Tackling climate change presents long-term opportunities for investors

With heat records being smashed across Europe and devastating floods in KwaZulu-Natal, the climate crisis is no longer being seen as a distant threat. This will add impetus to the decarbonisation of the world economy – with both risks and opportunities for investors.

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Standard Bank welcomes president’s call for private sector energy generation

Innovative platform enables any enterprise to sell energy

The South African president’s recent removal of the licensing threshold on embedded private generation, the announcement of feed-in electricity tariffs for the outright purchase of privately generated electricity, tax incentives for the construction of commercial generation installations, and a virtual – albeit temporary – scrapping of private power generation application red tape, marks a watershed in South Africa’s 14-year struggle against the socially and economically crippling onslaught of loadshedding and persistent energy insecurity.   

While the country breathes a collective sigh of relief that a comprehensive and broadly inclusive plan is finally on the table, “the effectiveness of these bold initiatives depends on how quickly they can be implemented, and how successfully the expertise available in South Africa’s private sector can mobilise and gear capital in the development of an environmentally and financially sustainable public-private energy future,” says Berrie de Jager, Head of Natural Resources at Standard Bank’s Business and Commercial Clients division.  

Kick-starting stalled construction on bid window five independent power producer projects by addressing impractical local procurement requirements, doubling the size of bid window six projects from 2 600MW to 5 200MW, issuing requests for proposals for battery storage, as well as the review and speeding up of Integrated Resource Plan allocations, are significant developments that the country’s existing energy sector should leverage – and take to scale – with alacrity. “The funding mechanisms and capital structures enabling these projects have long been in place. They are proven and are working well in the formal, relatively restricted, public-private renewable generation sector,” observes de Jager.

What is most exciting about the president’s recent announcement, however, is the new opportunity that these pronouncements present in the decentralised energy generation space, that is “the niche and entirely untapped energy market that sits behind the Eskom or municipal meter,” says de Jager.

Making this space available for general investment for the first time means that almost any business in any sector can now potentially generate – and sell – any amount of energy to the grid. In short, once the required regulatory adjustments are made, energy production, sale and trading will no longer be the preserve of the state and its exclusive and very limited circle of approved energy partners.

Instead, if South Africa urgently implements the reforms promised on Monday night, “investment in the country’s energy market will expand exponentially, allowing all manner of innovative combinations of energy generation, sale and supply,” predicts de Jager. From malls to mines, hotels to hospitals, and farms to factories – every business or even small enterprise might soon be participating in the generation and sale of electricity.  

While Eskom will retain control through a soon-to-be spun off transmission entity regulating and controlling the trading and transmission of energy across the grid, “the key challenge for South African businesses wishing to participate in the country’s new energy market is managing the financing, construction delays and cost overruns that typically plague private generation projects,” reports de Jager. Poor quality energy generation technology investments are another common pitfall preventing businesses with no knowledge of energy generation from reaching cash-neutrality as quickly as possible.

To help businesses manage the operational and reputational challenges associated with independent energy generation, Standard Bank has developed a digital platform to support clients in procuring high quality and financially sound Solar Photo Voltaic solutions.

Even before the president’s recent announcement, “we designed PowerPulse as a digital platform to empower ordinary businesses to produce, deliver, consume and trade energy,” says de Jager. Whether you are a financial executive looking to manage energy costs, feel overwhelmed by the jargon and complexity of technical solutions, or are simply unsure of which providers to use, PowerPulse provides the answer. “PowerPulse even assists with financial modelling, delivering a report which can be used to justify renewable energy investments to boards or investors,” adds de Jager.  

In Standard Bank’s experience, a key need for any business thinking of building an independent energy generating and trading capability includes accessing and shortlisting accredited engineering, procurement and construction partners. Introductions to specialist concierge teams to guide the process is also critical for businesses whose core capability is not energy. As such, PowerPulse is also linked to solar photo voltaic and other technical knowledge bases across the energy value chain, “connecting client enterprises with the specialist energy experts, advice and resources that they may require,” reports de Jager.  

Supported by this kind of energy procurement and build capability ecosystem, “any businesses can confidently add an energy income stream to their existing operations or infrastructure,” says de Jager.

Moreover, knowing that clients are being guided by PowerPulse provides Standard Bank with the confidence to provide funding support to as many clients as possible, “heeding the president’s call to contribute to South Africa’s future energy security in a profitable and sustainable manner,” concludes de Jager.

