Finance is a major driver in the advancement of climate technologies.
When it comes to limiting global warming, climate technologies will be critical. But these technologies are not just about saving the planet, writes Matthew Cruise.
We live in a rapidly warming world. Whatever the shrinking number of climate change sceptics might try to tell you, that’s no longer in doubt. Globally, 2022 was the sixth warmest year on record. It was also a year in which a number of places recorded their highest-ever maximum temperatures.
The effects of that rapid warming are becoming increasingly catastrophic too. The floods that devastated KwaZulu-Natal in April last year were undoubtedly made worse by climate change, as is the drought which has brought Nelson Mandela Bay to the brink of its own Day Zero.
When it comes to mitigating and perhaps one day even reversing that warming and its effects on the world, climate-forward technologies (including solar PV) will be critical. But those technologies aren’t just about saving the planet. They also represent an opportunity to boost economic growth (at a time when that’s not easily achievable), grow employment, and build up desperately needed skills in markets.
The economic power of climate tech
One of the biggest drivers of the climate tech advances we’ve seen in recent years is money. As the world looks to divest from carbon-intensive industries, finance has flowed into climate-positive industries, including the climate tech sector.
In 2020, for example, the Scottish Widows Fund announced that it would dump £440 million of company holdings that failed its environmental, social, and governance (ESG) tests. A year later, ABP (one of the world’s largest pension funds) announced that it, too, would stop investing in fossil fuels. China, meanwhile, pledged to stop financing new coal projects in 2021.
All of that money has had to find other places to go, and one of the biggest beneficiaries has been climate tech. It should hardly be surprising that estimates from McKinsey suggest that next-generation technologies could attract between $1.5 trillion and $2 trillion of capital investment per year by 2025.
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Given that South Africa reportedly needs about R1.5 trillion ($84 billion) for its just energy transition, it would only make sense for it to do everything in its power to attract the finance available for investments, including creating the best possible conditions for the manufacturers, sellers, and installers of climate tech.
The imperative should be even greater when you remember that climate tech – including wind, solar PV, and energy management tools – represents the fastest and most affordable way out of the country’s ongoing energy crisis. Getting out of that crisis is, in turn, critical to revving much-needed economic growth.
Building skills, creating jobs
But climate tech can do much more than that. It’s also essential to creating much-needed jobs and building up skills that will increasingly be in demand in South Africa in the near future. By one estimate, renewables alone could create around 250 000 jobs in 25 years. In a country with an unemployment rate north of 32%, that’s not to be sneezed at.
As important as they are, renewables aren’t the only avenue for job creation when it comes to climate tech. Skilled installers, for instance, are required for energy management devices such as geyser timers. And as those devices become smarter, they’ll require support. That’s before you even consider sales staff and all the various other functions needed to keep companies running smoothly. The electric and hydrogen fuel-cell vehicles that will eventually dominate our roads will also need new specialist job functions.
Building up the skills required for these functions could also provide a massive boost to both the country’s economy and job numbers. For example, a skilled and accredited solar PV installer is in a much better position to start a business than a coal miner. There are dozens of other examples which show why investing in climate tech is so critical to the future not only of South Africa but the world.
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Help build the future now
The great thing is you can help build that future right now by investing in climate technology for your home. You’re not only making your home greener, less grid reliant, or reducing your energy bills – you’re also helping grow the businesses, big and small, that will be critical to creating a prosperous future for South Africa.
Climate change is one of the biggest existential threats humanity faces, and we all have a role to play in addressing it. But in doing so, we can enjoy direct benefits as consumers while also contributing to economic, job, and skills growth.
Matthew Cruise, head of business intelligence at Hohm Energy.
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