The government must urgently roll out its carbon-credit programme if South Africa’s economy and renewables sector hope to introduce green and sustainable tech to the market on a commercial scale.
This is according to Dave Lello, chief business development officer of Ener-G-Africa, an energy solutions company that was started in Malawi but has since moved its head office to South Africa.
Lello said that while South Africa’s advanced infrastructure prompted Ener-G-Africa’s move to the country, economies of scale remained a challenge.
“I don’t think, at this point in time and certainly in South Africa, there are policies that are driving us to do business more cheaply. South Africa has good infrastructure, and we don’t have a problem with foreign exchange. The rand is up and down, but it’s a stable currency.
“But we would encourage the government to roll out their carbon-credit programme. To get companies to support our activities with carbon-credit programmes, where they can offset their taxes by helping us, is not really feasible.”
He said that, while there were efforts to accelerate progress in developing a carbon-credit programme from minister of forestry, fisheries & the environment Barbara Creecy, there were not many other programmes that supported moves in this direction.
I don’t think, at this point in time, and certainly in South Africa, there are policies that are driving us to do business more cheaply
— Dave Lello, Ener-G-Africa
One of Ener-G-Africa’s latest projects is developing a cookware manufacturing facility in Paarl in the Western Cape that produces a range of clean-burning, fuel-efficient stoves and cookware. The company says this facility employs 100 people from the local community.
Lello said different layers of stainless steel enhance the insulation characteristics of the stoves, which were safer than cooking on an open fire.
In Malawi, the amount of fuel used was cut by 25% to 30% compared with that used when cooking on an open fire, he said.
“Three-stove fires or traditional ways of cooking in Africa tend to be very inefficient. Our stoves kick in at about 40% efficiency, which means that, of the energy produced in burning a fire, 40% of it goes into the fire.”
“The two things we focus on are durability and fuel-efficiency. Our products are made from stainless steel. We use different insulation techniques to make sure the windchill factor does not affect the fire. There is a flame, it still burns, but it burns in a much more efficient way.”
Lello said Ener-G-Africa also did rooftop solar, sustainable fuels, and low-income solutions where energy access was challenging. Ener-G-Africa exported to 17 countries and had a presence in four, which was due to be expanded to seven.
“We provide people off grid with better and cleaner solutions. A lot of them are supported by carbon credits to bridge the affordability gap and make them more affordable for people ... It’s not a nonprofit. It’s not about giving things away. It is about affordable solutions for people. We don’t get donor funding in any way. We sometimes get small grants and carbon finance.”
He said that, since the Paris Agreement, companies had been waiting for South Africa to move on carbon credits, as multinational companies in sectors such as mining and food were more focused on international than local policy.
“Companies want to reduce their scope-3 carbon footprints. It’s a footprint that is out of your control. Scope 3 is all about the carbon credits beyond the control of a company, in the upstream and downstream supply chain. We have seen a spike in companies looking to help communities and use credits to drive down scope 3.”
Lello said shack fires were becoming more prevalent, as much of the rapid urbanisation occurring in South Africa was unplanned.
As people migrated to the city and settled and created informal settlements, Ener-G-Africa wanted to help with safer cooking solutions in informal settlements, he said.
“They say two out of three people will be living in cities by 2050. I think Africa will become a services-driven economy, and people will migrate to the cities. But we need to create the proper energy solutions for them in these areas.”
World Bank lead financial sector specialist and programme manager Catiana Garcia-Kilroy said earlier this month that South Africa was active in carbon markets in a bid to support decarbonisation through a carbon-pricing policy.
“Another advantage for South Africa is that it has relatively sophisticated players in the financial sector, with banks that are very interested in becoming active in carbon trading,” she said.
The government introduced the carbon offset administration instruction manual of 2017, the carbon offset regulations of 2019, and amendments to the Taxation Laws Bill in 2020 to allow for carbon offset administration systems to facilitate the management of carbon credits to offset carbon tax liabilities.
Business Times sent questions to the National Treasury and presidency on the progress being made in the introduction of a carbon-credit system, but neither office responded in time for publishing.
The presidency told parliament in February that international financing pledged for the energy transition amounted to 756 grants, 5,736 concessional loans, 2,764 commercial debt and equity transactions, and 1,890 export carbon credits — at a total combined value of R11.5bn.
Lello said the company’s operations were gaining traction in Zambia and Mozambique, and the company wanted to increase its focus on helping urban areas dealing with the migration issues that affect them.
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