Biting the hand that feeds you: green growth and electricity revenues in South African metropolitans

Abstract

Local governments are central in green growth (green economy) transition. They set framework conditions for investments, draw up incentives and finance, inform private behavior and drive local innovation and scaling up. Consequently, South African metropolitan municipalities have been engaging with the green growth transition agenda as informed by the need to mitigate negative impacts of climate change through green growth transition strategies. Green growth transition is, however, associated with both risks and opportunities for local governments, especially when one considers electricity revenues. Through a case study of the impact of mitigating the demand for coal generated electricity demands in the Johannesburg, Tshwane and Cape Town metropolitan municipalities, this research sought to identify risks associated with such transition so that these are minimized whilst opportunities are enhanced. Among the key measures aimed at mitigating demand for this ‘dirty’ electricity, the retrofitting of energy efficient technologies in municipal and private facilities and the use of renewable energy sources (dominated by the use of solar technologies) are the most prominent. This paper, however, finds that the use of these technologies poses the risk of ‘biting the hand that feed the metropolitans’. This is so given that significant revenue is generated from rates charged on usage of this dirty electricity. The conclusion from this work is that whilst there is pressure for metropolitan municipalities in South Africa and globally to embrace the green growth agenda, due diligence must be undertaken to minimize the risks associated with this transition.