The rate at which we will have to transition our economy to reduce our carbon emissions has increased considerably. This is both in a formal sense, through the commitments we have made to the international community in the form of our nationally determined contribution, and through the expectations that many stakeholders have that business and government work towards. net zero emissions by 2050.
Yet here is the question: if we are to meet these goals, we have to unite as a country. We will need all the social partners to commit. The challenge is that there will be compensations. Jobs will be lost in some parts of the economy as we move from carbon-intensive forms of production to renewable energy-based manufacturing. We must ensure that those who lose have an interest in the new activities that will emerge. This will require innovation and an unprecedented willingness to change.
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Over the years, I have learned that people can be trusted to resist change – it is uncomfortable and risky. But the climate challenge cannot be met without a massive will to change the way we currently do our work and live our lives. Of course, if we fail in this challenge, change will come anyway, it will be destructive as weather patterns change. We need to have the maturity and foresight to act now to limit the risks of a chaotic and unmanageable process that unfolds.
Business clearly has an important role to play. Eskom, of course, is critical due to its heavy reliance on coal-based power generation. Its CEO, André de Ruyter, has established a clear and ambitious plan for Eskom to transition its activities, which is linked to a broader review of the electricity supply sector. It is an example of the kind of ambitious thinking that we must all commit to.
The agreement announced last week by President Cyril Ramaphosa of a commitment by France, Germany, the United Kingdom and the United States to fund 131 billion rand to support South Africa’s transition was extremely important. I was pleased to see Cosatu express his support for the agreement. Its members and workers throughout the economy must accept the changes we face. Ultimately, this is how we protect jobs and make sure communities are not left behind in the transition. We need to find ways to direct economic activity back to cities that currently depend on coal mining and power generation. There are technological solutions supported by the fact that the network capacity is configured around those production areas.
In a sense, we are lucky that renewable energy sources have dropped in price so drastically. The results of the fifth round of the Independent Renewable Energy Producer Program confirmed this without a doubt. Photovoltaic solar energy had an average cost of 42c / kWh and wind at 37c / kWh. That is considerably cheaper than traditional energy production. Eskom’s electricity operating costs alone are 90.5c / kWh, which ignores the capital costs of power plant construction. There can be no debate now that the IPP program is reducing average costs for Eskom and low-cost renewable energy generation means that the transition as a whole will be cheaper than it would have been in the past.
Businesses have a lot to do to meet the challenge of transition. We need to diversify our own energy sources, promoting the use of renewable energy. The amended Electricity Regulation Act that allows companies to build plants of up to 100MW without a license allows many companies to adopt technologies such as rooftop solar, both to reduce carbon emissions and to reduce costs, also obtaining better electricity reliability. But this transition must be managed properly: we must seize the opportunities that present themselves on the supply side.
We must ensure that we build a national green technology industry to drive industrial development based on the greening of our economy. The IPP program has been able to stimulate part of the local production, but there is a much broader opportunity as many companies begin to acquire their own plant. All stakeholders must work together to ensure this opportunity is not lost; It is critical to provide the jobs and economic security that should replace those at risk of transition.
As an organized company, we are ready to join with work, civil society and government to drive this transition. I look forward to working with partners to ensure that we maximize the opportunities and manage the risks of the transition, especially to ensure that workers and communities do not lose out. We will need tenacity, creativity and a willingness to change. As COP26 concludes, let’s get ready to get down to business
Busi Mavuso is Executive Director of Business Leadership South Africa.