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World Bank says climate-smart infrastructure investments could ‘deliver benefits’ to South Africa worth R10-trillion

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South Africa needs R3.7-trillion worth of investments in climate-smart infrastructure, but it could pay off to the tune of 110,000 jobs and R10-trillion in other benefits, according to a new report by the World Bank.

A report by the World Bank titled, Africa’s Pulse: Climate Change Adaptation in Sub-Saharan Africa Can Improve Resilience and Deliver Jobs, says that South Africa will need $215-billion — or roughly R3.7-trillion — in investment in its cities to mitigate and adapt to a heating world with a changing climate.

The investments have the potential, however, to create benefits that make this staggering figure far more palatable.  

“In a region where much of the infrastructure, cities and transportation systems are yet to be built, investments in climate-smart infrastructure can help cities create jobs,” a section of the report explains. 

“Urban policies that are climate-sensitive can help local governments leverage their limited public finance with private sector investment while addressing problems such as pollution, floods, extreme heat and energy access. For instance, energy-efficient retrofits of buildings, low-carbon municipal waste and water, and green urban transport can deliver benefits to cities in the short and medium term. Recent evidence suggests that African countries need investment in more compact, clean and connected cities.

“South Africa will need $215-billion in investment in its cities,” the report says, noting that these investments would “deliver benefits” in South Africa of $700-billion, or just over R10-trillion. They will also result in an average of 120,000 net new jobs in South Africa by 2050.

The report goes on to note that “building a path to inclusive growth in sub-Saharan Africa faces a series of challenges. Climate change adds to the region’s already immense development challenges. Massive investments are necessary to help meet development goals — including climate-related objectives.

“Africa has been hit hard by climate change and there is a need for massive investment in adaptation — for instance, decarbonisation of the grid with renewable energy, nature-based urban infrastructure, scale-up of climate-smart agriculture and modernisation of food systems, among others. Still, financing adaptation is more cost-effective than frequent disaster relief. Sub-Saharan Africa has contributed the least to greenhouse gas emissions, but suffers the most from the impact of climate change,” the report explains.

“The frequency of extreme weather events has increased substantially in the region over the past four decades — and it has increased at a faster pace than in the rest of the world. Relative to 1970-1979, the frequency of droughts in sub-Saharan Africa nearly tripled by 2010-2019, while it more than quadrupled for storms and increased more than tenfold in the case of floods.

“More than a third of the world’s droughts and about a fifth of the world’s floods took place in the region during the past decade.”

“The greater sensitivity to climate shocks of the different engines of growth in sub-Saharan Africa (agriculture, natural capital and infrastructure) highlights the need to bolster climate-smart development at scale and across economic sectors. Climate change and development in sub-Saharan Africa are not only interdependent, but also hard to disentangle.

“Relative to other regions, the greater sensitivity of the different productive sectors to natural hazards and climate change patterns leads to disproportionate impacts across countries in the region, especially among poorer countries and poorer segments of the population.”

Business Maverick previously reported that South African Cabinet ministers last week met with climate envoys from the EU, US, UK, France and Germany to discuss financing options and other support for South Africa and its decarbonisation agenda.  

In a statement released after the meeting, the Department of Forestry, Fisheries and Environment said “South Africa’s ambitious, revised nationally determined contribution to mitigating greenhouse gas emissions, submitted under the United Nations Framework Convention on Climate Change, requires an equally ambitious multilateral commitment of financial support by developed countries for our country’s just transition”.

“The discussions, which took place a few weeks ahead of COP26 in Glasgow, aimed to explore opportunities for enhanced co-operation, financing and support for South Africa’s just transition to a low-carbon economy and climate-resilient society. We recognise the consequences of climate change will be catastrophic for the world, and for South Africa in particular, without global ambitious action to reduce emissions and address adaptation.”

The statement continued that “the latest science makes it clear that in order to prevent these catastrophic consequences, an accelerated shift to a low-emissions society is required. South Africa, in partnership with the rest of Africa, is on the frontline in the global struggle against climate change and is dedicating significant resources to adapt to the reality of an already-changing climate and address consequential loss and damage”. 

South Africa, while committed to a just transition, needs “certainty and predictability of the quantum of financing available to us, to accelerate this transition. We do need an irrevocable agreement that we can sign at COP26 where our commitments, as all parties, are clear.

