Nico Kelder Senior Economist, Research and Information, IDC

1. Green jobs: Estimates of the potential and realised direct employment of a greening South African economy NicoKelder Senior Economist, Research and Information, IDC Strategic planning session Portfolio committee on Economic Development Cape Town, 17 April 2013

2. Introduction • Substantial steps taken by South Africa (SA) in formulating and implementing strategies aimed at: • Adapting to the effects of climate change; • Reducing its carbon emissions to a sustainable level. • Economy’s carbon-intensity underpinned by: abundance of coal resources, little hydroelectric power generation and natural gas production, enormous mineral resource wealth and industrial policy legacy, among other factors. • Divergent views on how to move toward a low-carbon economy, but imperative of a sustainable development (SD) trajectory widely recognized. • Transition must be achieved without hindering socio-economic objectives. • Green economy considered one of the critical tools for SD, presenting opportunities for expansion of productive capacity (incl. local content development) and service delivery, contributing substantially to job creation.

3. Green Jobs report:Introduction

4. Green Jobs report:Introduction • The greening of an economy can present substantial opportunities for the creation of sustainable employment through the introduction of new activities in the primary, secondary and tertiary sectors. • A green economic revolution worldwide, re-orienting national development trajectories. • South Africa’s economy is one of the most carbon intensive globally. • Environmental sustainability and economic progress are not opposing forces. Source: Green Jobs Report 2011

5. Green Jobs report:Introduction Limited window of opportunity – concerted effort needed!

6. Green Jobs report:Purpose of the report • Considering the fast growing interest in the green economy and divergent views on employment potential, attempt to bring forth a degree of consolidation and comparability. • Estimate the national direct employment potential per green area/technology covered. • Contribute to debate, not only on renewable energy generation, but also wider green economy issues. • Provide useful input for prioritisation processes at the national, industry and institutional levels. • Assist a broad spectrum of stakeholders in the associated strategic planning process. • Methodology permits flexibility and review as information evolves.

7. Green Jobs report:Methodology - coverage Energy generation Natural resource management Bio-fuels Wind power Solar power Marine power Biodiversity conservation and ecosystem restoration CSP PV Soil and land management Waste-to-energy Hydro-power Landfill gas Biomass combustion Anaerobic digestion Large Energy and resource efficiency Pyrolysis/ gasification Cogeneration Small Industrial efficiencies Green buildings Insulation, lighting and windows Emissions and pollution mitigation Industrial motors Pollution control Recycling Solar water heaters Mechanical insulation Air pollution control equipment Electrical vehicles Rainwater harvesting Carbon capture and storage Transport Clean stoves Water treatment BRT

8. Green Jobs report:Jobs estimates - overall direct potential

9. Green Jobs report: Jobs estimates -building, construction & installation • Employment momentum re. building, construction and installation activities peaks in the medium term, largely propelled by mass transportation infrastructure, stabilising thereafter as green building methods become progressively entrenched.

10. Green Jobs report:Jobs estimates - operations & maintenance • The largest employment gains are likely to be associated with O&M activities, particularly those involved in the various natural resource management initiatives. • O&M jobs linked to renewable energy generation plants also substantial.

11. Green Jobs report:Jobs estimates - manufacturing • Potential for localisation of manufacturing and associated employment expands as projects related to a greening economy are progressively commissioned. • Competitiveness gains derived over time due to economies of scale as markets develop.

12. Green Jobs report: Jobs estimates - Energy generation VH = very high (total employment potential > 20 000 direct jobs; manufacturing potential > 3 000 direct jobs) H = high (total employment potential > 8 000, but  20 000; manufacturing potential > 1 000 but  3 000) M = medium (total employment potential > 3 000, but  8 000; manufacturing potential > 500 but  1 000) L = low (total employment potential > 1 000, but  3 000; manufacturing potential > 150, but  500) VL = very low (total employment potential > 0, but  1 000; manufacturing potential > 0, but  150) N = negligible/none (total employment potential = 0; manufacturing potential = 0)

13. Green Jobs report: Evolution of renewable energy generation • Renewable energy expansion path (bearing in mind that cost issues are not addressed) exceeds that of IRP 2010-2030 by a significant margin (i.e. 8 720MW), largely due to higher deemed CSP potential and inclusion of waste-to-energy (particularly cogeneration). • Renewable energy mix also considerably different and more labour intensive.

