent academics, scientists, policy experts, and non-profit advocates. More than 1 800 individuals and organisations signed on within the first nine days of its release.

The overall approach of the Green Stimulus Letter is based on five main principles namely:

1) health as the top priority for everyone

2) providing economic relief to directly to people

3) rescue workers and communities, not corporate executives

4) make a down payment on a regenerative economy while preventing future crisis

5) protect the democratic process while protecting each other

These five principles are supported by four key strategies:

1) create millions of new family sustaining, career-track green jobs

2) deliver strategic investments like green housing retrofits, rooftop solar installation, electric bus deployment, rural broadband development, and other forms of economic diversification to lift up and collaborate with frontline communities

3) expand public and employee ownership

4) make rapid cuts to carbon pollution[xx]

The research published in Nature Communications also points out that limiting global warming to 1.5°C would deliver a corresponding boost, with the global economy growing by US$616 trillion compared to inaction. Skarbek notes that research undertaken at Oxford University by Nobel-prize winner Joseph Stiglitz and climate economist Nicholas Stern concluded that climate mitigation actions deliver maximum economic growth multiplier benefits from a stimulus perspective.

The study catalogues more than 700 stimulus policies and makes comparisons with the global financial crisis of 2008. In the study they compared green stimulus projects with traditional stimuli, such as measures taken after the 2008 global financial crisis, and found green projects created more jobs, delivered higher short-term returns per pound spent by the government, and lead to increased long-term cost savings. Clean energy infrastructure construction is one example, generating twice as many jobs per pound of government expenditure as fossil fuel projects around the world. Others include expanding broadband so more people can work from home.[xxi] Stern also warned that stimulating new jobs in heavily emitting sectors was short-sighted. “The jobs of the past are insecure jobs,” he said. “[To create future jobs] we need the right kind of finance in the right place at the right scale at the right price.”

Net-Zero Zero-Net future

The strategic targeting of stimulus funds is therefore critical: the greatest risk to a systemic change in consumption and production patterns is for governments to occur increasing debt through spending trillions of dollars on propping up business, as usual, leaving no economic capacity to invest in building resilient local communities and moving toward a low-carbon future.

Researchers from the University of Oxford, the London School of Economics and Political Science, Columbia University, and the University of Cambridge, undertook a survey of 231 central bank officials, finance ministry officials, and other economic experts from G20 countries on the relative performance of 25 major fiscal recovery archetypes across four dimensions: speed of implementation, economic multiplier, climate impact potential, and overall desirability. Their study identified five policies with high potential on both economic multiplier and climate metrics: clean physical infrastructure, building efficiency retrofits, investment in education and training, natural capital investment, and clean R&D.

To monitor the stimulus spend, a team of researchers from Johns Hopkins University has set out to measure what percentage of the billions of dollars that world governments are spending on the recovery might result in lasting reductions of greenhouse gas emissions. They note that studies of the impacts of past economic downturns, such as the recession of 2007 to 2009, provide scant information on what percentage of the recovery money spent delivered long-term benefits to the climate. Estimates of the 2009 recession show that somewhere between 5% and 16% had impacts on climate change-related issues.

They caution that information from the aftermath of earlier recessions shows that typically rebounds have more than offset greenhouse gas reductions from the recessions themselves and quickly surpass what might have been saved if it is not done well.[xxii]

There is precedent from targeted directing of public funds that have worked in the past: President Obama was able to introduce a stimulus package stacked with incentives for green investment and tougher environmental regulation after the economic crash of 2008.

A post-pandemic economic reconstruction based on restructuring the energy map makes sense.

Enrique Dans

But for the Covid-19 event, signs thus far are mixed. The $2.2-trillion stimulus package agreed by the US Congress may have avoided sinking taxpayers’ dollars into a rescue plan for the country’s struggling coal industry, but it also failed to make any environmental requirements on those industries, such as the aviation industry, that were bailed out. Congress members have argued that in this case the holding up a desperately needed economic-rescue package in the name of climate action was an untenable proposition. However, care must be taken to avoid using that argument again.

The renewable energy sector is one of the sectors favoured by many commentators as a prime vehicle for stimulating the economic recovery while also mitigating climate change.

