Estimating the potential impact of a greening economy on job creation

1. Day Month Year Estimating the potential impact of a greening economy on job creation Green Economy Summit Sandton, 19 May 2010 Jorge Maia Head: Research & Information Industrial Development Corporation

2. Introduction to the IDC/DBSA research project • High expectations around green jobs: • Rapid growth sector with enormous multi-sectoral potential. • Determinant of future competitiveness. • Economic crisis imperative – one of the main solutions. Need for greater clarity around job creating potential. • Existing figures on green jobs: • High variability from one study to another - mainly sector- or technology-specific, no macro-economic estimates. • Often weak reliability / uncertainty about the sources.  Uncertainty = criticism = credibility issues. • Informoptimal technology mix to meet energy demand, highlighting relative jobs potential: • Not “green jobs” in isolation, butstrong employment emphasis/balance when greening the economy. • Policy trade-offs (long-term economic growth, emissions reduction, job creation, sustained competitiveness). • Acknowledge and face the various constraints. • Prioritisesectoral emphasis, sequencing policies over time.  Maximise job creation as we green the SA economy. 2

3. Introduction to the IDC/DBSA research project (cont.) Moving away from an overwhelming dependency on fossil fuels (especially coal) for energy generation in SA, towards alternative energy sources: + ve impact - ve impact • Mining • Transport (logistics) • Environmental impact such as pollution levels (air, water, soil etc.) • Economic linkages (GDP, jobs, investment, etc.) • Impact on output levels, investment & jobs in coal mining (expansion at slower pace, substitution in the L-T) • (New investment, jobs and output through alternative energy sectors, incl. const., manufacturing, O&M.) • Transportation of cleantech materials • Transport of export coal to ports. • Road usage: reduced congestion & infrastructural damage. • Transportation services activity (rail & road) from coal mines to power stations • Improvement in soil and land quality • Improved water and air quality • Increased water availability • Reduced economic activity in several sectors (e.g. machinery & equipment, chemicals etc.), via linkages, due to lower coal mining production over time • Increased economic activity due to linkages arising from expanding renewable energy sector & introduction of cleaner technologies . • Potential growth of export sector associated with renewables & cleantech. • Regional shifts i.t.o. investment, GDP, jobs

4. Estimating the economy-wide impact Assessing the impact of introducing alternative/renewable energy sources & cleantech Export potential Export potential 4

5. Process of determining employment potential Technological application/resource management (energy generation, energy efficiency, emission control, biodiversity) Operation & maintenance Construction Manufacturing Local potential Export potential Local potential Export potential Local potential Export potential Short-term jobs opportunities Medium-term jobs opportunities Long-term jobs opportunities 5

6. Case study – wind power generation: Growth and challenges • Technically, wind power has the largest RE generation potential after solar. • Growth in global wind power generation capacity has been almost exponential. • Some slowdown since late 2008 (with a few exceptions such as China). • Significant contribution in more than 70 countries, both industrialised and emerging/ developing. • Major challenges include: • Not yet competitive, although continuously improving; • Depend on available wind power, backup capacity needed; • Logistics for construction; • Grid connection. Cumulative global wind power generation capacity 6

7. Case study – wind power generation:Potential and challenges • SA’s wind power potential: • Recorded potential is only moderate at best, though data is insufficient ; • Potential contribution to power generation in SA may be significantly higher – improved wind atlas being developed; • Potential (average speed) directly affects unit cost; • Some areas in east and north Africa seem to have higher wind power potential than South Africa. • Major challenges facing the domestic wind power industry: • Transmission infrastructure / grid connection; • Regulatory framework, progress, support ; • Wind energy expected to be competitive by 2020. 7

8. Case study – wind power generation:Opportunities and strengths General opportunities & strengths include: • Promising REFIT tariff, ‘free’ power source, little water needed. • Tested technologies, improving competitiveness. • Commissioning – short period, generating units separately completed. • Strong investor interest – many proposed projects in pipeline, involving both global & local players. • Existing manufacturing capacity, demand-driven expansion potential. • New components manufacturing potential. • African markets. • Support from global institutions (UNDP, GEF, IFC). 8

9. Case study – wind power generation:Potential involvement of local industries • Local manufacturing capacity (see next slide) can be promoted through engagement with established global manufacturers. • Significant opportunity exists in construction and manufacturing activities targeting other African markets with higher/good wind power potential. 9

10. Case study – wind power generation:Manufacturing wind turbines 10

11. Case study – wind power generation:Estimating the job creation potential in SA * Jobs per GWhincluding indirect jobs 11

12. Case study – wind power generation:Estimating the job creation potential in SA Results: • Jobs estimates using employment intensity/MW of 3.2, 1.0 & 0.7 for manufacturing, construction and O&M, respectively. • Manufacturing numbers based on: • Share of parts in turbine cost (see composition of parts table); • Competitiveness of their domestic industries (high, medium, low); • Increasing penetration of local manufacturing (40%, 60%, 80%). • South Africa’s future capacity ceiling will determine • Depends on IRP, expectations being only 2 000MW – 2 500MW 12

13. Case study – wind power generation:Potential jobs estimates

14. Concluding remarks • Substantial, yet preliminary, estimation work undertaken on : • Energy generation: solar PV; solar CSP; wind; hydro (small & large); wave and tidal; landfills; pyrolysis; biomass combustion; biofuels; and nuclear. • Energy efficiency: solar water heaters; light bulbs; insulation; cleaner stoves. • Estimation work yet to be undertaken on: • Emissions control. • Biodiversity. • Need for substantial testing with key role players.

15. Day Month Year Thank You The Industrial Development Corporation 19 Fredman Drive, Sandown PO Box 784055, Sandton, 2146 South Africa Telephone (011) 269 3000 Facsimile (011) 269 2116 E-mail callcentre@idc.co.za