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The load shared: Ramaphosa calls for South Africans to be part of solution

25 July 2022

President on actions to address the electricity crisis in SA. He calls for all South Africans to be part of the solution; to contribute in whatever way they can to end energy scarcity.

Fellow South Africans,

Tonight, I want to address you about the energy crisis that is confronting our nation.

During the past three weeks, severe load shedding has disrupted all of our lives and caused immense damage to our economy.

The daily power cuts we have been experiencing have inconvenienced millions of households and have presented huge challenges for businesses.

After more than a decade without a reliable electricity supply, South Africans are justifiably frustrated and angry.

They are fed up.

We have therefore developed a set of actions to respond to the crisis.

The crisis that we are facing requires that we should take bold, courageous and decisive action to close the electricity gap.

This is a call for all South Africans to be part of the solution; to contribute in whatever way they can to ending energy scarcity in South Africa.

As government we are announcing a number of interventions to overcome the immediate crisis.

In the past 10 days, I have held extensive discussions with the Eskom executive management, power station managers and former Eskom personnel.

I have also met with labour federations, Business Unity South Africa, the Black Business Council, community representatives and several experts in the energy sector. This morning, I also met political party leaders.

I am grateful for the valuable proposals made by all those we have met.

These meetings have helped to shape our response and ensure that all sections of South African society are involved in solving this problem, as this is a national crisis.

All the people I have spoken to have said this is the time when the country must unite to address this challenge.

The set of additional actions I am announcing this evening:

Firstly, are aimed at improving the performance Eskom’s existing fleet of power stations;

Secondly, will accelerate the procurement of new generation capacity;

Thirdly, are intended to massively increase private investment in generation capacity;

Fourthly, are designed to enable businesses and households to invest in rooftop solar; and,

Finally, are directed at fundamentally transforming the electricity sector and positioning it for future sustainability.

Fellow South Africans,

For our response to be effective, we need to understand the problem.

South Africa has installed capacity to produce approximately 46,000 MW of electricity, and at peak times we use about 32,000 MW of electricity.

However, only 60% of this installed capacity is available at any given time due to some units going through planned maintenance and others having unplanned outages.

Many of our power stations were built many years ago.

The average age of Eskom’s power stations is 35 years. Generally as power stations get older, their performance deteriorates.

The construction of our newest power stations, Medupi and Kusile, started late and they have experienced several delays and some design flaws.

These challenges are being addressed.

As a result of this, Eskom deferred essential maintenance to keep the lights on, which is causing breakdowns and failures now.

The performance of some of Eskom’s power stations have been further worsened by extensive theft, fraud and sabotage.

After years of state capture and mismanagement, a capable and effective management team is working hard to turn the utility around and reverse years of decay.

However, as things stand, we are still faced with an electricity shortage of up to 6,000 MW.

In recent weeks, a combination of factors resulted in 18,000 MW of generation capacity being lost, and forced Eskom to implement stage 6 load shedding.

Eskom has to implement load shedding to prevent the electricity grid from collapsing, and to ensure that we never experience a complete blackout.

The factors that led to the latest load shedding included a number unit breakdowns at some power stations.

We also experienced damage to the transmission line from Cahora Bassa in Mozambique and there were also instances reported of deliberate damage to equipment.

Teams within Eskom have worked hard to bring generation units back online and stabilise the national grid.

As a result of their efforts, the system outlook has improved over the past week.

The agreement reached between Eskom and workers has allowed critical repairs to the units that had broken down to be undertaken and normal electricity generation operations to resume.

Progress has also been made by law enforcement agencies in tackling sabotage, theft and fraud at Eskom’s power stations and other key installations.

While these actions to stabilise electricity generation have brought relief from the current load shedding, the system remains vulnerable and unreliable.

The shortage of electricity is a huge constraint on economic growth and job creation.

It deters investment and reduces our economy’s competitiveness.

As this administration, we have already taken important steps to increase generation capacity and diversify our energy supply.

One of the first steps we took to address the electricity shortfall was to revive the renewable energy procurement programme in 2018.

Since then, over 2,000 MW of solar and wind power has been connected to the grid through Bid Window 4 of the programme.

A further 2,600 MW of capacity has been procured through Bid Window 5, which will begin to add capacity from early 2024.

We have started to diversify generation by allowing parties other than Eskom to generate electricity.

