Green Initiatives In S. Africa: Cost Prohibitive Or Cost Imperative?

Green Initiatives In S. Africa: Cost Prohibitive Or Cost Imperative?

Green initiatives are becoming increasingly important in the South African market and may one day become a factor in supplier choice, much like black economic empowerment is today, according to a report in BusinessDayLive.

But prohibitive capital investment costs for green initiatives, particularly for black empowerment companies, are presenting opportunities for foreign investors, the report said.

South Africa is behind the curve when it comes to green technology because going green is more expensive than traditional technology that consumes more energy, says Neil Cameron, general manager of Johnson Controls Building Efficiency Africa, a U.S.-based global diversified technology and industrial company.

“South Africans do not have a green mind-set,” Cameron said. “Many prefer to opt for less costly, less energy-efficient equipment and technology.”

Other limitations to businesses going green in South Africa include shrinking budgets. “This is a short-term view,” Cameron said. “The total cost of ownership of equipment that is not energy efficient far exceeds the initial cost saving at the point of purchase, making it an expensive investment in the long term. End users must be educated with regards to the total cost of ownership of a product.”

Andrew Hutchison, expert for intelligent networks at Germany-based T-Systems in South Africa, questions whether South African countries can afford to continue taking the short view.

“As a supplier organization we are seeing a trend towards large organizations in South Africa requesting green credentials from suppliers,” Hutchison said.

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Although current market conditions for renewable and sustainable energy in South Africa are good, the capital investment required to enter the sector is its biggest stumbling block, particularly for black empowerment partners, said Mazars audit partner Yolandie Ferreira.

“As a result, a lot of foreign investors are entering the market,” Mazars said.

Although many green ventures are not financially viable, there is acknowledgement that environmental factors are important and relevant, and many organizations are implementing initiatives that deliver a direct return in cost savings, Hutchison said.

“South Africa is still growing within the green technology market but we have some way to go in comparison with our international counterparts,” Alli said.

One reason South Africa is slightly behind compared with the rest of the world is there is no baseline from which to measure, Hutchison said. “This opens up the market for monitoring tools such as smart metering and home management. Environmental responsibility is not the domain of large corporates, but also consumers themselves.”

Globally, he said, companies waste on average 10 percent to 15 percent of energy; in South Africa, companies waste between 25 percent and 40 of energy they use.

South Africa is well positioned to benefit from global technology advances, Ferreira said. “We have the resources and infrastructure in place to support the growth of this industry here and into Africa.”

South Africa still relies on coal for 80 percent of its energy supply and that needs to change, she said, but “We are seeing green tech featuring more prominently in urban planning to help reduce the carbon footprint of our communities.”

Once the benefits outweigh the costs, she said, green technology will grow fast.