Excellency, Mr Mxolisi Kaunda, Mayor of eThekwini,
Members of the Mayoral Council of eThekwini,
Ladies and Gentlemen,
South Africa took over as Chair of BRICS on 1 January 2023 in a difficult national and global economic environment.
Globally, the conflict in Ukraine and the West’s unilateral sanctions, have battered economies that were struggling to recover from the COVID pandemic. With Russia being the world’s third-largest oil producer, second-largest natural gas producer and a top producer of steel and wheat, the conflict has led to substantial increases in food and energy prices that have disproportionately impacted us in the global South. Nationally, load shedding is worsening the situation with devastating impact on the economy, closing many businesses and worsening disruptions to the rail and logistics networks that should be supporting the trading economies, particularly in KZN.
As government, we have the South African Economic Reconstruction and Recovery Plan with detailed interventions to address our energy crisis with the aim of fixing Eskom, fundamentally transforming the electricity sector to achieve long-term energy security and enabling and accelerating investment in the energy sector.
It is clear that we cannot do this alone. At the January Lekgotla, President called on our BRICS partners to assist South Africa in our recovery.
This is line with our principled position to advance in partnership with others and is the central part of our theme as Chair of BRICS for 2023, namely “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism.”
Our theme reflects our vision of BRICS as a partnership of leading developing countries providing leadership, momentum and solutions for global growth, sustainable development, and inclusion of the global South in the world system.
The theme and priorities were developed through an inclusive national consultation process that included government departments and the South African chapters of the BRICS Business Council, BRICS Women’s Business Alliance, BRICS Think Tanks Council and BRICS Civil Forum in order to align our BRICS priorities with South Africa’s national interests.
Our first priority responds to the significant transformational changes we are making in our economy, particularly in the energy sector. We therefore aim to “Develop a partnership towards an equitable Just Transition” This priority aims to find solutions to transformational energy change which will also improve people’s lives and livelihoods in the sectors that supported the old economy, such as mining.
Our other BRICS priorities are:
Transforming Education and Skills Development for the Future
Unlocking Opportunities through the African Continental Free Trade Area
Strengthening Post-Pandemic Socio-Economic Recovery and the Attainment of the 2030 Agenda on Sustainable Development
Strengthening Multilateralism, including Working Toward Real Reform of Global Governance Institutions and Strengthening the Meaningful Participation of Women in Peace Processes.
BRICS countries are uniquely positioned to support South Africa’s energy recovery. BRICS countries contain almost half the world’s population and account for approximately 40% of the world’s energy consumption. As BRICS we are responsible for 48% of the world’s coal consumption, 22% of the world’s oil consumption and 13.5% of the world’s natural gas consumption.
While renewable energy consumption is only 16% at the moment, BRICS renewable energy consumption has been growing year by year driven by most BRICS members commitment to mitigating climate change and global for low carbon development.
BRICS countries are not only consumers of energy, as all members have substantial fossil fuels and available renewable energy resources. BRICS members account for 40% of the world’s coal reserves, 25% of the world’s natural gas reserves and 8% of the world’s oil reserves. In the renewable energy sector, solar power from South Africa, Brazil and India, wind power from Russia and China, as well as biomass from Brazil, all enjoy substantial resource advantages.
Within BRICS, China is the world’s largest coal producer with 50% of the world’s output in 2020 and India 10%. Russia produced 12% of the world’s oil and 16% of the world’s natural gas. Brazil is rich in biomass energy and its output for 25% of the world’s total biomass energy in 2020.
With our natural resources, BRICS countries are major role players in the global supply of energy and its dynamics. BRICS countries have developed similar energy policies to manage energy risks. BRICS countries have both expertise and technologies to use their energy resources to enhance energy security and cooperation.
BRICS recognised these complementarities and in 2020, BRICS adopted a Road Map for BRICS Energy Cooperation up to 2025 aimed at building a strategic partnership in energy cooperation. The Road Map is being implemented in phases.
The first phase is the research phase which started under South Africa’s Chairship of BRICS in 2018 with the establishment of the BRICS Energy Research Cooperation Platform. The platform brings together experts, companies and research institutes to coordinate common interests of BRICS in research and development of innovative technology and policies, with seven studies being released to date at BRICS Ministers of Energy meetings. Last year, China presented an additional study on the development of renewable energy and smart grids in the BRICS countries. This year, Russia is leading a study on energy security. The roadmap also established the publication of the annual BRICS Energy Report.
