simon zadek

A week in South Africa, and a step further in a brilliant initiative, the South African Renewables Initiative (SARI) exploring how to boost renewables and in the process drive industrial development opportunities deep into the industry’s value chains, and help to vaccinate South Africa’s energy and carbon intensive against the expected growth of ‘carbon sensitivity’ in its key international markets by establishing a green purchase obligation for these sectors.

The keystone to the deal concerns the capacity of South Africa to finance the rapid scaling of renewables generation through a German-style feed in tariff that pays a premium on green energy produced and fed into the grid. What a great way to get private citizens and commercial investors to cough up money for the equipment…only problem is the cost. Even Germany is beginning to groan at the cost to the public purse. According to one estimate, “In 2008, the tariff’s estimated cost was 3.2 billion euros, or $5 billion. This amounts to less than two-tenths of 1 percent of the German economy, hardly a significant price tag to encourage a technology that delivers 15 percent of the nation’s electricity. Furthermore, the cost is spread across the entire ratepayer base. In 2007, the added cost per household was 3 to 4 euros per month, about the price of a latte”.

For South Africa, the cost to the tax payer (or spread across all consumers) is manageable at low levels of renewables, including the current target of 4% of the total mix by 2013. But to catalyze industrial development and jobs, and to deliver enough ‘green’ to exporters, will take 10-15%, and rather fast, say by 2020. At this scale, it is just not practical to finance this domestically…hence the problem.

One possible solution, and the topic of the work that i am involved in with Associates Maya Forstater and Saliem Fakir on behalf of the South African Government, is to cut a deal with key governments making international climate financing commitments to subsidise the feed in tariff rather than pay for projects. Whilst the feasibility study is a work in progress, initial estimates suggest that the implied cost by carbon ton abated might be as little as US$10, closer to the cost per ton of avoiding deforestation than the much higher costs normally estimated for promoting most renewables at this stage in the game.

Work-in-progress, certainly, but progressing quickly, so watch this space as it develops…

BAe’s admission that it has been guilty of illegal practices, basically bribery at scale, is a relief and vindicates the persistence campaigning on this issue by the Corner House and other advocates of clean practice. BAe, once at the starting gate for a radical transformation to produce non-military products, the so-called Lucas Plan, is now one of the world’s largest merchandiser of fine weaponry to the four corners of the globe. Admitting to the evil deeds, one assumes, was part of a deal that satisfied the US’s call for blood and allows BAe to keep bidding for a share of the world’s largest military budget. And since the Saudi family appears to have been removed for now from the limelight, one also assumes that BAe gets to stay in that lucrative market, its dominant source of profit over many years. So i guess everyone is happy now, right ?

Not really, the ultimate loser is once again the UK, its leading politicians which ingloriously sought to cover it up in the spirit of good inter-cultural relations with the Middle East. In truth it beggars belief, that first Mr Blair and then Mr Brown, both who liberally evoke their religious fervor and moral rectitude, could choose to suppress what seemed obvious to us all, that dirty deeds had been committed and needed to be surfaced and penalised according to the law, or at least as close as one can come to that these days. Anwar Ibrahim, in an earlier role as President of AccountAbility, wrote personally to the now Prime Minister pleading with him to take the high ground on this issue as he entered office, citing the ‘ethical north’, a political opportunity, but also an opportunity for the US to regain its stature in international benchmarking of good practice. Sadly there appeared to be no one at home at Number 10, and the advance met with stony silence…imagine how much better this would seem and be if Mr Brown had acted then.

And why do I say once again. Well, what with MPs’ heading for the courts over their liberal attitudes towards expenses, and the murky world of calls to war against Iraq in the spotlight, it is hard not to see a pattern of all-too-visible moral collapse. In fact, the pay-off of Mr Blair seeking at all costs to maintain the UK’s standing in the world has achieved, in a nutshell and as fast as they take to fall to the ground, exactly the opposite.

Thank goodness it just doesn’t matter to anyone much, least of all the citizens of that fair isle who are just trying to sort out their lives, their livelihoods and their families’ security in the face of that more legal transgression by the financial industry, egged on by, yup, you guessed it, those Anglo-Saxon politicians from the UK and the US.