What does a “just transition” to a cleaner, greener, carbon neutral future mean for Nelson Mandela Bay and where does the automotive industry fit in?
In general, achieving a just energy transition means ensuring that no-one is left behind in the transition to a low emissions economy; that actions to mitigate and adapt to the effects of climate change, especially in the global drive to achieve net zero emissions by 2050, do not impact negatively on the economy, employment, livelihoods and social wellbeing.
Communities most tied to high-emissions industries, and those most vulnerable to the effects of climate change, must be brought along in a just transition, with climate change adaptation contributing to improved quality of life, a more resilient economy, decent work, social inclusion and poverty reduction.
That is the global thinking on the concept of just transition, also encapsulated in the Just Transition Framework for SA released by the Presidential Climate Commission (PCC) last year.
That thinking is also at the heart of a climate-resilient development strategy for the Bay, being developed by a broad multi-stakeholder collective of business, civil society and the municipality with the support of the PCC.
A well-managed just energy transition holds the potential to drive a new green economy for the Bay, taking advantage of our unique biodiversity, manufacturing capacity and skills base, and global and local developments in green technology and manufacturing.
Such a green economy is expected to be a driver for new, and better jobs, new economic opportunities, improved social justice and equality and poverty eradication.
However, very specific to the Bay, is that the automotive industry is at the heart of both our challenges and our opportunities for a just transition.
Road transport, by internal combustion engines (ICE), is one of the greatest contributors to greenhouse gas emissions.
It is well known that this metro is heavily reliant on the automotive industry the vehicle manufacturers, the component manufacturers that supply not only local OEMs but those in other provinces and internationally as well, and all the associated suppliers and service providers, with economic ripple effects into nonauto sectors such as retail, tourism and hospitality, property, professional services, security, cleaning, IT and so on.
To illustrate the significance, according to Naamsa the Eastern Cape accounts for 44.6% of local vehicle production (about two-thirds of that in this metro) and is home to around 40% of the country’s component manufacturers in both cases, a bigger share than any other province.
The country’s automotive sector, both vehicle and component manufacturers, provides for just under 117,000 jobs, with at least 60,000 in this province.
The sector is also highly export-orientated, accounting for 12.4% of the country’s export value.
About two-thirds of SA-manufactured vehicles are destined for export, primarily to the EU and UK, with smaller volumes to the US, Japan and Africa and more than half of those exported vehicles are produced in the Eastern Cape.
The province also accounts for the lion’s share of automotive component exports.
The automotive sector is literally the engine driving this metro’s economy and employment. Further putting the spotlight on this, is Naamsa’s decision to host all the key players from the country’s automotive industry in the Bay this week.
The reality for the sector is that their export markets are rapidly transitioning to new energy vehicles, with time frames to ban new ICE vehicles as early as 2030 in the UK and 2035 in the EU, while local demand for new energy vehicles (NEVs) is low as these vehicles are unaffordable for most due to high duties imposed on the importation of these vehicles.
Key concerns are the lack of a clear policy framework to support transition to NEV manufacturing to sustain local vehicle manufacturers’ export business, to support component manufacturers in transitioning their operations to manufacture NEV components, and to stimulate local demand for NEVs by enabling mass production towards affordability.
Critical to providing this certainty is the Auto Green Paper on the Advancement of New Energy Vehicles, which unfortunately has yet to be finalised.
The research supporting the SA Just Transition Framework also highlights further implications for the automotive sector and its impact on the SA economy, with the Eastern Cape the region most deeply impacted.
Production of NEVs requires far fewer inputs and jobs than petroleum-based cars.
An electric vehicle has about 20 moving parts, compared to more than 2,000 in an ICE vehicle hence the implications for component manufacturers and the need to literally re-tool, adapt and reinvent.
The largest employment impacts are foreseen in the supporting industries around ICE vehicles and public transport, in addition to the direct implications for vehicle manufacturing.
For example, it is estimated by the PCC that 250,000 people work as auto mechanics, and more than a third of those are self-employed in the informal sector they will need to be reskilled to work on NEVs that are predominantly electronic and have far less moving parts.
Another 250,000 people are taxi owners and drivers, providing a vital public transport service and unlikely to be able to afford and service NEVs.
Petrol stations employ about 130,000 people and though most of their profit lies in the garage shop, they rely on petrol to attract those customers.
There are new business and job opportunities around the infrastructure for EV charging stations and the disposal, recycling and refurbishment of batteries and fuel cells but these are unlikely to be enough to replace current ICE vehicle-related jobs.
A “just transition” to a lowcarbon future for Nelson Mandela Bay needs to bring the automotive industry along, and also boldly look to new opportunities for diversification and reinvention.
The Bay is home to a worldclass automotive manufacturing sector, employing highly skilled people, and we must take action now to ensure that we leverage and strengthen this asset for the future.