COP-17 has thrown a spotlight on SA's efforts to green the economy - and the exceptional challenges we face. Above all, SA remains among the countries with very emissions-intensive growth. That is, for every 1% of growth in gross domestic product (GDP), we have unusually high emissions of greenhouse gases. At the same time, the economy remains among the most inequitable in the world, with one of the highest rates of joblessness.
Recognition of these challenges led to the adoption of the New Growth Path a year ago as a broad policy framework to guide economic reconstruction and development. The central aim must be to take advantage of new opportunities for growth while minimising the costs of change overall and especially to poor communities and working people.
The reason for high emissions is not that our energy is unusually dirty. Like SA, many countries rely primarily on coal-fired power plants. Rather, the problem is that the economy depends heavily on the mining value chain. Aluminium, titanium, platinum, gold and steel, as they move from ores to metals, consume huge amounts of electricity.
The process of transforming coal into oil, the basis of our petrochemicals industry, is also energy intensive.
Obviously we cannot close down these core industries. More than half of SA's exports come from the mining value chain. Moreover, it contributes about 17% of our GDP and 8% of employment. This is a central strength that we can't simply relinquish.
The challenge of moving to a greener growth path is defined by the social context of inequality and pervasive poverty. The richest 10% of households still enjoy nearly half of all household income. In contrast, the poorest 40% of households get about 6%. Behind these figures lie high unemployment and the spatial differentials left by apartheid. The economic downturn in 2008-09, which destroyed a million jobs and reduced the median household income in real terms by about 9%, further aggravated these difficulties.
SA presents an extreme case of the dilemmas global warming poses to global development. We cannot continue with business as usual. But we need to ensure that measures to reduce emissions support more equitable and inclusive growth.
This situation in turn demands that the government works closely and responsively with stakeholders to identify bold but realistic measures to curb emissions, take advantage of new technological opportunities as the basis for growth and, as far as possible, ensure that the costs and benefits of change are more fairly spread. In the New Growth Path, we agreed on some broad strategies to achieve these aims.
We are committed to bringing more renewable energy into the national grid. The Integrated Resource Plan for energy expects that more than a third of new electricity will come from renewable sources over the next 20 years. We expect to finalise the tender for almost 4000MW to come on stream by 2016. That is more than the electricity use of the City of Cape Town, about a tenth of current generation capacity.
We are also committed to reducing emissions from coal as we build two new base- load plants. We need solutions based on technological innovation that will let us use this, our most abundant and affordable energy source, without the current damage to the environment.
Bringing in renewable energy and maintaining the grid are not costless. South Africans have experienced high recent electricity price hikes. The consequences of emissions are reflected in the energy price. As a result, SA no longer has the cheapest electricity in the world.
We cannot close our eyes to the implications. Industries that developed on the basis of cheap energy will have to adapt. We have to ensure this does not cause an economic slowdown or job losses, but rather leads to more energy-efficient production overall, combined with diversification into less energy-intensive and more employment- friendly activities.
That also requires that we reduce other costs, including by cutting red tape, increasing the cost-effectiveness of our logistics infrastructure, and acting more strongly to end price collusion and other unfair pricing practices in concentrated industries.
The cost to households is also climbing. Certainly, higher electricity prices remind all of us to use electricity more efficiently. But we must make sure they do not shut poor households, which barely use electricity at all, out of the national grid. That is why we are still committed to providing free basic electricity for indigent families.
Equity and inclusion require economic growth, employment creation and support for new enterprises. Sustainability requires that we address these social priorities while achieving our environmental aims.
Greening the economy also promises major opportunities for diversifying and growing our economy - for instance through biofuels, inputs for renewable technologies such as solar water-heaters and windmills, and reaching into global markets. Indeed, one of our major exports is automobile catalytic converters, which use our rich platinum resources to reduce car emissions.
In the longer run, the world is embarking on a technological revolution that should stimulate growth just as other technological revolutions have in the past. The challenge for SA is to reap the full benefits of these changes, rather than just following in the wake of more responsive economies.
The Green Economy Accord reached last month through the National Economic Development and Labour Council should bolster collaboration between economic stakeholders - a necessary condition for achieving our aims.
Critical commitments relate to the increased use of renewable energy through generation for the national electricity grid, as well as the mass installation of solar water heaters; the implementation of the national energy-efficiency strategy, which seeks to reduce energy intensity by about 10% in selected areas in the next three years; the expanded production of clean stoves for SA and the rest of Africa; support for biofuels through regulatory measures and assistance to small farmers; investment in mass transit and shifting freight from road to rail; the establishment of various finance facilities for green projects; a target of 80% of new jobs to go to young workers, who face extremely high levels of unemployment; and support for school programmes on the environment.
Ten Cabinet ministers were actively involved in the discussions around the accord. Business delegates included representatives from SA's largest companies, as well as smaller enterprises.
All three labour federations, with a joint membership of close to three-million workers, were represented. Community representatives were drawn from women, the youth, co-operatives and civic formations.
We will need to work closely to transform our economy and introduce cleaner technologies while sustaining growth and job creation. A central challenge is to ensure the appropriate phasing of green initiatives, including around the cost of electricity and carbon targets.
At the same time, we must ensure that South African businesses have the support they need to compete domestically and internationally as new opportunities and markets emerge out of our common efforts to restore the global environment.
. Patel is Economic Development Minister.