14. Green Jobs report:Evolution of renewable energy mix • Wind and cogeneration are dominant in the short term, although solar power (initially PV, but later also CSP) brings some balance in the long term.

15. Green Jobs report:Jobs estimates - Energy & resource efficiency / Emissions & pollution mitigation VH = very high (total employment potential > 20 000 direct jobs; manufacturing potential > 3 000 direct jobs) H = high (total employment potential > 8 000, but  20 000; manufacturing potential > 1 000 but  3 000) M = medium (total employment potential > 3 000, but  8 000; manufacturing potential > 500 but  1 000) L = low (total employment potential > 1 000, but  3 000; manufacturing potential > 150, but  500) VL = very low (total employment potential > 0, but  1 000; manufacturing potential > 0, but  150) N = negligible/none (total employment potential = 0; manufacturing potential = 0)

16. Green Jobs report: Jobs estimates - Natural resource management VH = very high (total employment potential > 20 000 direct jobs; manufacturing potential > 3 000 direct jobs) H = high (total employment potential > 8 000, but  20 000; manufacturing potential > 1 000 but  3 000) M = medium (total employment potential > 3 000, but  8 000; manufacturing potential > 500 but  1 000) L = low (total employment potential > 1 000, but  3 000; manufacturing potential > 150, but  500) VL = very low (total employment potential > 0, but  1 000; manufacturing potential > 0, but  150) N = negligible/none (total employment potential = 0; manufacturing potential = 0)

17. Green Jobs report:Key messages • The greening of the SA economy can result in substantial net direct employment creation within the formal sectors. • Jobs estimates escalate once multiplier effects are taken into account, whilst informal employment potential is considerable. • Appropriate and conducive policy and regulatory environment, accompanied by effective public sector coordination, are crucial for the successful roll-out of the various green areas/technologies. • The public sector should take the lead in driving the use of certain green technologies. • Institutional capacity development is a prerequisite, especially at the local government level due to its crucial roll in a future greening of the SA economy. • Long term industrialisation and localisation strategies are required, and need to be communicated clearly. • Regional cooperation is deemed key for market development and sourcing of feedstock. • Need to act without delay as the window of opportunity is limited.

18. Drivers of SA’s low-carbon strategy • SA’s commitments to undertake mitigation actions. • Green Economy Accord between government, organised labour, business and community constituents. • Supportive policies (e.g. New Growth Path, Industrial Policy Action Plan). • Appropriate mix of carbon pricing mechanisms. • Renewable energy (RE) programme, development of biofuels sector. • Energy efficiency incentives and energy demand management. • Provision of development finance. • Green building and construction regulations and practices. • Local government programmes (e.g. waste management, street lighting). • Improved efficiencies in public transportation systems. • Allocation of resources to R&D. • Exploiting manufacturing opportunities arising from preferential local procurement. • Skills development and training. • Active marketing efforts. • Effective monitoring, reporting and verification.

19. Green Industries SBU focus Renewable Energy: Non-Fuel Power Energy efficiency Heat, Electricity & building efficiency Cleaner production / Industrial Efficiency Transport Efficiency Concentrated Solar Power Wind Power Generation Services related to renewable energy & energy efficiency Solar Photo Voltaic Power Hydro Local manufacturing related to renewable energy & energy efficiency Fuel Based Energy Waste to Energy Co-generation Bio Fuels Emission and pollution mitigation Bio Ethanol Bio Diesel Air pollution control Waste Management/ Recycling Clean stoves

20. Select public-sector backed initiatives:Renewable energy (RE) • Exciting time for RE development in SA and throughout Africa - opportunities abound and investor interest clearly visible. • SA requires approx. 56 000MW in new electricity generation capacity by 2030, with over 20 000MW planned to come from renewable sources and technologies (Integrated Resource Plan for Electricity 2010-30). • Introduction of Independent Power Producers of RE being effected through Renewable Energy Independent Power Producers Procurement Programme: • Up to 5 phased bid process being opened for subscription by bidders, for a total allocation of 3 725MW spread across renewable energy technologies; • Key qualification criteria include economic development factors such as job creation, local content, community development, skills development; • Announcements of preferred bidders in first 2 rounds of REIPPPP made in Dec. 2011 and April 2012, for a combined capacity of 2 460MW: 1 197MW wind power; 1 049MW solar photovoltaic; 200MW concentrated solar power; 14MW small hydro; • Expected employment creation in first 2 rounds = 21 214 jobs. • Manufacturing of solar PV panels, wind turbine components.

