Will South Africa Miss Out on the Green New Deal?

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(Published in the Cape Times, 19 November 2009)

Everyone agrees now that the Climate Change negotiations in Copenhagen will not result in a new global deal about how the world will prevent the planet warming by more than 2 degrees Celsius. But this is, in many ways, now beside the point. Things are moving so fast now that CO2 emissions are no longer the only issue that threatens economic recovery, development and poverty eradication strategies. Mainstream scientific assessments of ice melting, biodiversity loss, soil degradation, depletion of oil reserves, agricultural yields, fish resources, forest clearing, build-up of chemical pollutants, shortage of strategic metals and the impacts of biofuels all arrive at the same conclusions: we have reached, or will soon reach, the limits to the resources we depend on for our survival as a species. ‘Peak everything’, is how Achim Steiner, Director of UNEP, depicted the situation during discussions of the International Panel for Sustainable Resource Management in Beijing on 10 November.


We now accept that the ecological crisis is far worse than any had thus far imagined and so, what is needed now is not just a Climate Deal, but what the G20 has called a Global Green New Deal. This, in short, refers to investments in sustainability that can simultaneously drive economic recovery. With few exceptions, these investments are in urban infrastructures that are configured technologically and institutionally to use and re-use resources in far more sustainable ways, including renewable energy, public transport, waste recycling, water efficiency, zero-energy buildings and ‘smart grids’. South Korea is different: its ‘green new deal’ budget also includes the restoration of forests and rivers because this is how best to protect water supplies and food production.

The leaders of China and the UK have clearly expressed the paradigm shift. China’s President, Hu Jintao, used the 17th National Congress of the Communist Party of China in October 2008 to call for the building of a new “ecological civilization” which he defined as the “summary of physical, spiritual and institutional achievements of human beings when they develop and utilize natural resources while taking initiative to protect nature.”

Minister for Environmental Protection in the State Council, Zhou Shengxian, explained in his opening address to the China Council for International Cooperation on Environment and Development (CCICED) on 11 November 2009 in Beijing, that China aims to achieve this vision through “green development” and investments in a “low-carbon economy”. 38% of China’s recovery package of 4 trillion yuan has been committed to fund this strategy. Greening, in short, is China’s primary industrial strategy.

In a remarkable article in Newsweek on 28 Septermber 2009 UK Prime Minster Gordon Brown echoed the language of Hu Jintao when he wrote: “There can be little doubt that the economy of the 21st century will be low-carbon. What has become clear is that the push toward decarbonisation will be one of the major drivers of global and national economic growth over the next decade. And the economies that embrace the green revolution earliest will reap the greatest economic rewards. … Just as the revolution in information and communication technologies provided a major motor of growth over the past 30 years, the transformation to low-carbon technologies will do so over the next. It is unsurprising, therefore, that over the past year governments across the world have made green investment a major part of their economic stimulus packages. They have recognised the vital role that spending on energy efficiency and infrastructure can have on demand and employment in the short term, while also laying the foundations for future growth.”

Brown referred to the need to spend $100 billion per annum to make a difference, others put this figure closer to $300 billion, while in reality the investment levels may already be higher than this if one combines all the “green recovery” budgets with the “green investments” by venture capital funds as they look for alternatives to paper in a post-crash world.
So as many of the world’s economic planners recognise that dependence on increasingly scarce natural resources and disintegrating eco-systems means pushing up the financial costs of doing ‘business-as-usual’ over the long run, how does South Africa respond to what it is hearing at the G20 meetings? Is South Africa chasing the billions of dollars available for “green investments” in order to create jobs? Is South Africa preparing its cities to compete with places offering locations elsewhere that offer green energy, recycled wastes, clean air and no traffic jams?

When he was Finance Minister, Trevor Manuel started to introduce carbon taxes because he did realise that things needed to change (albeit very slowly). In his 2008 budget speech he said: “We have an opportunity over the decade ahead to shift the structure of our economy towards greater energy efficiency, and more responsible use of our natural resources and relevant resource-based knowledge and expertise. Our economic growth over the next decade and beyond cannot be built on the same principles and technologies, the same energy systems and the same transport modes, that we are familiar with today.”

