SA is risking being uncompetitive should it take its foot off the just energy transition pedal, Absa’s head of strategy and sustainability has cautioned.
Punki Modise has called for Africa’s “energy poverty” to be put on the table when global leaders, civil society and captains of industry meet next week at the COP28 meeting in Dubai.
Modise told Business Day that SA must stay the just transition course.
“There are serious implications if we don’t transition. One of the biggest implications is rendering ourselves as a country uncompetitive in the sense that the developed world is transitioning. New accounting standards are being rolled out and endorsed by big bodies,” Modise said.
“If we want our markets to be deep, we have to transition. The biggest risk we face is that if we don’t transition, there will be a liquidity drain. I look at it from an opportunity point of view to say as a country we have to look at opportunities to support our economic growth. My sense is that the politicians also see it from that perspective.”
Public enterprises minister Pravin Gordhan this week told the FT Moral Money Summit Africa in Johannesburg that SA was on course to meeting its energy transition commitments. This is as international commitments to fund SA’s just transition pathway increase. The enlarged International Partners Group (IPG) this week increased total concessional financing commitments from $8.5bn to $9.3bn to support SA’s Just Energy Transition Investment Plan (JET-IP).
SA is expected to take a high-level government delegation to the COP28 meeting.
Modise, who sits on Absa’s executive committee, said Africa’s interest must be high on the agenda at the COP28 gathering.
“It is important that when we go to COP28, Africa gets a proportionate share of voice in the conversations. That is important because the continent suffers significantly from energy poverty and we want to ensure that we use this opportunity to solve the issue of energy poverty in the right way,” she said.
“We have to make sure that funding is made available in the right way to help the continent to transition.”
The energy poverty data emanates from African Development Bank, which shows that more than 500-million people on the continent have no access to electricity, and 700-million have no access to clean cooking energy.
Absa has ploughed billions of rand into renewable projects, participating in 53% of Renewable Independent Power Producer Programme (REIPPP) projects with more than 4.3GW of projects to date.
Absa made a commitment in 2020 to mobilise R100bn of sustainable finance by the end of 2025. Modise said the bank would revisit the quantum.
Some of the R100bn found its way to Harmony Gold, SA’s largest gold producer by volume, in the form of a R10.4bn sustainability-linked transaction, which incentivises the mining house to reduce its overall carbon footprint by setting targets for greenhouse gas emissions, renewable energy consumption and water usage.
“We are looking at our balance sheet exposure to see which of our clients are significantly impacted by the transition. First, we have to agree with clients that what we are seeing is aligned to what they are seeing in terms of the total emissions they are generating, On the back of those discussions we have further discussions on how we can fund them to reduce emissions,” Modise said.
“The R100bn target is therefore utilised to fund clients to help them to transition. At the same time we are looking for opportunities in the green space. There is a lot of talk, for example, about green hydrogen as an energy source.”
According to global consulting firm Boston Consulting Group, negotiations at COP28 will focus on how to increase finance levels to fund the energy transition and rapidly expand the role of technologies and methods such as renewables, energy efficiency, methane reduction and storage, and hydrogen.
“With hydrogen, there’s a lot of work still to be done to move from hype to reality. Investment decisions are already too late to hit 2030 targets, while optimistic cost projections are simply not coming to fruition,” Esben Hegnsholt, MD & partner said.
“The change has to be led at global policy level with active co-ordination from the private sector players needed to deliver on our hydrogen potential. Going into COP28, this is not yet happening nearly to the degree needed.”
Correction: November 23 2023
The previous article incorrectly said Absa was operating in 20 African countries. It is in fact 14 countries. We regret the error.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.