One of the concerns about RE in the past was its ability to carry the electricity mix, but as Tom Andrews, a senior analyst at Cornwall Insight notes, while the generation balance is likely to return to normal as countries come off lockdown, this has demonstrated that managing a grid with high renewable penetration is feasible. This may therefore become the new normal as more renewable generation is deployed across Europe.

Renewable energy is also supported by the International Energy Agency (IEA) who, in their Global Energy Review report, supported the view that renewables are the only power generation source that is experiencing rising demand and penetration amid the slump in energy demand brought on by Covid-19 industrial shutdowns. Due to priority dispatch for renewables and lower operating costs, the IEA expects solar, wind, and hydropower to experience uplift during the public health crisis and subsequent economic recovery.[xxiii]

In a policy brief for policymakers, the IEA presents four strategic considerations:

  1. Energy efficiency actions can support the goals of economic stimulus programmes by supporting existing workforces and creating new jobs, boosting economic activity in key labour-intensive sectors, and delivering longer-term benefits such as increased competitiveness, reduced greenhouse gas emissions, improved energy affordability and lower bills.

2. Governments can deliver stimulus at scale and speed by leveraging existing programmes and standardising designs, eligibility criteria and contracts; choosing shovel-ready options for retrofits and technology upgrades, and considering how energy efficiency can be built into all government stimulus programmes.

3. Important market considerations include aiming for high energy efficiency without constraining programme delivery; setting sufficiently attractive incentives to deliver high uptake without significantly increasing program costs and risks; considering the capacity of suppliers to scale up rapidly while maintaining quality and safety of products and services; and considering the consumer motivations and demand for products and services.

4. Government can facilitate better outcomes from large-scale investment programmes by addressing unnecessary regulatory barriers; turning short-term impacts into long-term transformations by raising energy efficiency standards; and considering the resource efficiency impacts and recycling sector opportunities as part of programme design.[xxiv] It is argued that apart from the climate change benefits, solar and energy storage in particular offer swift, job-intensive opportunities for growth, with average ground-mount sites able to be built in a few months and rooftop installations often taking only a day or two.

The EU’s C-19 recovery plan aims to do just that: their €750 billion ($825 billion) recovery package for the coronavirus pandemic includes plans to address the other global crisis, climate change. European Commission President Ursula von der Leyen views the proposal as a vehicle to steer the continent toward carbon neutrality by 2050, a critical deadline if the world is to avoid the worst effects of global warming. The EU plan calls for investments in clean technologies and value chains and for increasing investments in renewable energy, energy storage, hydrogen, and carbon capture as well as storage technologies. Funds under the plan would be directed toward installing 1-million EV chargers. It also proposes a renovation wave of basic infrastructure investments to create millions of jobs in construction, renovation, and other labour-intensive industries.

Most of the EU’s plan would be paid for via debt raised in capital markets, loans with very long-term maturities, by new taxes, including taxes on carbon emissions, a new carbon border adjustment mechanism, and taxes on big companies that benefit most from the single market. [xxv]

France also announced an €8 billion bailout of its automotive industry. However, the French plan is to boost domestic production of electric vehicles and see France emerge, as President Emmanuel Macron put it, “As the leading producer of clean vehicles in Europe.” The subsidy plans include exceptional support measures to help consumers purchase battery hybrid and all-electric vehicles.[xxvi]

South Korea ― the world’s seventh-largest source of planet-heating carbon dioxide ― too has set course to become the first East Asian country to reach net-zero emissions by 2050. The ruling party named its official climate manifesto the Green New Deal, becoming the biggest emitter yet to endorse moving toward the kind of industrial planning and social safety net expansion rarely seen outside of wartime. South Korea’s proposal includes ending public institutions’ financing of domestic and overseas coal projects, establishing a new program to retrain workers for green jobs, and making large-scale investments in wind and solar energy. The plan also pledges to research and consider a carbon tax.[xxvii]

As Enrique Dans put it, a post-pandemic economic reconstruction based on restructuring the energy map makes sense. We know we must do it, and we know the reason we haven’t done it so far is because it challenges the interests of a powerful few. The time has come to abandon outdated concepts, to change our mindset, and to put the use of renewables at the top of our list of priorities.[xxviii]

