South Africa ranked number 5 in Climatescope 2016

The Climatescope 2016 results have recently been released and South Africa has ranked number 5 on the list of countries overall and number 1 in the Africa and the Middle East region. This is down one position from its 2015 ranking.

China was ranked number 1 followed by Chile, Brazil and Uruguay. India, Uganda, Honduras, Mexico and Kenya rounded out the top ten. Each country is ranked according to four parameters: I) Enabling Framework (40% of total ranking), II) Financing and Investment (30%), III) Value Chains (15%) and IV) Greenhouse Gas Management (15%). Each parameter is given a ranking of between 0.0 and 5.0 with 5.0 being the best possible score. South Africa’s overall score was 2.21.

The Enabling Framework Parameter I includes a total of twenty-two indicators which are measured for each country in order to assess its policy and power sector structure, levels of clean energy penetration, levels of price attractiveness for clean energy deployment and the expectations for how large the market for clean energy can become.

This was South Africa’s worst parameter and saw the country drop twenty-six places to be ranked 32nd globally based on this measure alone. It has a ranking of 1.28 for this paramater. This was largely due to the slower growth of clean energy installation and generation across the country. While the country’s Renewable Energy Independent Power Procurement Programme (REIPPP) has been commended internationally there is uncertainty as to whether it will be continued. Eskom, the country’s national electricity supplier has refused to sign new power purchase agreements (PPAs) agreed to under the REIPPP unless it is given more control over the prices agreed to through the auction process. However, to date the REIPPP has helped spur $16 billion in investment representing around 9 GW of renewable energy contracts since it was started in 2011.

The Financing and Investment Parameter II includes nine data indicators and accounts for the amount and growth of clean energy investments in projects larger than 1MW in each country, the availability of local funds and local finances.

Thanks to more than $4 billion in investment in the renewable energy sector in South Africa across 2015 the country performed well in this ranking and rose 18 places to be ranked 6th globally. It received an overall ranking of 1.77 for this parameter. The fourth bidding round of REIPPP projects occurred in mid-2015 with a combined value of $1.5 billion while other projects commissioned under earlier REIPPP bidding rounds became to come online during this stage across South Africa. China was ranked number 1 globally for this parameter due to it accounting for around one third of global investment.

The Value Chains Parameter III includes three indicators to measure local value chain resources available in order to facilitate clean energy development. Taken into account are the availability of local manufacturers to provide the equipment needed to construct technology-specific projects, financial firms to provide capital and service firms to provide assistance, such as legal support.

South Africa was ranked 3rd globally with a parameter ranking of 4.41. The high score reflected the large number and wide variety of companies (including financial institutions) that are involved in the country’s clean energy sector. Independent power producers (IPPs) are starting to carve out market share with renewable projects, such as solar, wind, water and biomass, and each IPP requires the support of other organisations and institutions in order to come into effect. China received a perfect score of 5.0 for this parameter and was ranked number 1 globally.

The Greenhouse Gas Management Parameter IV considers 13 total indicator inputs related to carbon offset project activity, level of policy support for carbon emissions reduction and local corporate awareness of carbon issues. Worth noting here is that the Climatescope methodology seeks to take into account each country’s efforts launched explicitly to reduce emissions rather than simply measuring each country’s emissions.

For this parameter, South Africa was ranked number 1 globally with a score of 3.39 which greatly exceeds the global average score of 1.56. It was strong on all three categories – carbon offsets, policy and awareness. In 2015 all countries, including South Africa, submitted their Intended National Determined Contributions (INDCs) to the United Nations as part of the Paris Climate Change Conference. South Africa has set a goal to have emissions in the range of 398 – 614 MtCO2e for the period 2025 to 2030. It has also said it would consider participating in a global market-based mechanism to reduce carbon emissions.

2016 marks the fifth year the Climatescope report has been prepared. For each country it analyses it provides a snapshot of “where clean energy policy and finance stand today, and a guide to where clean energy can go tomorrow.” For South Africa, which has performed better in some parameters than others, improvements can be made in policies in order to provide certainty to current investors and to help attract new finance.