In June last year, we raised the licensing threshold for new embedded generation projects from 1 MW to 100 MW.

This removed the licensing requirement for generation projects up to 100 MW that are connected to the grid.

This measure enabled these generators to have the ability to sell electricity to one or more customers, such as factories, mines or data centres.

We also changed the regulations to allow municipalities to procure power independently.

A number of municipalities are already in the process of doing so.

Eskom recently made land available next to its power stations in Mpumalanga for renewable energy projects, which will unlock 1,800 MW of new capacity.

Eskom has identified additional land that will be released for this purpose.

These actions are significant and they will make a difference over the coming months and years.

What the most recent load shedding has made clear, however, is that the actions we have taken and continue to take are not enough.

We are therefore implementing additional measures to achieve long-term energy security and end load shedding for good.

First, we are fixing Eskom and improving the performance of our existing fleet of power stations.

Over time, the maintenance programme of Eskom’s electricity generation fleet has declined.

It is now been decided that over the next 12 months, Eskom will increase the budget allocated for critical maintenance to increase the reliability of its generation capacity.

We are cutting red tape that has made it difficult for Eskom to buy maintenance spares and equipment within the required period to effect repairs.

One of the challenges that Eskom has faced has been the shortage of skilled personnel and engineers.

The utility is now recruiting skilled personnel, including former senior Eskom plant managers and engineers from the private sector.

These skilled personnel will support various personnel and help to ensure that world-class operating and maintenance procedures are reinstated.

Over the next three months, Eskom will take additional actions to add new generation capacity to the grid on an urgent basis.

As an immediate measure, surplus capacity will be bought from existing independent power producers.

These are power plants which built more capacity than was required and can now supply this excess power to Eskom.

As part of addressing the shortage of megawatts, Eskom will now also purchase additional energy from existing private generators such as mines, paper mills, shopping centres and other private entities that have surplus power.

A number of our neighbouring countries in Southern Africa, such as Botswana and Zambia, have more electricity capacity than they require.

Eskom will now import power from these countries through the Southern African Power Pool arrangement.

Eskom will also use interim power solutions, such as mobile generators, to supplement current generation capacity for a limited period.

Eskom will implement a programme that encourages efficient energy use by consumers to reduce demand at peak times.

We have spoken in the past about Eskom’s huge debt, which stands at close to R400 billion.

The debt continues to be a huge burden on Eskom’s ability to address its many challenges.

The National Treasury is working to finalise a sustainable solution to Eskom’s debt.

The Minister of Finance will outline how government will deal with this matter in an effective manner when he presents the Medium-Term Budget Policy Statement in October.

We will use climate funding provided through the Just Energy Transition Partnership to invest in the grid and repurpose power stations that have reached the end of their lives.

Eskom will be constructing its first solar and battery storage projects at Komati, Majuba, Lethabo and several other power stations. These will result in over 500 MW being added to the system.

The South African Police Service has set up a special law enforcement team to help Eskom in confronting crime and corruption.

A number people have been arrested in recent days and several others are already being prosecuted for corruption and fraud involving Eskom contracts.

With improvements in the regulatory environment and mobilisation of society, Eskom will be well positioned to carry out its maintenance and investment programmes.

There can be no longer any excuses.

These steps will allow us to limit load shedding to lower stages and reduce the risk of such severe load shedding in future.

To end load shedding, however, we need to urgently add much, much more capacity to the grid.

Our second priority is therefore to accelerate the procurement of new capacity from renewables, gas and battery storage.

The relevant government departments are working together to ensure that all projects from Bid Window 5 of the renewable energy programme can start construction on schedule.

This includes taking a pragmatic approach to the local content requirements for these projects, prioritising the need to build new capacity as quickly as possible.

The Department of Trade, Industry and Competition together with the Independent Power Producers Office will provide further details in this regard within the coming days.

The amount of new generation capacity procured through Bid Window 6 for wind and solar power will be doubled from 2,600 MW to 5,200 MW.

We will release a request for proposals for battery storage by September this year, and a further request for gas power as soon as possible thereafter

The Minister of Mineral Resources and Energy will issue a determination for the remaining allocations in the Integrated Resource Plan 2019, and will open further bid windows on an expedited basis.

To ensure effective planning, the country’s Integrated Resource Plan is being reviewed to reflect the need for additional generation capacity and our climate commitments.

Third, we are accelerating greater private investment in generation capacity.