21. Select public-sector backed initiatives:Energy efficiency • Energy Efficiency Strategy sets a national energy efficiency target of 12% by 2015. • By means of an historic “Energy Accord” between industry, mining and the Government, industry players committed to a voluntary target of final energy demand reduction of 15%. • An appliance-labelling programme was launched for domestic appliances such as refrigerators and further sectors will be targeted, such as transportation. • Green Energy Efficiency Fund (partnership between SA’s IDC and Germany’s KfW) launched recently, offering the market: • Loan funding at concessionary rates with debt tenures up to 15 years; • Loan repayment structured to effectively match the savings profile of the technology installed, so that there is no out-of-pocket expense for the company.

22. Select public-sector backed initiatives:Energy efficiency (cont.) Building regulations: • New building regulations published in Government Gazette in June 2010, supporting SA government’s IPAP and energy strategy. • These standards include minimum requirement guidelines to reduce the energy requirements of buildings, residential as well as non-residential buildings. • Building aspects that have minimum requirements include: glazing, insulation, shading, orientation and building services, hot water and lighting. • Energy Efficiency Building Regulations stipulate that new buildings, as well as buildings being renovated that require municipal approval, will have to be installed with: • solar water heaters, heat pumps or similar technologies; • ceilings, walls, windows will have to meet minimum requirements to prevent heat loss (in winter), or heat gain (in summer); • energy-efficient heating, air conditioning and mechanical ventilation systems.

23. Select public-sector backed initiatives:Energy efficiency (cont.) Solar water heaters • Total of 158 175 solar water heaters (SWHs) installed under the Eskom rebate programme in FY2011/12 (1 220 installation & manufacturing jobs), while the total number of SWHs increased to 315 000 installed across the country up to January 2013. • Public transportation • Public Transport Strategy aims to radically accelerate improvement in public transportation through modal upgrading and the establishment of Integrated Rapid Public Transport Networks (IRPTN), incl. Bus Rapid Transit (BRT) in metropolitan areas: • Gautrain Rapid Rail Link has set a new and innovative standard for public transport between key centres of SA’s Gauteng Province. • BRT system operational in Johannesburg since 2009 (named Rea Vaya). • IRPTN operational in Cape Town since 2011 (named MiCiti), with construction continuing on the remainder of the system. • Construction of BRT system in Tshwane (Pretoria) started in mid-2012.

24. Select public-sector backed initiatives:Natural resource management & environmental protection • Natural Resources Management: • Includes the following programmes: Working for Water; Working on Fire; Working for Forests; Eco-Furniture factories; and Working for Energy (biomass). • Environmental Protection and Infrastructure: • Includes the following programmes: Working for Wetlands; Working for Waste; Working for the Coast; People and Parks; Working for Wildlife; and Working for Land. • These programmes, which are aligned to the Expanded Public Works Programme, are estimated by DEA to have created 23 074 full-time equivalent jobs in fiscal year 2011/12, with 38 644 job equivalents expected to be created in 2012/13.

25. Green Jobs report:Key success factors > 460 000 direct jobs in the formal economy Success factors • Commitment, awareness and readiness by the private, public and household sectors. • Institutional capabilities. • Funding availability, incentives, mechanisms. • Regional coordination. • Integration and coordination. • Local procurement and export market penetration to develop critical mass. • Availability of competitively priced inputs and services. • National industrialisation strategies. • R&D capabilities and technology transfer. • Policy framework, pace of regulatory revision, amendment and development. • Stakeholder communication and co-ordination. • Simplification and streamlining. • Address shortages of skills in certain areas. • Re-skilling and development of specific skills capabilities. Conducive regulatory environment Generic issues Taking the lead, growing demand Localisation Securing resources Developing skills • Availability, accessibility, quality, sustainability and pricing of required resources. • Public sector playing an exemplary role. • Gradual, effective transformation of production and consumption patterns.

26. Thank you