Transition to renewables faster or pay the price

By Banele Ginindza, News Editor at Business Report.

South Africa’s energy sector needs urgently to transition fully to renewable energy options ahead of looming deadlines by major markets, including the EU and US, which will, in the next decade, reject products manufactured with fossil fuel sources, analysts warned.

This as the EU and the UK announced a proposal to ban the sale of new cars with internal combustion engines by 2030 to 2035.

“Certain importers are now looking to add higher tariffs depending on how products are produced. Fossil fuel-driven production will attract much higher tariffs,” said Vuyo Ntoi, the co-managing director of African Infrastructure Investment Managers.

Ntoi said if South Africa did not move to a cleaner energy base, there could be an enormous impact for the economy, after the US, in its budget deliberations, recently raised the bar for renewable energy production, while the EU is setting up a carbon border tax to protect their manufacturing against products deemed to be contaminated by fossil fuels.

The move would hit particularly South Africa’s automotive industry, which accounted for 13.9 percent of all South African exports last year. Europe accounted for 72.8 percent of total vehicle exports.

Paul Boynton, the chief executive of Old Mutual Alternative Investments, said all logistics, infrastructure planning and investments needed to be built around the shape that a more sustainable future would take.

“If you look towards the future, carbon footprint and supply chain will become an increasingly critical metric when it comes to sustainability and exports,” Boynton said.

Ntoi said it was encouraging to see policy, such as the announcement that private entities can generate up to 100 megawatts in renewable energy for their own use, promulgated into law.

“While developing countries may well get some leeway, the topic of sustainability in developed countries is top priority, making it prudent for South Africa to get on board sooner than later,” he said.

Read the article on IOL here.