Last year we announced the raising of the licensing threshold to 100 MW.

This move was widely welcomed. It has unlocked a pipeline of more than 80 confirmed private sector projects with a combined capacity of over 6,000 MW.

We are already working together with industry to accelerate the most advanced projects, several of which are already entering construction.

These changes have fundamentally changed the generation landscape.

Following the success of this reform and the enthusiasm shown by the private sector, we will remove the licensing threshold for embedded generation completely.

This will enable private investment in electricity generation to rise to higher levels.

While they will not require licences, all new generation projects will still have to register with the regulator and comply with the technical requirements for grid connection and our environmental legislation.

One of our greatest challenges in adding capacity to the grid is the time that it takes for any energy project to receive the necessary approvals and commence construction.

The process, from design to commercial operation, has tended to take more than three years due to lengthy regulatory processes and red tape.

While existing legislation may be sufficient in ordinary times, the current crisis requires that we act decisively and more speedily.

We will therefore be tabling special legislation in Parliament on an expedited basis to address the legal and regulatory obstacles to new generation capacity for a limited period.

We raised this matter this morning with leaders of political parties represented in the National Assembly.

There was broad agreement that this process should be hastened once the special legislation is tabled in Parliament.

We will in the meantime waive or streamline certain regulatory requirements where it is possible to do so within existing legislation. 

This includes reducing the regulatory requirements for solar projects in areas of low and medium environmental sensitivity.

It also means Eskom can expand power lines and substations without needing to get environmental authorisation in areas of low and medium sensitivity and within the strategic electricity corridors.

We are also establishing a single point of entry for all energy project applications, to ensure coordination of approval processes across government.

I have instructed departments and entities to review all existing time frames and to ensure we process all applications on an urgent basis.

These measures are preferable to declaring a state of disaster or even emergency, as some have suggested.

These interventions will allow us do what is necessary to accelerate new generation capacity while protecting the rights of all South Africans and upholding the rule of law.

We do not need a state of emergency or national disaster to implement common sense regulations that should help in resolving our energy crisis.

Fourth, we intend to enable businesses and households to invest in rooftop solar.

South Africa has great abundance of sun which we should use to generate electricity.

There is significant potential for households and businesses to install rooftop solar and connect this power to the grid.

To incentivise greater uptake of rooftop solar, Eskom will develop rules and a pricing structure – known as a feed-in tariff – for all commercial and residential installations on its network.

This means that those who can and have installed solar panels in their homes or businesses will be able to sell surplus power they don’t need to Eskom.

We call on all South Africans to use electricity sparingly as we work towards ending load shedding and getting more energy on the grid.

Finally, we are fundamentally transforming the electricity sector and positioning it for future sustainability.

We have spoken in the past about restructuring Eskom, which will result in three entities, namely an electricity generation entity, an electricity transmission entity and an electricity distribution entity.

Eskom has established an independent transmission company and is on track to separate its generation and distribution businesses by the end of 2022.

We will soon be appointing boards for the transmission and generation entities.

Broader reforms to establish a competitive electricity market will be expedited through the finalisation of the Electricity Regulation Amendment Bill to enable private sector investment.

These changes will radically transform the structure of the electricity sector for future generations.

Many other countries have taken this route and have been able to stabilise electricity generation.

They will diversify our energy sources and improve the security of supply.

These changes will allow more generators, both private and state-owned, to compete on an equal footing.

The grid will remain state-owned.

Eskom will continue to be the mainstay of our country’s energy industry as we improve its efficiency, financial sustainability and performance.

To ensure that these measures are implemented in a coordinated manner, I have established a National Energy Crisis Committee.

The committee is chaired by the Director-General in the Presidency, and brings together all the departments and entities involved in the provision of electricity.

The National Energy Crisis Committee will draw on the best available expertise from business, labour, professional engineering entities and community-based organisations. 

The relevant Ministers will report to me directly on a regular basis to ensure that we move quickly to implement these actions.

Fellow South Africans,

The measures I have outlined are not just to address our immediate constraints.

Our ultimate objective is to achieve long-term energy security, so that we never have to experience an electricity shortage again.

We aim to do this by stabilising Eskom and improving plant performance, establishing a competitive electricity market, opening the way for private investment in new generation capacity and increasing our investment in renewables.

These measures are necessary to revive economic growth and create jobs.

