South Africa’s medium-term response to the Covid-19 pandemic provides a unique opportunity to reset the country’s unsustainable development pathway by fostering a “green recovery” that improves electricity and water security and creates jobs, Trade & Industrial Policy Strategies (TIPS) senior economist Gaylor Montmasson-Clair argues.

Speaking during a TIPS webinar on South Africa’s post-lockdown reconstruction options, Montmasson-Clair made the case for placing a green stimulus at the core of the country’s recovery effort.

He stressed, however, that such a plan should be tailored to domestic conditions, as transferring green-stimulus models from developed countries might fall short in ensuring that outcomes were inclusive and just. The package should also be broadened beyond renewable energy to include water and other ecological infrastructure.

Besides inclusivity and justice, Montmasson-Clair argued that South Africa’s green stimulus should also be guided by the principles of harnessing domestic solutions and building local capacity, as well as improving the country’s climate resilience and reducing the economy’s carbon intensity and resource inefficiencies.

The green-recovery package should be based on five key pillars, including:

• building the network infrastructure required for a green and just transition, such as smart electricity and water grids, e-mobility and broadband infrastructure, improved rail and waste management and the maintenance of ecological infrastructure;
• making the regulatory changes needed to unlock investment from the private sector into sustainable energy, water, waste and sanitation systems;
• supporting local development around the manufacture of technologies such as smart meters, biomaterials, electric vehicles, batteries and green hydrogen, while stimulating sustainable tourism and agriculture;
• improving access to sustainable services, including sustainable housing and mobility; and
• implementing fiscal reforms that removed fossil-fuel subsidies, incentivised new green solutions, promoted resource efficiency and preservation, and reformed energy and water tariff structures to make pricing inclusive and drive behavioural change.

“Such a green and inclusive recovery approach would have massive co-benefits for the country and society,” Montmasson-Clair asserted, adding that one of these would include ensuring that the country’s exports were not jeopardized by the possible future imposition of border carbon adjustments.

In the area of electricity, Montmasson-Clair said the economic and social co-benefits associated with accelerating the deployment of renewable energy and smart grids were particularly noteworthy. These ranged from bolstering energy security at least cost, to developing industries that were able to manufacture and supply into these projects.

The benefits could be achieved quickly by restarting the Renewable Energy Independent Power Producer Procurement Programme for utility-scale projects, unlocking the small-scaled embedded generation market and through minor regulatory reforms that enabled municipalities and corporates to procure their own power.

“There is no silver bullet and no blueprint, but there is definitely a unique opportunity for South Africa to channel a vast amount of resources towards the country’s just transition to sustainable development,” Montmasson-Clair said.

His message was also in line with those emerging from international organisations such as the International Energy Agency (IEA) and the International Renewable Energy Agency (Irena), which are both currently urging governments to place clean energy at the heart of their postpandemic recovery plans.

In early June, Irena director-general Francesco La Camera said that renewables offered a way to align short-term policy action with medium- and long-term energy and climate goals.

“Renewables must be the backbone of national efforts to restart economies in the wake of the Covid-19 outbreak. With the right policies in place, falling renewable power costs can shift markets and contribute greatly towards a green recovery,” La Camera added.

Recent sharp declines in onshore wind and solar photovoltaic costs also meant that more new capacity would be derived from each dollar invested in renewables, with Irena showing that, in 2019, twice as much renewable power generation capacity was commissioned than in 2010 but with only 18% more investment.

It also calculated that up to 1 200 GW of existing coal capacity could cost more to operate next year than the cost of new utility-scale solar PV.

Meanwhile, IEA executive director Dr Fatih Birol said in May that clean-energy investment, which had remained stable at about $600-billion a year for the past five years, would need to more than double to meet global climate targets.

Birol also noted the relative resilience of renewable electricity to the Covid-19 crisis but said it could not be taken for granted.

“Even before the Covid-19 pandemic struck, the world needed to significantly accelerate the deployment of renewables to have a chance of meeting its energy and climate goals. Amid today’s extraordinary health and economic challenges, governments must not lose sight of the essential task of stepping up clean energy transitions to enable us to emerge from the crisis on a secure and sustainable path,” Birol added.