“Some of the specific areas where we require immediate support include repowering and repurposing of retiring coal plants, investment in new low carbon generation capacity and transmission and distribution infrastructure, the first phase of the just transition support electric vehicle manufacture in South Africa as a critical transition pathway for the automotive industry and support for an export-oriented green hydrogen industry based on low-cost renewable energy.”

The South African government proposed the establishment of a just transition financing facility which would support the just transition process across the relevant sectors of the economy. A model for such a facility was described by energy and infrastructure economics advisory firm Meridian Economics in a study they released on the day of the meeting. 

In a nutshell, the proposed transaction framework would be aimed at unlocking concessional market financing of about three quarters of a trillion rands of power sector infrastructure projects over the next decade, by supporting the “shareholder” with recapitalising the unbundling of Eskom entities. 

Daily Maverick previously reported that only three of the world’s developed countries are meeting their climate finance obligations, according to a study by the independent think tank, Overseas Development Institute. Another study by Oxfam found that developed countries’ pledges to provide $100-billion of annual financing, made more than a decade ago and seen as key to unlocking upcoming climate talks, are unlikely to be met even five years behind target.

 

President Cyril Ramaphosa on Thursday re-emphasised the need for climate-smart infrastructure at the Sustainable Infrastructure Development Symposium (SIDSSA) during his keynote address. The theme of SIDSSA this year was, “Implementing quality infrastructure for development, recovery and inclusive growth”.

Addressing the crowd, he said that “infrastructure is transformational” and that “at SIDSSA 21, we are focused, firstly, on an innovative approach to projects with future revenue streams and, secondly, on new ways to finance crucial social infrastructure. 

“One of the new frontiers of infrastructure development is green energy, which has the potential not only to drive industrialisation, but to establish a whole new industrial reality. The Green Hydrogen Export special economic zone… is a major step towards realising our potential to be a global leader in green hydrogen. It points to a future where tens of gigawatts of renewable energy feed electrolysers at massive scale, producing the hydrogen power fuels of the future.

“We stand ready to be a major exporter in this market, to use hydrogen to rapidly decarbonise our existing industries, and attract industrial investment from across the globe seeking to meet new standards of green power in the production process… This complements the Hydrogen Valley project… to create decarbonised industrial power grids and supply lines for hydrogen-based green aviation fuel,” he said. 

Green hydrogen is hydrogen that has been created through a process in which hydrogen and oxygen molecules are separated, called electrolysis. When this process is powered by renewable energy, the end result is “green hydrogen”. 

Hydrogen, when used in fuel cells or as the basis for aviation fuel, has the potential to radically reduce the emissions profile of the transport sector as hydrogen-powered vehicles emit only water vapour as a byproduct. 

South Africa is in prime position to benefit from this burgeoning export market due to the combination of the country’s extensive renewable energy potential, relatively well-developed export infrastructure and the lion’s share of the world’s platinum group metals (PGMs). PGMs are used in proton exchange membrane electrolysers to produce green hydrogen and hydrogen fuel cells in electric vehicles.   

Ramaphosa said in his address that “another critical area is the development and management of the country’s water infrastructure. Water is our most valuable natural resource. We live in a water-scarce country, and much work is happening in this area as well. It is necessary to sustain life, to grow our food, to maintain human health and to enable the growth of our economy, because it is water that powers our economy… we’ve established the National Water Programme Management Office jointly owned by the Department of Water and Sanitation and Cooperative Governance and Traditional Affairs.

“We are strengthening the preparation and planning of municipal water infrastructure so it can access blended finance solutions positioned under the Infrastructure Fund.”

Daily Maverick previously reported that leading climatologists have said that multi-year droughts are the number one risk South Africa faces in a changing climate on a heating planet. Already, the drought in all three Cape provinces has been declared a national disaster.

“Infrastructure development at a massive and innovative scale is critical for the economic development of our country,” said the president, adding that “inclusive growth and shared prosperity depends on it”. OBP/DM

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  • Unfortunately, with the ANC in power, we will get R3.7 trillion of additional debt and maybe, if we are lucky 10% of that in real value… see Mhkize story as a reference, I think that was 0% value delivered.

  • So all we need is a tax base capable of delivering annual taxes of a few trillion each year.

    I wonder what Johan Rupert and the few other remaining sizeable earners and taxpayers make of this?

    The whole article, premised on OPM, is a masturbatory exercise, based upon a wishful “we need it” shopping list.

    What we need is the bedrock of competence in Government.