In the process, we will position our country as a leading player in the transition to new and sustainable energy sources, turning this crisis into an opportunity for future growth and resilience.

Just as government will play its part, I call on business, labour and all of society to join us in this effort.

This includes urgent implementation of the Eskom Social Compact and reinforcing the commitments and concrete steps to be taken by all social partners.

Just as we rallied behind the national effort to contain the COVID-19 pandemic, so too must we now contribute wherever we can.

As households we can use electricity sparingly.

We must pay for services and prevent illegal connections.

We must join in a massive rollout of rooftop solar and contribute to the solution.

Business needs to reduce its consumption through greater energy efficiency.

Business should seize the opportunities that have been created and invest in generation projects.

Labour should engage in a spirit of partnership, mindful that achieving energy security is the most important thing we can do to protect existing jobs and create new ones.

Last weekend, I visited the Tutuka power station in Mpumalanga, whose performance has been badly affected by criminal activities.

We heard of maintenance spares being stolen and sold back to Tutuka and other power stations.

We were told of ongoing theft of oil in a massive scale and the deliberate damaging of equipment so that Eskom should hire equipment from private contractors.

What is happening at Tutuka and other power stations is deliberate sabotage by well-organised criminal syndicates that are destroying the utility and damaging our economy.

After my visit to Tutuka, I met with all of Eskom’s power station managers.

I was impressed with the diversity of this group of men and women and their commitment to getting in the right skills and ensuring adherence to a maintenance philosophy.

We owe the teams at these power stations a debt of gratitude for their actions.

They set a fine example for the rest of us.

The measures we are announcing this evening, together with the steps we have already taken, will hasten the end of load shedding.

They will put our country on a clear path towards reliable, affordable and sustainable energy supply.

If we work together, if we hold each other to account, if we meet our deadlines and fulfil our commitments, we will end the energy crisis and create the conditions for growth and job creation.

More than that, we will show that we are up to the challenge of rebuilding our beloved country.

Ministers who serve in the Energy Crisis Committee brief the media following President Cyril Ramaphosa’s address to the nation to further outline measures to ensure long-term energy supply in South Africa.



IN ISSUE 53, WE UNCOVER THE FUTURE OF ENERGY IN SA
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Minister Creecy brings contextual clarity to section 24h registration authority regulations

3 Aug 2022

The Minister of Forestry, Fisheries and the Environment has published the amendments to the section 24H regulations, which were gazetted for public consultation on 31 December 2021, for implementation. Comments on the proposed amendments have been duly considered, and the Regulations were revised accordingly.

The amendments are required in order to provide contextual clarity, certainty on who is required to be registered as an environmental assessment practitioner (EAP) and by when, specify tasks that can only be performed by a registered EAP and to address potential implementation challenges.

The amendments require the registration of EAPs responsible for NEMA environmental authorisation (EA), section 24G of NEMA and waste management license (WML) application processes, and specify tasks that may only be performed by a registered EAP for those categories.

The amendments to the Regulations furthermore explicitly exclude certain role-players in the NEMA EA, NEMA Section 24G and WML application processes from the requirement to be registered based on reasons of rationality and practicality. These include persons that take the final decisions on applications such as the Ministers responsible for the environmental and mineral resources, Members of the Executive Council (MECs), Director-Generals (DGs) of the DFFE and the DMRE, Heads of Departments (HODs) or persons acting in any of those positions; persons who provide comments on documents; and persons who investigate, assess, or prepare  specialist reports.

The amendments will not limit or exclude the participation of any person in the public participation processes for applications that fall within the scope of the Regulations, but will advance the professionalisation of the EAP sector.

The deadline for the compulsory registration of EAPs performing the specified tasks is 8 August 2022.

The Gazette for the amendments and a record of the comments and responses report for comments emanating from the public consultation process can be accessed at: National Environmental Management Act, 1998 (Act No. 107 of 1998) Amended of the section 24h registration authority regulations, 2016 [G 47133 – GoN 2320]

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A new approach to the regulation of residue stockpiles and deposits is on the cards

By Kirsty Kilner, Partner & Lerato Molefi, Associate from Webber Wentzel

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The impact of the G7’s multi-billion dollar plan on Africa’s infrastructure gap

Heightened focus on sustainability and social impact

By Michael Foundethakis, Baker McKenzie’s Global Head of Projects and Trade & Export Finance, and Africa Steering Committee Chair

In late June 2022, it was announced at the G7 Summit in Germany that a USD600-billion lending initiative, the Partnership for Global Infrastructure Initiative (PGII), would be launched to fund infrastructure projects in the developing world, with a particular focus on Africa. The G7 countries – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – explained the PGII would help address the infrastructure gap in developing countries.

