Public-private partnership boosts SA environmental performance

In the 2016 Environmental Performance Index (EPI), South Africa out-performed African countries to rank fourth within the Sub-Saharan Africa region. This positive performance placed South Africa in the top half of the index at 81 when compared to 180 countries worldwide. European nations – such as Finland, Iceland, Sweden, Denmark and Slovenia – took the top spots, showing the relationship between countries’ EPI performance and economic development.

The EPI ranks countries’ performance on high-priority environmental issues in two areas: protection of human health and protection of ecosystems. Developing countries, particularly those in Sub-Saharan Africa, have seen the greatest gains in environmental performance over the last decade. Investments in clean water, sanitation and energy infrastructure are the main contributors to improvements in these nations’ scores. The report goes as far as to suggest that environmental performance is an issue of governance – only well-functioning governments are able to manage the environment for the benefit of all.

But should the responsibility rest solely on the shoulders of government? Perhaps the key to increasing environmental performance may be linked to public-private partnerships. One example of this in South Africa is the Department of Energy’s (DoE) Renewable Energy Power Producer’s Procurement Programme (REIPPP).

South Africa has rapidly become a world player in renewable energy and is well on its way to achieving government’s goal of 30% clean energy by 2025, according to a recent DoE report. The South African renewables sector, through the REIPPPP launched in 2011, has attracted R192.6 billion investment, of which 28% (R53.2bn) is much-needed foreign investment.

“There is huge international investor focus on Independent Power Producers (IPP) due to the power shortages and load shedding in the region and the increasing demand for energy amongst the region’s growing economies. And opportunities for projects using both renewable and thermal technologies are expanding. The South African DoE’s Renewable Energy Power Producer’s Procurement Programme (REIPPP) launched an IPP development boom in the region; now there is investment across the region in various technologies,” explains Scott Brodsky, Partner at international law firm Macfarlanes.

The growth of the programme has been extremely effective in driving down tariffs for renewable energy through competitive bidding. Renewable energy already provides a cost-competitive solution to traditional fossil fuel-based generation. There have also been notable improvements in the economic development commitments, primarily benefiting rural communities. One investor characterised REIPPPP as “the most successful public-private partnership in Africa in the last 20 years.”

Important lessons can be learned for both South Africa and other emerging markets contemplating investments in renewables and other critical infrastructure investments.

To read the full EPI report visit: http://epi.yale.edu/sites/default/files/2016EPI_Full_Report_opt.pdf