The world is changing fast and to keep up you need local knowledge with global context.
The Development Bank of South Africa balances bilateral meetings and knowledge accumulation sessions at the World Economic Forum in Davos.
Mark Swilling on transitioning to a decarbonised world
There are many sessions dedicated to the energy transition. Most of them are around the technical aspects of financing decarbonisation. One or two sessions are on the just transition. In other words, how you combine decarbonisation with social justice to ensure you do not have an unjust transition; a decarbonised and equal world. A just transition is the core business of the DBSA. It is about development and we have to figure out how to do that in this new world we are living in, which is transitioning to a decarbonised world.
The global distribution of resources
I find it interesting that the conversation is dominated by the global north, which is continuously trying to come to grips with a fundamental geopolitical shift in the global distribution of resources because of the energy transition. The bulk of the materials we are going to need for the energy transition are in the global south, and yet the capital is in the global north. So, the discussions are dominated by how we are going to finance this transition when the global south does not have the capital. As the Development Bank, we wrestle with that. The cost of capital for investing in these projects in South Africa is very high and it is going to be an obstacle. What I find fascinating is how we deal with this financial Rubik’s cube.
SA needs a governance framework that embraces where the rest of the world is going
South Africans should be comforted by what I heard in the last session: “If you thought the energy transition was going to be smooth, you’re living in a fancy world.” It is not going to happen. Transitions are by definition ruptures. They are challenging; they are reversals; they are great leaps forward. There are unexpected outcomes and that is exactly what we are experiencing in the South African context. We are part of a global set of dynamics. South Africa is, in some ways, unique. We have got some of the best solar and wind resources in the world. We have one of the oldest coal-fired power fleets, which has to slowly get wound down. There is no way to escape this. We have to put in place a governance framework that is going to fully embrace where the rest of the world is going.
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