The US

The US has recently renewed its focus on impact-building and financing strategic, long-term infrastructure projects in Africa, with the Export-Import Bank of the United States (EXIM) supporting infrastructure development on the continent. According to a 2020 report by McKinsey and Company – Solving Africa’s infrastructure paradox – the US accounts for 38% of global investors who have an appetite for African investment, by far the most of any country. In 2021, the US launched a refreshed “Prosper Africa initiative”, focusing on improving reciprocal trade and investments that create jobs and build infrastructure between the two regions. In 2022, the US announced it would mobilise USD200-billion over the next five years as part of the PGII, in the form of grants, financing and private sector investments. Some deals have already been announced, including, for example, a USD2-billion solar energy project in Angola, and the building of multiple hospitals in Côte d’Ivoire.   

The EU

In February 2022, the European Commission announced investment funding for Africa worth EUR150-billion. The funding package is part of the EU Global Gateway Investment Scheme and is said to be in the form of EU combined member funds, member state investments and capital from investment banks.

In early 2020, the European Commission published its Comprehensive Strategy with Africa, outlining the region’s plans for its new, stronger relationship with the continent. The strategy document laid out five top priorities for the EU in Africa: the green transition and improving access to energy; digital transformation; sustainable growth and jobs; peace and governance; and migration and mobility.

The UK

The UK is also making a strong play for influence, investment and trade with Africa, post-Brexit. Further to key summits in 2020 and 2021, finance is being redirected into Africa from the UK. In 2022, UK development finance institution (DFI), British International Investment (formerly CDC Group), announced it had exceeded its pledge to invest GBP2-billion in Africa over the last two years. The UK’s Global Infrastructure Programme helps partner countries (including in the African continent) to build capacity to develop major infrastructure projects, setting up infrastructure projects for success and paving the way for UK companies to support these projects.

Further, in November 2021, it was announced that the governments of South Africa, France, Germany, the United Kingdom and the United States of America, along with the European Union, were in negotiations to form a long-term Just Energy Transition Partnership. The partnership focuses on boosting the decarbonisation of the South African economy, with a commitment of USD8.5-billion for first round financing. It is expected that 1-1.5 gigatonnes of emissions will be prevented over the next 20 years, assisting South Africa to accelerate its just transition. Discussions are also currently taking place to establish a similar partnership in Senegal.

African solutions

The African Development Bank noted in early 2022 that Africa’s infrastructure investment gap is estimated at more than USD100-billion per year. DFIs are increasingly anchoring the infrastructure ecosystem in Africa – serving a critical function for project finance as investment facilitator and a check on capital. DFIs can shoulder political risk and access government protections in a way that others cannot, enter markets others cannot and are uniquely capable of facilitating long-term lending. The large amount of capital needed to fill the infrastructure gap, however, means that DFIs cannot bridge it alone. Private equity, local and regional banks, debt finance and specialist infrastructure funds are primed to enter the market, and multi-finance and blended solutions are expected to grow in popularity as a way to de-risk deals.

The African Unions 55 member states have stated that their primary funding needs include support in terms of safety and security on the continent, as well help in implementing the African Continental Free Trade Agreement (AfCFTA) and the massive infrastructure investment it needs to be successful. The development of supporting infrastructure is key to boosting AfCFTAs free trade potential, especially in terms of transportation, energy provision, internet access and data services, education and healthcare infrastructure projects.

Infrastructure projects in Africa now also have a heightened focus on improving Africa’s capacity for green, low-carbon and sustainable development, via, for example, clean energy, community healthcare and support, green transport, sustainable water, wildlife protection and low-carbon development projects. Funding such projects comes with responsibility –  projects must not only be bankable and yield attractive returns, but must also be sustainable and provide tangible benefits to local economies and communities. All of Africas major partners have noted they will prioritise projects that commit to Environmental, Social and Governance principles, and access to capital for large infrastructure projects is likely to contain sustainability requirements.

That the focus of the PGII is on the sustainability and the social impact of these projects in Africa is further evidenced in the White House briefing room statement issued at the launch in June 2022, where it was stated that the PGII will ’’mobilise hundreds of billions of dollars and deliver quality, sustainable infrastructure that makes a difference in people’s lives around the world.’