Some concern has however been expressed that a lack of a gender lens when designing the stimulus packages generally has favoured sectors dominated by men. In New Zealand, the Ministry for Women warned its minister that the stimulus package risked further exacerbating gender inequalities, particularly for wahine Maori, Pasifika, disabled and rural women. This is a likely unintended consequence of favouring infrastructure projects, a sector traditionally dominated by the male workforce. The ministry noted that women were just 14.4% of the construction workforce, and 24.5% of the electricity, gas, water, and waste services.[xxix]

Other industries such as retail, tourism and hospitality – also hard hit by the shutdown – employ high numbers of women. Johnston makes the argument that investing in social infrastructure such as health, caring, and education would create more jobs than the same investment in construction. It is argued that the absence of a gender lens is reflective of budgets being prepared without investigating ‘who” would benefit from the investment.

Cities are also responding to the opportunity. Amsterdam is pursuing a unique approach by adopting the so-called ‘doughnut approach’ developed by British economist Kate Raworth from Oxford University’s Environmental Change Institute. This model forgoes the global attachment to economic growth and laws of supply and demand in favour of a set of minimum needs required to lead a good life as encapsulated in the UN’s sustainable development goals which include food and clean water to a certain level of housing, sanitation, energy, education, healthcare, gender equality, income, and political voice.

The model defines an outer boundary that represents the boundaries across which humanity should not go to avoid damaging the climate, soils, oceans, the ozone layer, freshwater and abundant biodiversity. What is critical about the approach Amsterdam is following is the desire to “not fall back on easy mechanisms” as Marieke van Doorninck, the deputy mayor of Amsterdam, put it.[xxx]

Raworth puts it more succinctly’ “The central premise is simple: the goal of economic activity should be about meeting the core needs of all but within the means of the planet. The “doughnut” is a device to show what this means in practice.”[xxxi]She explains, “The world is experiencing a series of shocks and surprise impacts which are enabling us to shift away from the idea of growth to ‘thriving’.” This approach, she argues, recognises that our wellbeing lies in balance, and this is the moment we are going to connect bodily health to planetary health.

In the private sector, Covid-19 appears likely to reshape sustainable investing in part, because in the aftermath of the pandemic more focus will be placed on social factors, such as health and safety, and the treatment of staff. Some asset managers think that the pandemic will become an environmental, social, and governance (ESG) litmus test. They envision interrogating firms about their actions during the crisis to gauge the businesses’ sustainability credentials.

The pandemic may also help to focus the minds of private sector investors on other threats such as the impact of climate change. Few investors or companies took the risk of a pandemic seriously at the start of the year, and the threat of devastating floods or once-a-century storms often get a similar treatment, but C-19 may just change that.

Our wellbeing lies in balance, and this is the moment we are going to connect bodily health to planetary health.

And encouragingly a remarkable list of business leaders is adding their names to a call for stimulus funding to be invested in what they refer to as “the economy of the future.”[xxxii] Chief executives, chairs and senior executives from major organisations are urging for massive investments in renewable power systems, a boost for green infrastructure and buildings, targeted support for low-carbon activities, and other similar measures.

In Europe, this call is aimed at making the European Union the ‘world’s first climate-neutral continent’ by 2050. In Australia, a leading business group is calling for the two biggest economic challenges in memory – recovery from the Covid-19 pandemic and cutting greenhouse gas emissions – to be addressed together, saying it would boost growth and put the country on a firm long-term footing. This group is among a band of community leaders and industry groups urging governments to back climate solutions in the pandemic recovery rather than projects that entrench or increase emissions. The Investor Agenda, a global group of institutional investors and managers in a statement said governments should avoid prioritising “risky, short-term emissions-intensive projects”, and that accelerating the shift to net-zero emissions could create significant employment and economic growth while improving energy security and clean air. As they put it, “The path we choose in the coming months will have significant ramifications for our global economy and generations to come.”[xxxiii]

The Australian business group has identified a number of opportunities including improving energy management in homes and buildings by plugging drafts, modernising equipment and backing local electricity generation and storage; boosting electricity networks by rolling out smart meters and moving edge-of-grid customers onto mini-grids; helping shift heavy industry to run on clean electricity and hydrogen, and supporting large and small energy storage. On transport, the group said it was an excellent time to prepare cities and major corridors for mass take-up of electric vehicles by installing or preparing charging points at service stations, in public and government car parks, and at apartment blocks. They suggest governments would have different preferences on whether to use regulatory reform, tax incentives, grants, or other approaches but, using the example of electricity, urged government to settle on a sound long-term design for market rules and climate policy could do as much to boost investment as direct public financial support.

