Reorienting South Africa’s economy towards a low-carbon growth trajectory

1 September 2015

A move towards a green economy provides clean growth opportunities and benefits. The policy dilemma exists as a costly undertaking with trade-offs in terms of national efforts to realise national socio-economic priorities is needed.

The philosophy of green economies is the new policy direction sweeping across both developed and developing countries alike. Green economies are defined as economic systems organised in such a way that they take into account effects on the environment and the ecosystem. Central to the green economy is the desire to improve people’s lives by combatting climate change, energy insecurity, and ecological instability. In line with this definition, the green economy in South Africa is viewed as a sustainable de­velopment path that is based on its potential to address the interdependence between inclusive economic growth, social protection, and a natural ecosystem.Like any other new policy initiative, the social and economic impacts of a transition to a green economy both in the short and long term is not yet fully understood in South Africa. As such, it is important to assess the implications of the transition to a green economy at country-level using selected indices.

South Africa’s public policy agenda and green economy transition

South Africa, like other emerging economies, is contending with reorienting its economy towards a low-carbon growth trajectory. Efforts to reorient the economy can be traced back to the 2008 National Framework on Sustainable Development (NFSD), which transcended into a systems-approach to sustainability. This was done through the establishment of a first Sustainable Development Action Plan (NSSDI). The 2009 to 2014 Medium Term Strategic Framework (MTSF) highlights the need to implement the National Framework for Sustainable Development (NFSD) to ensure that the country follows a sustainable development trajectory into the future.

Several issues were identified as the driving force behind the “green” economy paradigm in South Africa: the growing concerns about environmental unsustainability of past and current economic growth patterns; an increased awareness of potential future climate crises. In this regard, emphasis is given to substantial growth in investment so as to achieve climate change mitigation; and the need for substantial transformation of behaviour, industry technologies, and structures.

Environmental policies and economic planning

South Africa’s Cabinet commissioned a Long-Term Mitigation Strategy to examine the potential for the mitigation of South Africa’s greenhouse gas (GHG) emissions. The central driver of the strategy has been the intractable global challenge of climate change. This defines South Africa’s position at the United Nations Framework Convention on Climate Change. Despite the push to cut down GHG, the government opted to be informed by the scenario that would see the growth of carbon emissions peak (up to 2020), plateau (between 2020-2030) and decline (from 2035).

In support of recommendations made, the South African government has adopted the National Development Plan (NDP) as a roadmap to attain good service delivery particularly in water, electricity, sanitation, jobs, housing, public transport, adequate nutrition, education, social protection, quality healthcare, recreation, and a clean environment. The NDP outlines interventions that can put the economy on an environmentally friendly footing. The NDP dedicates Chapter Five to addressing South Africa’s agenda towards full transition to a low-carbon and greener economy by 2030.While the target for job creation is set at 11 million by 2030, the economy needs to grow threefold to create the desired jobs more of which should fall within the green growth trajectory.

Some of the significant strides made between 2009 and 2013 include 860 billion South African rand on infrastructure, a 300 million rand natural green fund, and 400 million towards green economy projects. Approximately 315 000 solar geysers have been installed since 2009 with more than 200 000 households connected to national electricity grids.

Challenges linked to South Africa’s transition to green economy

The advantages of transitioning to a green economy for any country may include among others: a reduction in GHG emission and a subsequent mitigation of global warming and its associated adverse effect on people’s livelihoods; as well as a reduction in deforestation and support of sustainable agriculture (particularly for the rural poor). Transitioning to the green economy may also attach a price to nature, a public good that in turn makes its depletion more visible and felt by economic agents. Furthermore, this may enable the world to feed its rapidly increasing population.

However, the benefits of green economy transition need to be qualified by the adopting country. South Africa, for example, faces a number of challenges in comprehensively transforming its economy to a green economy. Since 1994, the country’s job creation rate has lagged behind national economic growth. This demands that South Africa intensify its industrial development. Moreover, at an average economic growth rate of 3.5 percent, South Africa finds it difficult to fully move away from coal-based energy considered to be polluting. What this suggests is that South Africa will continue to rely on coal as its main source of energy, despite good policies and initiatives for a green economy.

Other challenges that South Africa seems to face in implementing the transition to a green economy include: acquisition of technologies in the medium-term needed to support the transition, development of a local skills and infrastructure base that can effectively implement and support adoption, diffusion and effective use of green technologies.

Additionally, regulations to support the country’s transition to the green energy may increase the cost of living of the people, hence, may be resisted. For example, the introduction of an emission tax on vehicles as part of national environmental protection will undoubtedly create an additional tax burden on those possessing older vehicles in the country.

Effort for a green production will most likely increase the cost of production in the short term as new production techniques are introduced. This general increase in production costs may impact overall competitiveness of local products on the international market. In the end, the country could experience worse trade deficits than hitherto realised.

The country may be forced to provide incentives and subsidies to local producers in order to encourage them to embrace green production, as is being done in developed countries. Such a policy will add yet another drain to the national revenue pool, which is already constrained by the government’s many socioeconomic expenditure commitments. Policies intended to support the move towards the green economy can act as non-tariff barriers against products from South Africa and Africa in general destined to international markets.

Conclusion

From South Africa’s experience, it can be said that transition to a green economy is desirable despite that it poses a policy dilemma  as it seems to have  a high likelihood of being a costly undertaking that is coupled with trade-offs in terms of national efforts to balance national socio-economic priorities.

Authors: Thokozani Simelane is the programme leader for Science and Technology at Human Sciences Research Council (HSRC), South Africa. He is a member of Research Ethics Committee at HSRC.

Shingi Mutanga is the Research Specialist in the Science and Technology Programme at the Human Science Research Council. He is a PhD candidate at the University of Pretoria.

Godwell Nhamo is a professor at the University of South Africa. He is a chief researcher and Chair for Exarro Chair in Business and Climate Change.

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