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SUSTAINABLE ENERGY: Affordable Energy - Concern in Sustainable Development


Recent Gauteng Business News

Worldwide CEOs have identified the affordability of energy as the decadeÂ’s biggest concern in sustainable development, according to a recent business poll conducted by Professional Services Firm PwC.

With less than a month to the landmark Rio+20 Conference on Sustainable Development, PwC examined global threats and challenges to business in driving sustainable development.

The study disclosed an increasing awareness of environmental issues affecting business among the worldÂ’s top-level CEOs. The poll, which was carried out among 141 CEOs during April and May 2012, identifies the affordability of energy, equality and social inclusion, and sustainable and resource scarcity as the top three concerns facing businesses this year.

Governments Embark on Clean Energy Initiatives

Jayne Mammatt, an Associate Director in PwC’s Sustainability and Integrated Reporting Department, South Africa, says: “Affordable energy is at the forefront of the agenda of multinationals worldwide and it is central to the issues of socio-economic development and environmental protection. Globally governments are embarking on clean energy initiatives to reduce the effect of energy on the environment, with the efficiency of energy in particular being a cost effective measure.

“South Africa is no exception and has embarked on a new initiative to meet the supply and demand of electricity, while at the same time addressing the issue of energy efficiency.”

The majority of CEOs (87%) believe cheap energy is an important factor to their business, increasing to 89% by 2022. The proportion of these for whom it is very important increases significantly, from 39% in 2012 to 60% in 2022.

The Rio + 20 Conference Focuses on a Green Energy Economy

The Rio + 20 conference is the follow-up to the UNÂ’s 1992 Earth Summit, which helped put climate change on the world agenda, and the 2002 World Summit on Sustainable Development, held in Johannesburg. The conference will focus on a green economy, while also trying to eradicate poverty. It will also focus on institutional and political support for sustainable development.

Mammatt says that companies are increasingly placing more emphasis on issues of sustainability. Matters such as the scarcity of resources, water stress and climate change are all expected to become bigger, more pressing issues for corporate strategy within the next ten years.

The poll reflects that as issues of energy affordability, water scarcity and climate change move to become strategic business concerns, the gap between sustained and sustainable development could be closed.

“There is a perception that there is a lack of understanding in the corporate sector about sustainable development, yet the issues of water, energy, and the scarcity of resources are very real issues.”

However, the poll also showed that CEOs have little confidence that next monthÂ’s international climate talks will see much progress about the issues being discussed and expect private sector issues to have more of an effect.

Only half of the 141 CEOs polled expect action on issues regarding energy, water and sustainable development to be advanced at the talks. Furthermore, four out of five CEOs say private sector pledges such as emissions reductions targets or national regional regulation, or even taxation will be more effective in driving action in the private sector.

SA Government to Introduce a Carbon Tax on Energy Emissions

Mammatt says that the South African Government confirmed in its February 2012 budget review that it will introduce a carbon tax next year. The tax will apply to carbon dioxide equivalents emissions and is proposed to be introduced at a rate of R120 per tonne, increasing annually by 10% during the first phase of the scheme which extends from 2013 to 2019.

The poll also showed that global targets and goals, as well as regulations and treaties such as the Kyoto Protocol were seen as ineffective by over a quarter of CEOs.

Malcolm Preston, Global Lead, Sustainability and Climate Change, PwC, says: “The Rio + 20 Summit can shape the vision and drive the ambition behind energy effectiveness. But business has more confidence in ‘bottom up’ driven actions that it has in ‘top down’. Over 90% of CEOs signaled that regional or national regulation and fiscal measures, along with private sector investment, are the most energy effective mechanisms for driving investment and change.

“There is a sense that business can and will respond on sustainability and climate change. Big business gets the strategic importance of sustainable development and consumption, and many major players are already taking action in their businesses and along their supply chain. When it comes to sustainable energy - the private sector is looking for more ambition and more leadership from governments and policymakers.”

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