Emerging from its annual strategic planning session and ordinary quarterly meeting held from 23 – 24 February 2023 in Johannesburg, the Presidential Climate Commission said Treasury’s renewable energy incentives listed, necessary as they were, were not sufficient enough to stimulate demand and bring about change in other energy spaces like green hydrogen, electric vehicles and batteries, and other renewables at a local level.
In his budget speech, Minister of Finance, Enoch Godongwana, unveiled tax incentives aimed at encouraging businesses and citizens to invest in renewable energy and increase power generation. Minister Godongwana announced that businesses will be able to reduce their taxable income by 125% of the cost of their investment in renewables with no thresholds on the sizes of the projects that are eligible for the incentive.
“Individuals who install solar panels,” said the minister, “will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15 000.” The minister further stated that the Bounce Back Loan Guarantee Scheme would be adjusted to entice renewable energy and rooftop solar investment, all the while responding to energy challenges facing small and medium enterprises.
“The commission’s advice and recommendations will focus on how these incentives can be expanded to support large scale roll-out and localisation of value chains linked to the green economy,” said Valli Moosa, Commission Deputy Chairperson.
The commission also emphasised that the just transition must be marked by sizable industrial and skills development to mitigate the crushing impact of Covid-19 and uncertainties in the global economy, which have led to job losses, a weak informal sector and inflated food prices. In addition, the commission debated the Just Energy Transition Investment Plan, while urging all partners to engage in the consultations currently underway in order to inform its set of governance and energy mix recommendations to be tabled to government by end of this month.
“The commission re-emphasised the need to remain cautious of the long-term debt burden and conditionalities on all climate finance and development cooperation, as well as the need for solid governance and oversight mechanisms of the JET-IP,” the climate commission said, adding that it was crucial for the country to be sensitive to water and food security, including the impact of biodiversity on the climate transition, jobs and livelihoods.
The PCC has also expressed concern that not all local municipalities have the ability to properly plan for the climate crisis. Consequently, it has devised an inclusive model for the purposes of building partnerships with local change drivers to realise desired climate outcomes. “Noting the dysfunctionality of many local governments to respond appropriately and plan for the climate crisis, the commission approved a policy framework for strengthening the resilience of urban communities and adaptation plans of cities and towns in responding to the immediate and future climate impacts,” the climate commission reported.
The commission invited prolific researchers such as Stellenbosch University’s Professor Mark Swilling, Professor Haroon Bhorat from the University of Cape Town and President Cyril Ramaphosa’s special economic advisor, Trudi Mkhaya. Both Bhorat and Makhaya presented on the global and national economic contexts, with Swilling providing the commission with insights regarding the ongoing energy transition in global economies and offering analysis on the implications of the finance minister’s budget speech on Eskom operations. The commission concluded from the presentations that South Africa’s electricity grid had to be upgraded and expanded to allow new power generation.
Meanwhile, the commission welcomed government’s commitment to lead the country’s just transition as shared by President Ramaphosa in his State of the Nation Address and noted the inputs that have been made by social partners during consultations aimed at making sure no one is left behind.
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