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Sun City Resort fights climate change while uplifting community with tree-planting project

Sun City Resort is helping to revive the citrus industry in the North West Province, traditionally a citrus-growing region, while at the same time uplifting unemployed youth and fighting climate change by reducing carbon emissions through tree planting.

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SANEDI’s Mandela Day brings the cool back to school 

Heat stress affects millions of children at schools, impacts their health and learning development. The reality of climate change is that children will become increasingly vulnerable and at risk to anthropogenic heating. This can result in severe dehydration, heat exhaustion, cramps and heat stroke. As a result, the South African National Energy Development Institute (SANEDI) is taking the cool back to the school. 

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Major step in South Africa’s climate response

The Presidential Climate Commission (PCC) welcomes the acceptance of the Just Transition Framework by President Cyril Ramaphosa on behalf of government. This is a major step in the country’s climate response and in achieving a just transition in South Africa. 

The PCC was established in December 2020 as an advisory body on South Africa’s journey to a net-zero economy and climate resilient society. The PCC unanimously adopted the Just Transition Framework at its Sixth Meeting held on the 27th of May 2022 following months of research and intense consultations with various social partners and communities across the country. The framework sets out the policy measures and undertakings by different social partners to minimise the social and economic impacts of the climate transition, and to improve the livelihoods of those must vulnerable to climate change.

The President is both Head of State and Chairperson of the Commission, giving unparalleled attention to the climate challenge at the highest level of government. In a meeting today between PCC Commissioners and the President, the President undertook to champion the framework within government, informed by the aspirations of workers, social partners, and our communities.

“Addressing climate change requires significant and unprecedented transformations across all sectors of the economy, with opportunities and challenges. Workers, communities, and poor people, whose lives and livelihoods are tied to high-emitting industries, may be particularly affected. It is for that reason that the PCC developed the recommendations for the just transition in a manner that supports and empowers impacted groups”- said Valli Moosa, Deputy Chairperson of the Commission.

While there are clear areas of consensus on achieving a just transition, there has not yet been a single policy framework that sets out the vision, principles and interventions that will give effect to this transition, as agreed to by all social partners. 

The Framework outlines a set of recommendations on “A Just Transition Framework for South Africa,” that are aimed at  bringing coherence to just transition planning in the country, with shared vision for the just transition, principles to guide the transition, and policies and governance arrangements to give effect to the transition.                                       

The PCC further recommends that “A Just Transition Framework for South Africa” is located within the central planning system of government, specifically in the national development plan, the medium-term strategic framework, annual performance plans, and annual budgeting processes, with each government department required to define their roles in relation to these objectives and the implementation of the framework.

“While the framework is not an implementation plan, it presents an organising frame for us to coordinate our efforts around the just transition. It is a foundation for more work to follow, underpinned by significant mobilisation towards social inclusion and help reach our climate goals, with a high degree of trust between all parties and a requisite policy intervention led by government, driven by industry and entrenched in our communities” said Moosa. 

Remarks by President Cyril Ramaphosa

Allow me to begin by congratulating the Presidential Climate Commission on its production of this important work that will guide our transition to a low-carbon, inclusive, climate resilient economy and society.

In doing so, we are meeting our international obligations as part of the global climate change effort, and also securing our country’s future. The Presidential Climate Commission was created in 2020 to engage with stakeholders to develop a framework for a transition that takes into account the principles of justice and equity.

We have been consistent that we are developing country that must be allowed its developmental space, and that no-one should be left behind.

As this Just Transition framework underscores, combating climate change is not only an environmental imperative, but an economic one as well.

This Framework is an evidence-based document and a victory for evidence-based policymaking.

It draws on a sizeable body of local and international research on the policies and practices related to the transition to a low carbon economy.

It lays out the pathway towards a sustainable, cleaner and more inclusive economy that we envisage for our country.

Though robust, it is still an organising framework, and will need a detailed implementation plan and action schedule.

Its strength is its broadly consultative nature. It incorporates a wide range of stakeholder views including those of government departments, business, small business, civil society, traditional leadership, epistemic communities, workers, and communities. This consultative process has ensured that broader society has made input on the document. 

The consensus achieved around its production means we will be able to take the transition forward in sync with all these stakeholders. This is especially insofar as it impacts sectors such as mining, automotive, tourism and agriculture.

