Low-carbon future an opportunity to grow the economy, Ramaphosa says

President Cyril Ramaphosa says SA’s transition to a low-carbon, climate-resilient economy has great potential to establish and develop new industries.

Cutting back on the country’s carbon footprint is critical to the health and wellbeing of its citizens, the sustainability of society and ensuring that South African goods and services remain competitive, the president said in his weekly newsletter..

“At the same time, it is a great opportunity to grow and diversify our economy and create employment. We have said that our transition to a low-carbon, climate-resilient economy must be just and inclusive,” he said.

Ramaphosa said the government has produced a just energy transition investment plan to direct resources both to supporting workers, communities and industries affected by the shift towards renewable energy sources and to investing in new industries such as green hydrogen and electric vehicles. 

“This is particularly important as many of our export markets are increasingly seeking to reduce the negative environmental impact of the goods they produce and import.

“The EU, for example, has decided to ban the sale of new petrol and diesel-powered motor vehicles from 2035. This has significant implications for SA, since Europe accounts for about 60% of our motor vehicle exports,” he said.

Ramaphosa warned that this presents both a threat to SA’s auto industry, which mainly produces petrol and diesel vehicles, and an enormous opportunity, citing that the opportunity has been seized by one of the world’s largest automotive manufacturers. 

“Last week the BMW Group announced that it will be spending R4.2bn over five years to prepare its local manufacturing plant for the production of the next-generation BMW X3. 

“The plug-in hybrid X3 will be exclusively manufactured in SA at BMW’s Rosslyn plant in Pretoria from the second half of 2024. While other vehicle manufacturers are producing hybrid vehicles, the X3 will be BMW’s first locallyproduced electric vehicle.”

This announcement affirms the confidence investors have in SA’s economy, he said.

“It also gives effect to the principle of our transition to low carbon energy. While there are fears that the move towards decarbonisation will result in job losses, BMW’s plans for job retention, reskilling and training on electro-mobility will provide certainty to more than 20,000 employees at the company’s facilities across the country.”

Working in partnership, government, business, labour and civil society have the responsibility of ensuring that the transition to new forms of production is managed in a just, equitable manner, he said. 

“Among other things, this means auto manufacturers need to be supported to expand their investment in the production of new energy vehicles in SA SA.

“We have a range of measures to support automotive manufacturers, such as the Special Economic Zone incentives, the Automotive Investment Scheme and others. We will soon be finalising a strategy to support the transition to electric vehicle manufacturing that is affordable and effective.”

It is important for SA to keep up with other countries that are incentivising the manufacture and uptake of electric vehicles as the world moves towards decarbonisation, he said. 

“ SA has some important advantages. We have the world’s largest reserves of platinum and are an attractive location for renewable energy, both of which are important elements in the production of green hydrogen. Such hydrogen can be used as an e-fuel in some models of vehicles, which are exempted from the EU ban.”

The decarbonisation of South African society can be used to drive growth, improve industrial competitiveness, create jobs and harness the potential of innovation, he added. 

“Whether it is in the auto industry, energy or other economic sectors, we are confident that our country is taking the necessary steps towards a low-carbon future that leaves no-one behind.”

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