Measuring green growth in South Africa

The last five years in South Africa have been characterised by high consumer prices (particularly for energy and food), low economic growth, low investment levels, low commodity prices, and greater dependency on credit (Stats SA, 2017). While the 2008 financial crisis was a contributing factor, there are a number of other factors that may explain South Africa’s sub-optimal economic performance. This includes the fact that the South African economy has continued to remain dependent on resource-intensive industries which emit relatively large amounts of greenhouse gases (GHGs) and where many negative externalities (relating to air and water pollution and solid waste generation) have not been internalised into market prices. Failing to account for externalities lead to the misallocation of capital, and failure to account for the value of natural capital. This in turn has led to wasteful consumption and production patterns; the unsustainable use of ecological resources; widespread environmental and health risks; and has led to unfair and inequitable societies (Fulai, et al., 2015).

The South African Government is aware of these challenges, and according to a recent study conducted by the Partnership for Green Economy Action (PAGE), South Africa has an extensive policy and regulatory framework to support green growth. A total of 32 sub-frameworks, strategies, policies or acts were identified as including environmental sustainability objectives (PAGE, 2017). However, despite these good policy intentions and some early successes in the development of renewable energy, progress has been hindered by the actions of some key role-players in the sector. Specifically, resistance from Eskom in terms of signing power-purchase agreements (PPAs) with renewable energy independent power producers (IPPs) and the enactment of a 77c/kWh price restriction on renewable supply, has stunted the growth of the renewable energy sector. Coupled with a current oversupply of electricity, the authorisation of nuclear plants, and the continuous delays in finalising the IRP, it is unlikely that South Africa will meet its renewable energy or emission reduction targets as specified in the NDP.

One reason for the lack of attention given to the green economy, is that South Africa (and most other countries) continue to focus on measuring conventional economic indicators, which evaluate, compare and represent economic growth (i.e. GDP), but do not account for the impact of economic development on natural capital. Unless the loss of natural capital and the externalities resulting from GHG emission are factored into the way that we target and measure economic performance, environmental objectives and outcomes are likely to be marginalised.

According to the National Strategy for Sustainable Development (NSSD1), four headline indicators have been identified to address this concern, and to monitor the country’s progress in terms of developing a greener economy (DEA, 2011):

1. Progress on the implementation of the nine green economy programmes;

2. Increase percentage (or amount) of financial resources ring-fenced/streamlined and spent for green economy programmes;

3. Number of patents, prototypes and technology demonstrators added to the intellectual property (IP) portfolio annually funded or co-funded research programmes; and

4. The share of GDP of the Environmental Goods and Services Sector.

However, it is not clear that these indicators are being tracked and reported on, with little or no data available on South Africa’s performance against some of these targets.

Measuring the progress of green growth is not only an issue faced by South Africa. Global efforts to measure green growth have shown that there is a lack of consistent and readily available data. Whereas collaborative platforms such as the Green Growth Knowledge Platform (GGKP) provide a database of indicators to measure green growth, the available data is sporadic, making it difficult to identify trends. Likewise, data on global energy balances are not up to date, and data on energy intensity and GHG emissions are also not readily available or up to date in existing statistical databases. The latest Environmental Economic Accounts Compendium report for South Africa issues by Statistics South Africa (March 2017), for example, only provides energy figures up to 2013.

The green economy has an important contribution to make to the South African economy. Jobs will inevitably be lost in inefficient and carbon intensive sectors. New and cleaner technologies will support employment creation, and the green economy transition will create new industries and support growth in others. Historically, technological change has led to net job creation (OECD, 2006). But how can South Africa measure progress on its green economy transition when the four headline indictors are currently not adequately measured? Clear definitions and adequate performance data are crucial in providing evidence for policies and monitoring progress and the subsequent success of policy implementation.