The public too is wanting to use this moment to recalibrate the structure of the economy. Polls taken in the United Kingdom finds that most Britons want quality of life indicators to take priority over the economy. As reported by Fiona Harvey, a YouGov poll has found eight out of 10 people would prefer the government to prioritise health and wellbeing over economic growth during the coronavirus crisis, and six in 10 would still want the government to pursue health and wellbeing ahead of growth after the pandemic has subsided, though nearly a third would prioritise the economy instead at that point.

The finding comes as millions of people face economic hardship because of coronavirus and the lockdown, while some measures of the quality of life – such as air pollution and the natural environment – are showing signs of improvement.[xxxiv]

Perhaps Kallis et al (2020) summed it up best in their study when they noted: “As we move from the rescue to the recovery phase of the Covid-19 response, policy-makers have an opportunity to invest in productive assets for the long-term. Such investments can make the most of shifts in human habits and behaviour already underway.”[xxxv]

Build, Build, Build: Investing in Infrastructure

Not surprisingly, most governments are including infrastructure development as part of their recovery plans: it makes economic sense to invest in asset formation rather than encourage consumer spending. However, there are debates about what type and scale of infrastructure to invest in. Some commentators are arguing for investment in housing, while others are looking for large-scale infrastructure investments.

As the US Congress and the White House contemplate the next phase of the government response to the coronavirus pandemic and its economic toll, legislators are increasingly raising the prospect of enacting a multitrillion-dollar infrastructure plan that, they claim, could create thousands of jobs. As the novel coronavirus ravages the economy, parties appear to be coalescing behind the idea of something akin to a New Deal-style jobs program to help the nation cope with what is expected to be a deep recession.

Speaker Nancy Pelosi of California outlined the contours of their proposal, building off a five-year, $760-billion framework. Among the new provisions are an extra $10-billion for community health centres fighting the spread of the pandemic and a programme that would provide federal grants to pay for drinking water and wastewater utility bills in low-income households during public health crises. Democrats’ infrastructure plan includes billions of dollars to expand the country’s passenger rail network, improve Amtrak stations and services, maintain ports and harbours, increase climate resiliency and further address greenhouse gas pollution. It would also dedicate funds to expand broadband access, a response in part to the extent that millions of Americans have depended on internet connectivity while staying at home to slow the spread of the virus.[xxxvi]

It has long been argued that construction has a significant multiplier effect in terms of upstream and downstream job creation. At the same time, providing affordable housing appears to be a serious challenge for most governments. Paul Emrath marries these two issues together when he makes the case for investment in homebuilding based on the economic impact that residential construction has on the economy. The most obvious impacts of new construction, he notes, are the jobs generated for construction workers.

But, at the national level, the impact is broad-based, as jobs are generated in the industries that produce timber, concrete, lighting fixtures, heating equipment, and other products that go into a home or remodelling project. Other jobs are generated in the process of transporting, storing, and selling these products. Still, others are generated for professionals such as architects, engineers, real estate agents, lawyers, and accountants who provide services to home builders, home buyers, and remodelers. He found that in the US construction sector building an average single-family home created 2.9 jobs; an average rental apartment 1.25 jobs; and for every $100 000 spent on remodelling 0.75 jobs. The above numbers are for full-time equivalents, i.e., enough work to keep one worker employed for a full year based on average hours worked per week in the relevant industry.[xxxvii]

The British Prime Minister, Boris Johnson, seems to favour a “dig yourself out of the hole” approach as well, according to The Economist. In a speech on June 30, he announced a plan to increase capital spending to 3% of GDP, the highest consistent level since the 1970s, and will speed up £5bn of repairs to roads, schools, and hospitals. But Colin Talbot of the Centre for Business Research at the University of Cambridge makes the point that calling for more infrastructure without answering the questions of why and for what makes no sense. For example, will ailing towns be best served by becoming attractive commuter hubs for neighbouring cities, or by trying to revive their industries? Henry Overman of the London School of Economics argues that what ultimately makes places prosperous is a high density of skilled workers, which means thinking hard about education, welfare, and public health.[xxxviii]

