South Africa suffered through load shedding of electricity on a national scale two years ago - traffic jams, darkened shops, offices and homes without electricity, industry grinding to a halt. On the heels of that energy crisis came the global financial downturn, further hampering the country's growth prospects. Since then, electricity supply has stabilized, lulling the country into a false sense of complacency. The reality is that for many developing countries, if they want to grow and develop, they need energy to do so. This, combined with the ambitions to reduce global carbon emissions, presents the world with the dual challenge of providing access to energy and its accompanying development opportunities while shifting to low-carbon energy sources to manage climate change.
As the head of an international business association with links to many developing countries, I often am confronted with this dilemma. We know that underinvestment in energy reduces GDP growth in some countries by as much as 1-3% annually and so energy security has to remain the top of many countries' agendas. If they do not protect and increase the energy supply, South Africa will face further economic losses and hardship for the poor. This is not a scenario we want to see in developing countries such as India, China, Brazil or South Africa. To counter this development we need global society to drive green transformations and solutions for energy efficiency, green technologies, new societal infrastructure, efficient markets and changes of lifestyle and consumption patterns.
What is clear is that this will not happen overnight, it will be a transition and the pace and scale of change will be different in different countries and regions and depend on many complex and interlinked factors. Each technology is different and thus requires different enabling policies. Governments choosing potential winners for their national situations (e.g., wind, hydro) must take account of the full development and deployment cycles.
The World Business Council for Sustainable Development (WBCSD) has often said that a quantifiable, long-term (50-year) global emissions pathway for the management of greenhouse gas emissions established by 2010 will help build confidence to support technological development, deployment and business action. I note that South Africa has embarked on this journey and taken not only decisive steps to increase its supply of available electricity and avert a future, prolonged energy crisis but has also completed a study on Long Term Mitigation Scenarios (LTMS) for the country in order to address the transition to a lower carbon emitting energy future. Many of the issues I raise above as key issues to drive are covered in the LTMS, such as increasing energy efficiency and the introduction of green technologies such as renewable energy. The plan does however cater also for the introduction of new, more efficient coal plants in the transition phase - a reality many countries have to face.
The South African Government has been working with Eskom to increase capacity by boosting energy conservation programs and investing in clean energy. It is also working to mobilize close to US$2 billion for scaling up grid-connected solar thermal power, utility-scale wind power development, solar water heaters, and increased energy efficiency. The South African Government appears determined to transition to a low-carbon economy over the long term and we, as members of the international business community, support that decision. The WBCSD has also through its work and that of its members studied the development benefits of business investment and concluded that most companies have an extensive reach. Beyond their direct impacts, Eskom has highlighted areas where through its activities the company is providing support to the South African economy. For example the current build program at Medupi power station has created thousands of jobs and resulted in considerable local economic growth.
These are all significant steps towards a carbon-friendly future, but they will not help South Africa avert an energy crisis now. While we plan for the longer term decarbonisation of the electricity mix globally, South African's as well as other developing countries still have to grapple with immediate decisions on technology choices to meet energy demand right now. Many developing countries are currently relying on coal as a low-cost source for power generation. What remains to be seen is what plans exist to reduce the impacts of a new coal plant while continually improving environmental conditions. We know it will take decades to change our energy mix, but what is important today is that we start on this journey while maximizing economic and social development.