During the second phase, BRICS countries will identify the needs and challenges to energy security and find areas where BRICS cooperation can provide solutions. The third phase aims at advancing mutually beneficial cooperation including exchange of best practice, use of BRICS advanced technology, as well as opportunities for trade and investment in each other’s economies. Of course, we are not waiting for this third phase before we work with our BRICS partners on energy solutions.
India is already South Africa’s biggest coal export market and brings in almost half of our total coal revenue. China is reopening opportunities for imports from South Africa, following its political fallout with Australia, previously an important coal source for them. China has substantial oil and gas trade with Russia, oil and gas cooperation with Brazil, a joint natural gas pipeline project with India as well as renewable energy trade with South Africa. South Africa is a pioneer in area of clean coal, in which India and China have an interest. The Russian state energy company Rosatom has signed an agreement with South Africa to construct small hydropower plants in Mpumalanga as a key component of South Africa’s energy security strategy.
Part of South Africa’s response to the energy crisis involves implementing a just transition to a low carbon economy. Climate change also poses considerable risks to jobs, businesses and the economy. We are among the most water-scarce countries in the world, and recent events here in KZN have shown that extreme weather events such as floods are occurring more often, with devastating impact on our infrastructure.
The response to the electricity crisis provides an opportunity to also mitigate our contribution to, and the risks from, climate change and adapt to a low carbon economy.
South Africa’s Just Transition Plan aims to significantly lower emissions of greenhouse gases and harnesses investments in new energy technologies, electric vehicles, and energy-efficient appliances. South Africa’s Integrated Resource Plan which drives our energy policy therefore envisions that renewable solar and wind energy will generate almost 25% of our electricity by 2030. Coal, which currently accounts for 85% of South Africa’s electricity generation will drop below 60% in less than a decade.
The impact on communities reliant on coal extraction and production is an important element of the Just Transition as it aims to ensure that communities tied to high-emitting energy industries are not left behind and are provided with new skills and new economic and employment opportunities.
During South Africa’s Chairship of BRICS in 2013, we established the BRICS Business Council to strengthen and promote economic, trade, business and investment ties among the business communities of the BRICS countries. The BRICS Business Council also identifies problems and bottlenecks and recommends solutions to BRICS.
This year, under South Africa’s Chairship, the Council’s Energy and Green Economy Working Group is focused on concrete outputs on the Just Transition. The Council has developed an energy skills roadmap for South Africa which will be rolled out to the other BRICS countries. The skills roadmap identifies the skills available as well as the skills necessary and identifies training programmes as well as sponsors across the BRICS countries.
There are discussions on the possible establishment of a BRICS African Centre of Excellence on the Just Energy Transition which would support a network of researchers focused on technology, socio-economic, environmental, financial and other aspects of the Just Transition that would inform policy making in BRICS countries in collaboration with the BRICS Energy Research Cooperation Platform.
The question is how to identify funding for investment in renewable energy. There is a lot of money available globally for renewable energy projects, with National Treasury estimating that there is 12 trillion dollars available from sources such as the Green Climate Fund. But developing countries struggle to access these funds because of the perceived risk of investing in a developing country. South Africa’s policy uncertainty and regulatory challenges have been cited as obstacles to South African investment opportunities, with other funders also banning financing and investment in coal for energy, even if it is clean coal.
India and China are able to source their own international finance for renewable energy by offering their own-currency Green Bonds known as Green Masala Bonds and Green Panda Bonds. The Green Panda Bond is issued by the BRICS New Development Bank.
The NDB is a multilateral development bank established by BRICS countries to mobilise resources for infrastructure and sustainable development projects. Sustainability is fundamental to the founding principles of the NDB, and the Bank aims to deliver transformative impact to BRICS member countries with a target of 40% of all the Bank’s loans funding projects mitigation and adaption for the effects of climate change by 2026.
South Africa and China have so far been the leading beneficiaries of sustainable financing from the NDB with respect to clean and renewable energy. South Africa is the beneficiary of 12 projects financed by the Bank to the value of 5.4 billion dollars. Five of these projects support the energy sector, with three of those funding renewable energy projects to the value of thirteen billion Rand.
The opportunities for BRICS to support transformative change in our economy are obvious. As Chair of BRICS in 2023, our strategic vision is to harness our existing mutually beneficial BRICS cooperation to address issues of national interest and national concern for South Africa in a holistic and multi-disciplinary way. The depth and strength of our BRICS partnership allows us to bring multiple BRICS solutions to the table, including financing, trade, investment, industrialisation, skills development and training, research, development and innovation, as well as partnership with African countries and leading countries of the global South.
I thank you.
ISSUED BY THE DEPARTMENT OF INTERNATIONAL RELATIONS AND COOPERATION
OR Tambo Building
460 Soutpansberg Road