A R720-million funding package to help make more buildings “green” in South Africa is just one step towards reducing weather catastrophes such as devastating floods and runaway fires, which have had a disastrous impact on the country.
On Tuesday, the World Bank’s International Finance Corporation (IFC) and Business Partners Limited launched the multi-million rand Green Building Financing programme. The IFC is providing a R600 million loan package to Business Partners.
But with rebates and grants that Business Partners will give SMEs to finance the certification of their buildings as green, more than R720 million in funding will be made available over the next five years. The two companies have calculated that this will be enough to “green” about 100 to 120 buildings.
Greening by installing solar panels, water conservation systems and other technologies, Business Partners estimates that each building will reduce its electricity and water consumption by at least 20%.
Industrial buildings, mixed-use developments, shopping centres, residential properties, offices, hospitals, schools and hotels can apply for this funding, as long as they don’t serve the luxury market.
A critical time to go green
Coincidentally, the launch of this funding package took place while South Africa is still tallying the damage caused by KZN floods and battling frequent load shedding. The two – a consequence of climate change on one hand and its cause on the other – are part of what the IFC and Business Partners hope to address by expanding green building financing in SA.
“If we look at the tragic events that unfolded in KZN two weeks ago…the effect of climate change is real, it’s here, and we need to start doing something,” said Business Partners’ MD Ben Bierman.
Bierman said as a country with the 16th highest carbon emissions in the world, primarily through our coal-fired power stations, SA has to date still been spared some of the worst possible effects of climate change. So far, it has mostly battled with droughts. But he believes the recent KZN floods should serve as a wake-up call.
“We are about three seconds away from high noon. We’ve got 150 years before we get to 12 o’clock. Unless we start doing something right now is generally accepted that we will not be around then,” said Bierman.
The other challenge that greening more buildings can address is the effect of loadshedding on SA’s economy. Kalina Miller, IFC’s new business lead in southern Africa, said the conversation with Business Partners began at the height of Eskom’s power cuts.
Less reliance on Eskom’s coal-generated power would mean decreased demand on the national grid and fewer emissions from burning coal. But Miller said while everyone thinks of Eskom’s coal-fired power stations when they see SA’s ranking on global carbon emissions, buildings produce around 40% of energy-related carbon emissions.
“So, if we need to tackle climate change and vulnerability, addressing green buildings is going to be critical to meet our climate goals,” she said.
But greening 100 to 120 buildings as this programme targets won’t on its own be enough to change SA’s emissions to the level that will move the dial on the country’s climate vulnerability. The IFC estimates that the financing need for green buildings in SA is much greater.
Business Partner’s chief operating officer, Mark Paper, said the company is hoping that when other financiers see how its package gives rebates to incentivise property owners to make their buildings green, they too will start coming up with more attractive propositions.
He said many businesses aren’t investing in things like solar panels because of the hefty upfront capital required to install these. But if more companies start providing grants and rebates as the IFC and Business Partners do, that hesitation will likely subside.
“The idea is eating an elephant one bite at a time. So, if each building reduces utility usage by 20%, all of that will have a meaningful build-up…Today it starts with 120 buildings. Tomorrow the next players come in, and before you know, there are a million green buildings,” he said.