Solar panels are growing
Solar panels are growing in popularity in domestic, commercial and rural settings. Marlenique Estate, Stellenbosch, South Africa. Credit: New Southern Energy credits for companies that invest in solar panels, wind and solar energy equipment. Companies that send waste from landfills for recycling or reuse also qualify for tax benefits. A recent study conducted by global research firm Kantar on behalf of Wesgro, the official tourism, trade and investment promotion agency for Cape Town and the Western Cape, shows that there is a growing appetite to invest in the green economy globally and many governments are putting in place clear and From 2024, Cape Town bus company Golden Arrow will add 60 e-buses to its fleet every year. Credit: Nick Fordyce/GreenCape 20 targeted measures to make it easier and more incentivised for players in that market. The US, for example, recently promulgated the Inflation Reduction Act of 2022 which includes almost 0-billion in clean energy and climate-related spending. The law partly puts an emphasis on subsidies and tax credits to stimulate investment in clean-energy technologies rather than on a carbon price or penalties. In broad terms, it aims to ramp up investments in domestic manufacturing capacity, encourage domestic procurement and the diversification of supply chains, and incentivise research and development and commercialisation of clean technologies like carbon capture, storage and clean hydrogen. A major portion of the funding under the new law is directed towards clean energy through a mix of tax incentives, grants and loan guarantees, with the ultimate goal of drastically lowering US carbon emissions. The largest amount of funding will support clean energy and transmission, followed by clean transportation, including a switch to electric vehicles (EVs). Similarly, the UK provides generous tax breaks for companies that operate in a sustainable manner. A Climate Change Levy (CCL) is paid by businesses in key sectors, including industrial, commercial and agricultural or public services for electricity, gas and solid fuels. But if the firm uses small amounts of energy (for example, when energy is not used as fuel), or uses domestic energy, it doesn’t need South Africa has the potential to attract more green investments by implementing policies and initiatives that promote the use of clean energy and sustainable development
GREEN INVESTMENTS to pay the main rate of CCL on certain supplies. A company can also claim “enhanced capital allowances” when buying energyefficient, low or zero-emission technologies, such as electric vehicles or zero-emission trucks. This reduces the amount of tax to pay. A company can also obtain tax breaks if it sends waste from landfills to be recycled, incinerated or reused. THE EUROPEAN GREEN DEAL Meanwhile, in 2019 a law on climate protection was introduced in Germany. The law includes, among other measures, tax incentives for energy-efficient renovation measures in residential buildings or a mobility bonus for people who commute to work. The “European Green Deal” – with the aim of achieving climate-neutral business activity by 2050 – also gives the tax policy a decisive role in the transition to greener and more sustainable growth. By 2030 Germany plans to produce at least 65% of all its electricity from renewable sources, and all electricity generated in the country should be greenhouse-gas neutral before 2050. To secure the green transition, the German government plans to invest €1.5-billion in green hydrogen to help decarbonise the economy. Such measures send a clear message to investors that renewables will be supported and builds confidence. Meticulously prepared top-down plans of a country on sustainable development give potential investors a defined road map and show investment opportunities in a clear way. In South Africa, incentives to fast-track the transition to a green economy have hardly moved the needle, amid lack of clarity on key government policies. The political will is there, for the most part. What is needed is urgent and decisive action. COLLABORATION IN THE WESTERN CAPE The energy crisis will not be fixed by any one stakeholder and the collaboration of the public and private sectors will be the catalyst for getting this right. The Western Cape is taking the lead on that front with Premier Alan Winde recently stating that the province is looking into ways in which private businesses can be provided with the necessary support to ramp up more investment A recent study conducted on behalf of Wesgro shows that there is a growing appetite to invest in the green economy globally and many governments are putting in place clear and targeted measures to make it easier and more incentivised for players in that market. into alternatives. The province has always emphasised the importance of intensifying and expanding the green energy drive by boosting relations with local and international partners. South Africa has the potential to attract more green investments by implementing policies and initiatives that promote the use of clean energy and sustainable development. This could include setting clear renewable energy targets, providing lucrative financial incentives for clean energy development and creating a predictable regulatory environment. By implementing policies and initiatives that promote clean energy and sustainable development, South Africa can accelerate the massive rollout of renewable energy, crucial to end the crippling loadshedding crisis. But this will require a comprehensive and coordinated approach that involves the government, private sector and civil society. Only then can SA build a much more attractive environment for green investors, accelerate the drive to a low-carbon economy, and end loadshedding which has become the biggest handbrake on the economy. For more information about Wesgro: www.wesgro.co.za Credit: Versofy Solar The green economy has many subsectors. Gestamp Renewable Industries is making wind towers in the Atlantis Special Economic Zone (ASEZ) near Cape Town. Credit: GRI/GreenCape Wrenelle Stander, CEO of Wesgro 21