There are however concerns about the quantum of funds needed to adequately fund infrastructure backlogs, notwithstanding the impressive numbers being quoted in government budgets. The findings of National League of Cities (NLC) new Covid-19 Local Impacts Survey of 1 100 US municipalities found that critical infrastructure is a key at-risk area as 65% of surveyed cities look to delay or cancel their infrastructure projects, which could create an “economic ripple effect” if actions aren’t taken to support capital expenditures and projects. As the vice-president of NLC put it, “I hate to say it, but the latest Covid-19 financial impact data we’re sharing with you today is painting a dire picture for our infrastructure future.”[xxxix]

Conclusion

As the world tries to deal with the ongoing challenges of Covid-19, it is worth reminding ourselves that infrastructure investment and climate action are both urgently need and that with the right approach, both goals can be achieved simultaneously. This article provides some indications of what the right approach may be.

READ THE ARTICLE IN GREEN ECONOMY JOURNAL ISSUE 48

References

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[iv] Briefing, 2020. “Rich countries try radical economic policies to counter covid-19.” The Economist, May 26, 2020. Available from: https://www.economist.com/search?q=rich%20countries%20try%20radical. Downloaded: March 26, 2020.

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[vi] Olsen, S. 2020. “Experts: Spring’s missing home sales will be added in coming years. Zillow, June 3, 2020. Available from: https://www.zillow.com/research/zhpe-missing-home-sales-27209/. Downloaded: June 5, 2020.

[vii] Prasad, E. and Wu, E., 2020. “Anatomy of the coronavirus collapse.” The Brookings Institution, Monday, April 13, 2020. Available from: https://www.brookings.edu/opinions/anatomy-of-the-coronavirus-collapse/?utm_campaign=Brookings%20Brief&utm_source=hs_email&utm_medium=email&utm_content=86296128. Downloaded: Thursday, 16 April 2020.

[viii] Tankersley, J. 2020. “Economic pain will persist long after lockdowns end.” The New York Times, 13 April 2020. Available from: https://www.nytimes.com/2020/04/13/business/coronavirus-economy.html?campaign_id=9&emc=edit_NN_p_20200414&instance_id=17621&nl=morning-briefing&regi_id=73055978&section=topNews&segment_id=25091&te=1&user_id=4c2641b64be4fbc96d3272bb1a96ae71. Downloaded: Wednesday, 15 April 2020

[ix] Joye, C. 2020. “Calling a ‘VU’ shaped recovery and creative destruction induced by GVC.” Coolabah Capital Investments, 7 April 2020. Available from: https://www.livewiremarkets.com/wires/calling-a-vu-shaped-recovery-and-virus-induced-creative-destruction-from-gvc?utm_campaign=8493&utm_medium=wire-page-share&utm_source=linkedin&utm_content=calling-a-vu-shaped-recovery-and-virus-induced-creative-destruction-from-gvc. Downloaded: Tuesday, 07 April 2020.

[x] Smith, N. 2020. “Paul Krugman is pretty upbeat about the economy.” Bloomberg, May 27, 2020. Available from: https://www.bloomberg.com/opinion/articles/2020-05-27/paul-krugman-is-pretty-upbeat-about-coronavirus-economic-recovery. Downloaded: Thursday, 28 May 2020

[xi] Finance and Economics, 2020. “How deep will downturns in rich countries be?” The Economist, April 16, 2020. Available from: https://www.economist.com/finance-and-economics/2020/04/16/how-deep-will-downturns-in-rich-countries-be?cid1=cust/ednew/n/bl/n/2020/04/16n/owned/n/n/nwl/n/n/A/452381/n. Downloaded: Friday, 17 April 2020

[xii] Cassidy, J. 2020. “The coronavirus is transforming politics and economics.“ The New Yorker, April, 6, 2020. Available from: https://www.newyorker.com/news/our-columnists/the-coronavirus-is-transforming-politics-and-economics?utm_source=nl&utm_brand=tny&utm_mailing=TNY_Daily_040420&utm_campaign=aud-dev&utm_medium=email&bxid=5be9f5bd2ddf9c72dc879e86&cndid=48809828&hasha=4c2641b64be4fbc96d3272bb1a96ae71&hashb=c9c1dba6c170b93151f4dd39d2d298d2cb950fd6&hashc=122c6030809ad6616af10d52091c32b56f95b8f727c69a827fdfdd7af1aa3c83&esrc=right_rail_magazine&utm_term=TNY_Daily. Downloaded: Sunday, 05 April 2020

[xiii] Briefing, 2020. “Rich countries try radical economic policies to counter COVID-19.” The Economist, March 26, 2020. Available from: https://www.economist.com/search?q=rich%20countries%20try%20radical. Downloaded: March 26, 2020.