It is encouraging that the Framework encompasses the principle of social justice and promotes equitable access to environmental resources. 

The Framework is also premised on the ethos of inclusion, public participation and the integrated approach to governance.

It also includes and complements international best practice.

Going forward, this Framework calls for the whole of government to adopt a comprehensive plan, accompanied by a set of activities to achieve a low-carbon economy and society. 

I would like to highlight in broad strokes some of the expectations and challenges as we go forward.

Among the most important recommendations is that government should ensure that the Just Transition must find expression in various plans such as the Medium-Term Strategic Framework, Annual Performance Plans as well as in the budget processes of every department.

It sets out the skills development, economic diversification, social support, governance and finance mechanisms required to make low carbon economy a reality. 

It advocates for a massive expansion of renewable energy, battery storage, new energy vehicles, green minerals and the hydrogen economy.

It calls for the creation of long term decent work that mitigates losses from the decline in fossil fuel usage. Green as the common expression goes, is the new gold.

In education, one of the immediate implications is re-skilling and upskilling the workforce, so that they are able to adapt to new technologies. 

The challenge we face is to overhaul the education system from basic education level, so that learners are thoroughly prepared for green jobs as part of the new economy. 

Also important is the  need to provide comprehensive social security safety for displaced workers and communities. 

We envisage that this support will include mechanisms that promote entrepreneurship and self-employment where possible, complemented by social protection funds. 
 
There will be need for significant capital mobilisation from both public and private sources. Now that we have this Framework we will be able to proceed apace with harnessing the benefits of the Just Energy Transition Partnership we concluded with the governments of the US, United Kingdom, Germany, France and the EU last year.

The publication of this Framework must now serve as a call to action to each of us to embrace the opportunities presented by a low-carbon, inclusive, climate resilient economy and society.

As the Nobel Prize laureate Wangari Maathai exhorts us: 

“We owe it to ourselves and to the next generation to conserve the environment so that we can bequeath our children a sustainable world that benefits all.”

This Framework is the culmination of efforts from government, business, civil society, labour, academia and other stakeholders. It gives true meaning to social compacting, and you have delivered on your mandate.

Once again, congratulations to all social partners on this effort. You have done our country proud. 

Let us now look to the next phase, namely a detailed action plan, and from this, implementation.

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Global water scarcity is code red for humanity, the answer is private finance

Half the world is now facing droughts, floods and filthy water – and the problem urgently requires huge amounts of private finance, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The warning from deVere Group’s Nigel Green comes as Italy declares a state of emergency amid the worst drought in 70 years. Elsewhere, Lake Mead, the largest reservoir in the United States, which provides water for tens of millions of people and countless acres of farmland in the southwest, is now just one-quarter full. Meanwhile, once again Sydney is flooded as the impact of the climate crisis becomes the new normal for Australia’s most populous state.

Nigel Green says: “There’s no doubt that all around the world the fallout of the growing climate crisis is accelerating.

“The UN’s Intergovernmental Panel on Climate Change has warned in a report that more than half the world’s population faces water scarcity for at least one month every year, others will be hit by regular severe floods, previously only seen once-in-a-generation, while others have access to only dirty water.

“This is now being played out in real-time every time you look at the news.”

He continues: “A failure to get a grip on this emergency is going to produce catastrophic, irreversible consequences later.

“The response will require political and social determination on a global scale. 

“But, critically, it will also require tens of trillions of dollars. As governments alone cannot afford this now, especially with slowing economic growth amongst other headwinds, the solutions demand private financing.”

As such, notes the deVere Group CEO, the financial sector needs now needs to become more proactive to “unleash and mobilise” the funds required.

He is calling for never-before-seen levels of cooperation between financial advisories, insurance firms, banks, wealth and asset managers, investment companies, fintech groups, banks, and auditors in the fight against climate change.

“Governments around the world have proven themselves to be slow – at best – at responding to the urgent ‘code red’ situation we’re facing.

“Therefore, the financial industry must step-up. If we don’t, the level of funding will not be available, nor at the pace necessary, to mitigate human-created global warming.”

Nigel Green concludes: “Climate change is the greatest risk multiplier to our planet, to our communities, and to our way of life.

“It will take huge amounts of private financing to halt its impact. 

“The onus now falls on the financial sector to help mobilise and unlock the necessary funds through education and robust, impactful investment solutions.”

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