President Thabo Mbeki made the wrong policy choice in the early 2000s when his administration chose to ignore pleas by Eskom to start investing in new generation capacity. Mbeki himself made a rare public apology to this effect in 2007 when load-shedding began. “We said not now, later. We were wrong. Eskom was right. We were wrong,” he said.
This one policy choice not to prioritise basic infrastructure has cost SA billions of rand in lost GDP.
GDP is not just a number. It is job losses, dashed hopes and deferred dreams for a generation of citizens who are robbed of opportunities for income, training and dignity.
Getting basic infrastructure right — reliable and affordable electricity; well-maintained, paved roads; railways and ports; clean water and wastewater treatment — are foundational to the wellbeing and health of the nation.
Like the aid versus investment debate, I argue that good infrastructure is even more important than progressive policies on social development or providing basic income grants. With decent infrastructure — where electricity is reliable, airtime affordable and transport costs manageable — people can and will start private enterprises to help themselves.
The world is on the cusp of a green energy revolution, and it is crucial that the Ramaphosa administration makes the correct policy decisions this time. All the major economies across the globe are moving away from fossil fuels and towards renewables. In the same way that oil and coal fuelled the Industrial Revolution, created multinational companies and dictated geopolitical movements, renewable energy will do the same. China is leading the drive to turn its economy green, and the West is working hard to catch up.
The war in Ukraine and the move by the EU to wean itself off Russian oil and gas will accelerate the move to renewable energy in the West. In SA, as the coal industry enjoys the windfall arising from higher global coal prices, we ought to realise that the coal industry must continue in the meantime to support and provide investments in the transition of SA and the Southern African Development Community to renewable energy.
Well-paying jobs
It just makes economic sense. Bloomberg projects that production of electric vehicles will rise from 6.6-million in 2021 to 20.6-million in 2025. In addition, grid-scale battery storage will increase exponentially as solar and wind power generation become mainstream.
Experiences in countries as diverse as China and Australia show that the transition to renewable energy is not only possible but also profitable and can create more well-paying jobs. Not to mention far cleaner than the coal industry. Both of these countries have shown that governments need to provide an incentivised policy framework.
SA and the Southern African region have rich deposits of lithium, cobalt, copper, nickel and rare earth minerals, which are essential for battery production. We are already seeing a boom in investment in mining these crucial minerals by Chinese investors. In addition to mineral resources for batteries, SA and the region are endowed with huge potential for solar and wind power.
Namibia intrigued everyone at the Davos World Economic Forum in May when it touted its sunshine and wind for sale. Once green hydrogen energy storage is ready, wind and solar energy produced in Namibia can be stored, packed on a ship and exported to Europe.
As President Cyril Ramaphosa looks to the Chinese experience as he battles to reform SA’s cumbersome electricity industry, fraught with corruption and vested interests, he should pause to look at Australia’s experience. Like SA now, Australia was a country addicted to coal, with runaway electricity prices. The land Down Under is now set to produce half of its electricity from renewables by 2025.
The renewable technologies are available, reform policy experiences ready to be studied, investors East and West already calling with incentivised loans and investment packages. SA can’t make the mistake again — it must choose to go green now.
• Dr Kuo, a former lecturer at the Shanghai International Studies University in China, is adjunct senior lecturer in the University of Cape Town’s Graduate School of Business.
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