[xiv] Muro, M., Loh, T., Ross, M., Schuets, J., Goger, A., Bateman, N., Frey, W., Parilla, J., Liu, S. and Tomer, A. 2020. “How COVID-19 will change the nation’s long-term economic trends, according to Brookings Metro scholars.” Available from: https://www.brookings.edu/research/how-covid-19-will-change-the-nations-long-term-economic-trends-brookings-metro/?utm_campaign=Brookings%20Brief&utm_source=hs_email&utm_medium=email&utm_content=86370408. Downloaded: Friday, 17 April 2020

[xv] Kallis, G., Paulson, S., D’Alisa, G., and Demaria, F. 2020. “The case for degrowth in a time of pandemic.” The Ecologist, May 18, 2020. Available from: https://theecologist.org/2020/may/18/case-degrowth-time-pandemic. Downloaded: May 31, 2020.

[xvi] Gronewold, N. 2020. “E.U.’s coronavirus recovery plan also aims to fight climate change.” E&E News, May 28, 2020. Available from: https://www.scientificamerican.com/article/e-u-s-coronavirus-recovery-plan-also-aims-to-fight-climate-change/?utm_s

[xvii] Skarbek, A. 2020. “Why it doesn’t make economic sense to ignore climate change in our recovery from the pandemic.” Available from: https://theconversation.com/why-it-doesnt-make-economic-sense-to-ignore-climate-change-in-our-recovery-from-the-pandemic-137282?onomic%20sense%20to%20ignore%20climate%20change%20in%20our%20recovery%20from%20the%20pandemic. Downloaded: Friday, 08 May 2020

[xviii] Gronewold, N. 2020. “E.U.’s coronavirus recovery plan also aims to fight climate change.” E&E News, May 28, 2020. Available from: https://www.scientificamerican.com/article/e-u-s-coronavirus-recovery-plan-also-aims-to-fight-climate-change/?

Downloaded: May 30, 2020.

[xix] Skarbek, A. 2020. “Why it doesn’t make economic sense to ignore climate change in our recovery from the pandemic.” Available from: https://theconversation.com/why-it-doesnt-make-economic-sense-to-ignore-climate-change-in-our-recovery-from-the-pandemic-137282? Downloaded: Friday, 08 May 2020.

[xx] Hall, D. 2020. “From what is to what if: A green stimulus and the importance envisioning the ‘impossible’”. Resilience, 22 April 2020. Available from: https://www.resilience.org/stories/2020-04-22/from-what-is-to-what-if-a-green-stimulus-and-the-importance-envisioning-the-impossible/. Downloaded: Saturday, 25 April 2020

[xxi] Harvey, F. 2020. “Green stimulus can repair global economy and climate, study says.” The Guardian, May 5, 2020. Available from: https://www.theguardian.com/environment/2020/may/05/green-stimulus-can-repair-global-economy-and-climate-study-says. Downloaded: Thursday, 28 May 2020.

[xxii] Fialka, J. 2020. “Researchers will track whether coronavirus recovery spending benefits climate.” E&E News, May 13, 2020. Available from: https://www.scientificamerican.com/article/researchers-will-track-whether-coronavirus-recovery-spending-benefits-climate/?Downloaded: Thursday, 14 May 2020

[xxiii] Hall, M. 2020. “COVID-19 weekly briefing: Evidence abounds of renewable energy gains at the expense of fossil fuels as the clamor for a green recovery rises.” PV-Magazine, 6 May 2020. Available from: https://www.pv-magazine.com/2020/05/06/covid-19-weekly-briefing-evidence-abounds-of-renewable-energy-gains-at-the-expense-of-fossil-fuels-as-the-clamor-for-a-green-recovery-rises/. Downloaded: Saturday, 09 May 2020.

