Old Mutual has called on the government to urgently address gaps in its green energy policies, which it says are holding back investments critical for the country’s energy transition.
Speaking to Business Day online while COP29 was under way in Baku, Azerbaijan, Robert Lewenson, head of responsible investment at Old Mutual Investment Group, said the company was ready and willing to invest but raised concerns about the lack of policy clarity, regulatory gaps and the government’s urgency in putting the tools in place.
COP29, which ran for two weeks, focused on the need for actionable climate finance, particularly for countries in the Global South. Closer to home, SA needs investment in green infrastructure, energy storage and technology transfer to phase out coal and ramp up renewable energy.
“We [Old Mutual] have asked for policy clarity and implementation actions,” Lewenson said, noting that these are essential for enabling bankable green projects.
“We’re probably one of the biggest, if not the biggest, investors in the green economy in SA and Africa. We’ve really got a lot of skin in the game. We have the funds set up.
“(But) we do need a little bit more clarity around the political regulatory environment to enable this. We need very clearly defined terms, conditions and governance structures for these projects,” said Lewenson, stressing the importance of a well-functioning “clearing house” for managing funding and projects.
Referring to the initial $100bn the continent reportedly needed, and which forestry, fisheries & environment minister Dion George later said SA required, Lewenson said: “OK, but can you (the minister) break it down? For instance, we need this much for green hydrogen, this much for electric vehicles (EVs), this much for infrastructure, for the transmission lines and moving renewable projects to trade centres, or for micro grids to take off, this is what we need. What does that pie look like in the R100bn?”
Only then will it make sense to a funder, he said. “Then we get to say, OK, so we know what we’re driving for; what we’re negotiating for if we go to a concessionary funder, whether it be the developed world or China, and say, this is how we break it up. This is what the SA financial sector is willing to contribute towards it. And this is where the gap is.”
Recent revised funding models show that poorer countries actually need $1.3-trillion by 2035. A study conducted by the Independent High-Level Expert Group on climate finance at COP29 revealed that these countries need $1-trillion of the
R1.3-trillion by 2030, as economists believe that waiting until 2035 is too late.
When Business Day asked George what numbers SA is negotiating with at COP29 — dubbed the “Finance COP” — there was no clear response, other than that it’s “difficult” to pinpoint a number. Instead, the publication was referred to energy & electricity minister Kgosientsho Ramokgopa, who did not attend the climate conference.
Lewenson agreed with the government that blended finance is the most impactful structure for climate funding in SA. This approach combines grants, concessional funding and traditional loans.
He was particularly vocal about the urgent need for tax incentives for green hydrogen and renewable energy to unlock private sector investments.
“We’ve written or invited Dr George to an open discussion around this and, as an institutional investor, providing our viewpoint. We’ve written to the minister of electricity to say, ‘Listen, how do we actually get — how do we nail down — the carbon taxes and incentives for renewables?’”
He mentioned the TLAB (2024 draft Taxation Laws Amendment Bill), which he said is “a really good piece of legislation”. However, he said: “We need to see those things come through... Because, again, no-one’s willing to put pen to paper unless they know that there’s an underpin, there’s an incentive to get those tax advantages.”
Once blended finance arrangements and policies were in place, SA would enter a purple patch, he said. But right now, “it feels like (we’re) one step short of a really mature and well thought-through financing ecosystem to allow this economy to take off here”.
Lewenson also emphasised the need for leadership at the top, noting that the new Climate Change Act (which, after months, is still not operational) empowers George to lead the country’s energy transition.
“Our request of him is to step up and take the reins here. Yes, there’s a lot of regulation that still needs to come through, but let it come through and let him take charge.”
The urgency for SA to align its policies with global trends is growing. Lewenson said countries such as China and the US have made significant progress in their renewable energy transitions, supported by strong policy frameworks and government backing.
“It needs to happen and has to happen now because we want to deploy. We want to encourage growth. Our investees — companies — they want to deploy capital but they need policy certainty. They need to make strategic long-term plans.”
Once that “final step” is in place, he believes things can progress very quickly. “I believe there is a lot of dry powder out there.” But if the final step continues to stall, “we are going to miss another opportunity”, he warned.
The department of forestry, fisheries & environment referred Business Day’s inquiries to the departments of energy, and trade, industry & competition (DTIC).
In response to a lack of actionable detail in SA’s climate plans — such as specific funding needs for green hydrogen, EV infrastructure, renewable energy transmission and microgrids — the DTIC referred to its Industrial Policy and Strategy Review published in May.
“In this document, we indicated that the DTIC has made substantial progress in defining a pathway to take advantage of this transformed global economy with the launch of three landmark strategies: the new energy vehicles white paper, the green hydrogen commercialisation strategy, and the renewable energy master plan,” ministerial spokesperson in the DTIC Yamkela Fanisi said.
“SA is obligated under the Paris Agreement to decarbonise our economy and various policy tools have started to operationalise this commitment. The private sector, as a responsible actor within our state, is a key to these commitments and enabler of our responsibilities.
“While the government is able to provide tools within its ambit, other actors in society must and should also help find solutions — such as solutions to our commitment to decarbonise all sectors and create value addition to our mineral resources.”
Fanisi also mentioned that through the DTIC’s entity, the Industrial Development Corporation, various financial support tools were available to enable the scalability of projects.
“The government always remains open to proposals from actors in society to help us find even more practical and pragmatic solutions that achieve our socioeconomic goals faster. We would welcome Old Mutual’s vision for what tools will enable them and other actors to move faster towards decarbonisation of our economy.”
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