Clean Energy Investment in Developing Countries: Domestic Barriers and Opportunities in South Africa

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In the midst of current global challenges and a gloomy economic outlook, solar, wind, biofuels, geothermal, hybrid and electric vehicles, and other clean energy-related technologies provide bright spots. The establishment of sustainable energy systems, based on the use of clean energy resources, has become a general pursuit of the global community. The driving force behind the application of renewable energy technologies in Europe and the rest of the developed world has been the drive to clean up the energy sector in terms of its environmental impact and reduce dependence on limited energy resources. Renewable energy technologies are largely used to replace existing fossil fuel-based generation capacity. In South Africa, clean energy development is at a crossroads. South Africa's highest emissions occur in the following sectors: public electricity and heat production; manufacturing industries and construction; and internal transportation (IEA, 2005). South Africa's carbon dioxide intensity is particularly high (0.18 metric tonnes per thousand USD of GDP in 2006) because it derives so much of its energy consumption from highly carbon-intensive coal. The primary problem is South Africa's dependency on coal and fossil fuels (Fakir & Nicol, 2008). Further, as we shall observe, South Africa suffers from the classic problem of being saddled with a state-owned single distributor and until very recently, sole generator as well.