[xxiv] IEA 2020. “Energy efficiency and economic stimulus.” International Energy Agency, 8 April 2020. Available from: https://www.iea.org/articles/energy-efficiency-and-economic-stimulus?utm_campaign=IEA%20newsletters&utm_source=SendGrid&utm_medium=Email. Downloaded: Monday, 20 April 2020

[xxv] Gronewold, N. 2020. “E.U.’s coronavirus recovery plan also aims to fight climate change.” E&E News, May 28, 2020. Available from: https://www.scientificamerican.com/article/e-u-s-coronavirus-recovery-plan-also-aims-to-fight-climate-change/?Downloaded: May 30, 2020.

[xxvi] Ibid.

[xxvii] Kaufman, A. 2020. “South Korea tackled the coronavirus. Now it’s taking on the climate crisis.” Huffington Post, May 8, 2020. Available from: https://www.huffpost.com/entry/south-korea-coronavirus-climate-crisis_n_5ea9e0d5c5b633a85444940b. Downloaded: Saturday, 09 May 2020

[xxviii] Dans, E. 2020. “In a post-pandemic world, renewable energy is the only way forward.” Forbes, May 5, 2020. Available from: https://www.forbes.com/sites/enriquedans/2020/05/03/in-a-post-pandemic-world-renewable-energy-is-the-only-wayforward/#55d0f9b517b6. Downloaded: May 6, 2020.

[xxix] Johnston, K. 2020. “Govt’s COVID-19 response slammed for ‘favouring men’.” The New Zealand Herald, 22 May 2020, A8.

[xxx] Boffey, D. 2020. “Amsterdam to embrace ‘doughnut’ model to mend post-coronavirus economy.” The Guardian, 8 April 2020. Available from: https://www.theguardian.com/world/2020/apr/08/amsterdam-doughnut-model-mend-post-coronavirus-economy. Downloaded: Thursday, 09 April 2020

[xxxi] Ibid.

[xxxii] Ibid.

[xxxiii] Morton, A. 2020. “Australian businesses call for climate crisis and virus economic recovery to be tackled together.” The Guardian, 4 May 2020. Available from: https://www.theguardian.com/environment/2020/may/05/australian-businesses-call-for-climate-crisis-and-virus-economic-recovery-to-be-tackled-together. Downloaded: Wednesday, 06 May 2020

[xxxiv] Harvey, F. 2020. “Britons want quality of life indicators to take priority over the economy.” The Guardian, 10 May 2020. Available from: https://www.theguardian.com/society/2020/may/10/britons-want-quality-of-life-indicators-priority-over-economy-coronavirus. Downloaded: Wednesday, 13 May 2020

[xxxv] Hepburn, C., O’Callaghan, B., Stern, N., Stiglitz, J., and Zenghelis, D. 2020. “Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?” Smith School Working Paper 20-02.

[xxxvi] Cochrane, E. 2020. “Infrastructure week returns as Trump and Democrats eye post-virus jobs plan. “ New York Times, April 1, 2020. Available from: https://www.nytimes.com/2020/04/01/us/politics/infrastructure-week-coronavirus.html?campaign_id=9&emc=edit_NN_p_20200402&instance_id=17271&nl=morning-briefing&regi_id=73055978&section=topNews&segment_id=23606&te=1&user_id=4c2641b64be4fbc96d3272bb1a96ae71. Downloaded: April 3, 2020.

[xxxvii] Emrath, P. “National impact of home building and remodeling: Update estimates.” NAHB, April 1, 2020. Available from: https://www.nahbclassic.org/fileUpload_details.aspx?contentTypeID=3&contentID=272642&subContentID=738975&channelID=311. Downloaded: June 16, 2020.

[xxxviii] The Economist, 2020. “Boris’s infrastructure plans.” The Economist, July 1, 2020. Available from: https://www.economist.com/britain/2020/07/01/boriss-infrastructure-plans?utm_campaign=the-economist-today&utm_medium=newsletter&utm_source=salesforce-marketing-cloud&utm_term=2020-07-01&utm_content=article-link-5. Downloaded: July 2, 2020

[xxxix] Musulin, K. 2020. “NLC: Financial impact data paints ‘dire picture’ of cities futures.” Smart Cities Dive, June 24, 2020. Available from: https://www.smartcitiesdive.com/news/nlc-financial-impact-data-paints-dire-picture-of-cities-futures/580383/. Downloaded: June 29, 2020.

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