South African companies, which seize opportunities in green technologies now, will be well-positioned when tougher policies on emissions and energy use come in, according to industry experts.
With Cabinet set to publish a green paper on the national Climate Change Response Policy, in April, and following a commitment last year to cut emissions growth by 34%, in 2020, there could soon be greater pressure on businesses to reduce their carbon footprints.
Jonathon Hanks, MD of local consultancy Incite Sustainability, says adaptation is likely to become an increasingly significant concern. “In the long-term, it is evident that business will be constrained by emission targets. While businesses can choose to play a wait-and-see game, they will benefit by taking action to reduce emissions and improve energy efficiency now.”
New world prospects
Hanks adds that many opportunities will be available in the move towards a lower carbon environment. “Smart businesses will be aware of the significant opportunities associated with the inevitable transition to a low-carbon economy, and will be moving to realise these opportunities.”
“If government provided the right policy environment aimed at seizing these opportunities, this would present a huge business opportunity for local mobile technology companies,” he states.
The Department of Trade and Industry has announced a plan to incentivise green industries and promote jobs in clean technology. The Industrial Policy Action Plan will focus on stimulating industrial activities to support infrastructure programmes, energy savings, green jobs and agro industries.
“Business is in the business of making profits,” notes Barney Kgope, climate change programme manager at the National Business Initiative. “One way of encouraging this, is if the government comes forward and says 'if you do the following, we will incentivise these technologies'. Business doesn't only want to be regulated, it also wants to participate.”
Hanks points out that the Copenhagen Accord [the document recognised at the conference talks] commits to providing financing and capacity support to developing countries for climate change adaptation strategies. “While the details of how such financing will be allocated are uncertain, there is the possibility that this could present significant opportunities for South African companies.”
“There are a whole lot of market opportunities opening up for green products,” notes Professor Mark Swilling, division head of sustainable development at Stellenbosch University's School of Public Management and Planning.
He says green buildings - designed and built to use less energy - will create openings for architecture firms and construction companies, as well as for solar energy, which is one of the fastest growing industries in the world. “The technology across all fronts is rapidly improving, and venture capital firms are starting to put money into green technologies.”
Energy innovation
According to Hanks, the key climate-related driver facing local businesses is likely to be the policy developments associated with the shortfall in electricity supply. This will see increased electricity prices, increased pressure for demand-side management initiatives, and potentially a more conducive policy environment for investing in renewable energy.
“The coal energy complex is completely dominant within our economy, with the idea that cheap energy is good for business,” argues Swilling. “But the more expensive electricity gets, the more innovations you'll see in an effort to become more efficient. Cabinet, in its Long-Term Mitigation Scenarios, talks about 30% cuts, but you can't achieve this if you continue building coal-fired power stations.”
There are also considerations for South African businesses competing in developed markets, which may have stricter policies on suppliers and products that are high-emitters. “If you want to be competitive in future, you're going to have to consider your carbon footprint, otherwise your product may be overlooked,” says Kgope.
“In terms of investing in green technology in the long-term, the competitor is going there in a big way,” notes Swilling. He adds that global competition and global regulatory forces are increasingly moving industry players towards cleaner solutions.
“While we might not have regulation now, we've already seen carbon taxes being introduced in recent national budgets. The slow build-up of carbon taxes is going to have a huge impact. Increasing electricity prices and the inevitable price on carbon are putting pressure on South African businesses to adjust very quickly.”
Swilling adds: “I hope SA will realise that sustainability is an opportunity, not a constraint, and will look at not only climate change, but oil peaks, water supply and waste, as opportunities for new investments. South Africans live with the delusion that if we trust in a mineral energy complex, we're very secure - but we're not.”
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