With the aim of supplementing the money available for the renewable energy feed-in tariff (Refit), the Department of Trade and Industry (DTI) has been leading work on the South African Renewables Initiative (Sari).

Sari would leverage international climate finance, to supplement domestic funding sources, for renewable energy production linked to domestic manufacturing.

This would ultimately allow for more renewable energy projects, which would stimulate greater localisation and production of renewable energy technologies and components.

It was suggested in the latest Industrial Policy Action Plan (Ipap), that national funding sources alone were insufficient to achieve a critical mass of renewable investment. Hence, international cooperation was required to secure the necessary concessionary finance and risk guarantee instruments to deliver the required, longer-term enabling environment that would, in turn, stimulate private investment.

This meant that the South African government, through bilateral discussions, was interacting with a number of developed country governments, such as the UK, Germany, and Norway on providing concessional funding, which would contribute to South Africa’s Refit ‘kitty’.

Work within Sari would remain government–to-government interaction, as the DTI wanted to de-link the assumption that finance from a certain country meant that companies from that country would be technology providers on projects.

“We want to attract international concessional funding, which would make it more viable to introduce the industry behind renewable energies. So that it would make sufficient sense for investors to invest in the capacity for componentry in South Africa,” said DTI deputy director-general Nimrod Zalk, adding that South Africa has a lot of existing capabilities to produce components, particularly for wind turbines.

Zalk also noted that the DTI was working with the technical teams on the Refit, and the DTI was insistent that, within the Refit process and licensing of potential projects, there should be minimum levels of localisation.

“Our purchase of renewable energy must be fundamentally linked to local production,” he reiterated.

Zalk said that as countries moved closer towards a global climate change agreement and the establishment of a financing mechanism, industrialised countries would need to start thinking about how to “put their money where their mouth is” with regard to financing emission-reducing projects in the developing world.

He added that countries that were involved in projects such as Sari at an early stage, would gain a ‘first mover advantage’. It would establish a firm link between a global climate change agreement, international finance and localisation in developing countries such as South Africa.

However, earlier in his address to participants at the Mama Earth green economy breakfast in Johannesburg, Zalk told delegates not to wait for a global agreement on climate change. He emphasised that the South African government, and the DTI in particular, was not holding back on ‘green’ initiatives.

He said that green issues were a “commercial reality” and highlighted that South Africa’s energy and carbon dioxide-intensive production of goods and processing of minerals made the country vulnerable in international trade arenas.

Zalk said that the environmental agenda could be hijacked for international trade purposes, in a form of ‘eco-protectionism’, which was a threat to South Africa’s exports.

To a certain extent this was already being witnessed in South Africa’s wine industry.

Commercial standards of retailers, such as labelling requirements, were shifting consumer demands, and lobby interest groups were using carbon as a way to lock-out imports in different ways.

In the recent Ipap review, the DTI noted that some countries are considering the imposition of ‘border adjustment taxes’ on imports produced with greater carbon emissions than similar products produced domestically, and subject to carbon- emission limits.