This is far-sighed stuff, but no-one else in Government seems interested. Our new Finance Minister did mention climate change in his budget speech, but in the traditional South African way – as a cost rather than as an economic opportunity, and as an international obligation rather than as a key industrial strategy.

Earlier this year ESKOM announced it was suspending all renewable energy projects and that, instead, it would focus on building two coal-fired power plants. Solar energy, we were told, is too expensive – this despite plenty evidence to the contrary if you do the full cost accounting over a 25 year life cycle. Ignoring for the moment that this was the equivalent of announcing our intention to transfer increasingly costly carbon taxes forever into international carbon markets with no extra economic benefits (given that our emissions per capita are the same as the UK’s but with 40% of our population living in poverty), this also ignores that we have the best solar resources in the world that could drive new investments, new jobs and create a new knowledge industry with massive export potential.

But now we hear that, after all, ESKOM will build a Concentrated Solar Power (CSP) plant. What happened? Word has it that when the World Bank was approached for a loan to finance the coal-fired power stations, they said only if the CSP plant was included. So, in short, we end up entering the new era of green investments after all, but not because we chose to, but because we were forced.

Unlike South Africa, China is carefully and purposively planning a wide-ranging set of investments to prepare itself to play a lead role in the transition to a low-carbon Green Economy – and this irrespective of whether there is a deal in Copenhagen or not. As US columnist Thomas Friedman put it in a September 2009 column published in the International Herald Tribune, the real significance of the recession is that “Red China decided to become Green China”.

The “Green China” agenda emerged most clearly during the deliberations of the CCICED that met 11-13 November 2009 in Beijing. Set up in the wake of the Earth Summit in Rio in 1992, the CCICED has met annually to consider a succession of reports by Task Teams staffed by Chinese and Western experts. Chaired by the Vice Premier of the State Council, Li Keqiang, the CCICED comprises 25 high level international experts and 25 Chinese experts and officials. The Minister for Environmental Protection is the Executive Vice Chairperson, which meant he was present at  all meetings for all three days (never once, like would happen in South Africa, leaving for ‘more important business’ or talking on his cellphone).

The CCICED is a remarkable example of how the Chinese fast track the learning process. The 25 international experts are a mix of academics; heads of key international environmental organisations (WWF, IUCN, UNEP, IPCC); business and business-linked movers (such as Stephen Heintz, President of Rockerfeller Brothers Fund, Bjorn Stigson, President of the World Business Council for Sustainable Development, Kandeh Yumkella, DG of UN Industrial Development Organization, Mark Moody-Stewart, former Chair of Shell and Anglo-American, and SA businessman Valli Moosa) and Director-General level government officials (mainly from Europe). These people work in Task Forces with Chinese experts and officials during the year and table reports when the Council meets annually. From this a set of policy recommendations to the State Council are formulated, this year for what should go into the 12th Five Year Plan that will come into effect in 2011.

Three themes dominated discussions. The first was China’s determination to achieve by 2050 a low-carbon economy by massively increasing investments in renewable energy, so-called “clean coal” technologies and, most significantly, the closure and relocation out of China (most likely into Africa) of dirty energy-intensive low wage manufacturing. Escalating carbon taxes to reduce energy intensity, technological innovation to promote energy productivity and carbon sequestration through reforestation will be the focus. Second, new technologies and systems must be introduced into China’s cities to reduce energy consumption across all sectors. And third, massive investments in organic farming in the rural areas to reduce dependence on chemical inputs, reduce pollution, increase carbon content of the soils and reverse ecological destruction.

None of this means China will stop scooping up resources across the globe, especially in Africa where it gets most of its crude oil, and large quantities of timber, minerals and, in future, agricultural produce. China is now the biggest investor in Africa, with strategic investments in infrastructures to ensure outward flows of resources and (probably) the relocation of low wage dirty manufacturing.

What it does mean is this: whereas the industrial revolution began in c.18th England and the IT revolution originated in the USA in the 1970s, China may well become over the next decade the epicentre of a future ‘ecological civilisation’. It is already the largest producer of solar hot water heaters. The question is whether South Africa will wake up and realize that the world is changing fundamentally and quickly, possibly too quickly for a country that still thinks that selling off its natural resources at the cheapest possible price is the way to eradicate poverty.