SA economy ‘poorly placed’ to deal with climate change challenges


    Business will have to play an instrumental role in developing and implementing climate policy in South Africa and will have to go beyond a mere process of engagement, climate change consultancy Camco stresses in a newly released report.
    The report, ‘Climate Change: Risks and Opportunities for the South African Economy’, states that the country’s economy is “poorly placed” to deal with the economic, reputational and technological challenges presented by climate change, and given its strong dependence on fossil fuels and high levels of energy intensity for economic output, climate competitiveness remains among the lowest of the Group of 20 nations.
    The report was coauthored by the research institution Trade and Industrial Policy Strategies.
    “Given the global nature of the climate challenge and the global nature of response measures, a concerted business drive on climate change is desirable, in collaboration with government, to ensure that South African companies thrive in a carbon-constrained future,” said the report.
    For many sectors of the economy, significant threats and opportunities to business lay outside the realm of national regulatory mechanisms, in the form of global supply chains, investor relations, reputational issues and the growing demand for low carbon goods and services.
    The Camco report went into detail on specific risks as well as opportunities faced by different sectors in the South African economy.
    Camco noted that focus on these factors has gathered momentum independently of calls for domestic policy action. As such, climate change should be viewed not just as a regulatory issue, but as a commercial issue shaping pricing, market equilibriums and the competitiveness of industries.
    The report studies the secondary impacts of climate change, such as local, national, regional and global responses to climate change, and how this range of responses influences trade, investment and economic performance, rather than the direct physical impacts of climate change such as increased temperatures and reduced water availability.
    The implications of climate change vary substantially between and within sectors, with most sectors displaying a range of potential threats and benefits.
    The report outlines a number of economic opportunities, which could be brought about by the shift to a low-carbon economy and society, including the ability to work in parallel with objectives related to economic growth, job creation, energy security and social development.
    It draws attention to the fact that over a sustained period South Africa has shifted to a largely tertiary economy, with 55% of all economic output and the majority of employment derived from service-related industries. The relatively poor performance of ‘Agriculture, Forestry and Fishing’ and ‘Mining and Quarrying’ is one of the main reasons that the primary sector’s contribution to gross domestic product (GDP) has shrunk over the past decade.
    Prior to the economic recession, South Africa enjoyed a period of sustained economic growth, with yearly GDP growth rates averaging 5,4% from 1999 to 2008. Economic growth is expected to recover in 2010 and beyond, with GDP estimated to reach a moderate growth rate of 2,3% in 2010 and approaching 3,6% in 2012.
    The report concluded by stating that proactive responses across the private and public sector were required to effectively address climate change in South Africa. Successful management of this global challenge would require short-term pragmatism and longer term planning, linking business, government, labour, nongovernmental organisations and the research community in support of low-carbon growth.