Google inks $3bn hydropower deal as industry intensifies clean energy hunt
The deal between Google and Brookfield Asset Management includes initial 20-year power purchase agreements, totalling $3bn (R53.43bn), for electricity generated from two hydropower facilities in Pennsylvania.
The tech giant will also invest $25bn (R445.25bn) in data centres across Pennsylvania and neighbouring states over the next two years, Semafor reported on Tuesday.
The technology industry is intensifying the hunt for massive amounts of clean electricity to power data centres needed for artificial intelligence and cloud computing, which has driven US power consumption to record highs after nearly two decades of stagnation.
Ruth Porat, president and chief investment officer at Google parent company Alphabet, is expected to discuss the news at an AI summit in Pittsburgh. US President Donald Trump is scheduled to attend the event, where $70bn (R1.25-trillion) in AI and energy investments are expected to be announced.
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Daily Maverick
7 hours ago
- Daily Maverick
Road ahead is steep but not insurmountable– SA's G20 can still deliver for debt and development
The global economy has slowed and become less supportive of developing countries. African countries may be forced to resort to international capital markets to fill the gap in their development financing needs. It is crunch time for South Africa to begin delivering on its ambitious G20 development finance agenda. The third of the four meetings this year of G20 finance ministers and central bank governors takes place on 17 and 18 July. A communiqué is expected to be issued, focusing on the development finance issues that South Africa prioritised at the beginning of its G20 presidency. The agenda includes politically and economically complicated topics such as sovereign debt and the cost of capital and climate finance, which are issues that are high on the global policy agenda. At the recent African Union Conference on Debt held in Togo in May, African leaders, among other matters, called for the reform of the G20 common framework and for a 'new debt doctrine'. The Compromiso de Sevilla, the outcome document from the recently concluded UN-sponsored Fourth International Conference on Financing for Development (FfD4), also acknowledged the need for a more development-oriented debt architecture. Unfortunately, the international economic environment in which South Africa needs to deliver on this agenda has become significantly more complex and challenging. The global economy has slowed and become less supportive of developing countries. The World Bank recently reduced its estimate of global growth from about 2.8% to 2.3% and forecast that average global growth in the first seven years of the 2020s would be the slowest of any decade since the 1960s. Its chief economist declared that ' outside of Asia, the developing world is becoming a development-free zone '. Some G20 participating states have become less supportive of developing countries. For example, the US and the UK, among other countries, have significantly cut their official development assistance, with the US going as far as eliminating USAid, its main aid agency. US President Donald Trump's administration also pulled out of FfD4 and has given mixed signals on his participation in the G20 summit in November. He has even opposed the theme for South Africa's G20 presidency – Solidarity, Equality, Sustainability. These developments aggravate Africa's development challenges. Currently, Africa has an annual financing gap of around $900-billion to $1.3-trillion for Agenda 2063 and the SDGs. While domestic resources should be the major source of each country's financing for these needs, they are unlikely to be enough in the short to medium term. Unfortunately, the amount of funding from official sources such as donor governments and the multilateral development banks (MDBs) will not be sufficient to plug this hole. Therefore, African countries may be forced to resort to international capital markets to fill the gap in their development financing needs. The financing these markets offer is expensive, involves exchange rate risks and is pro-cyclical. In addition, evidence suggests that African countries are charged much higher interest rates than countries in other regions with comparable credit ratings. The resulting 'African premium' costs African countries $74.5-billion per year in excess interest payments, according to a UNDP report. The reasons for this premium are still up for debate. It has been attributed to credit rating bias, lack of quality data, a lack of sound fiscal and public finance management by African governments, and to the fact that many African countries are new to international markets, having only started issuing international bonds between 2007 and 2020. Meanwhile, as African countries continue to deal with these tough conditions on the international capital markets, efforts to address their existing debt burden remain painfully slow. The current approach to sovereign debt restructuring uses the common framework developed by the G20 to deal with the obligations to all official and commercial creditors of low-income countries. Unfortunately, this framework has failed to deliver adequate outcomes for African countries. South Africa's G20 presidency provides the next opportunity to address this challenge. As South Africa commences the last half of its G20 Presidency, we suggest that it prioritise the following issues on the development finance agenda: South Africa must champion the Borrowers' Forum This forum, promoted in the outcome document from FfD4, would facilitate the exchange of ideas, information and peer learning among sovereign borrowers. If supported by a permanent secretariat, as proposed in the Report of the UNSG's Expert Group on Debt, the forum could become the repository of information about sovereign borrowing and the source of technical support and capacity building for debtor countries. South Africa should advocate for the G20 to actively support the creation of the forum as soon as possible. It should also work with the African Union and African G20 guest countries to take the first actions to operationalise a regional borrowers forum in Africa. Improving sovereign debt architecture South Africa, as co-chair of the Global Sovereign Debt Roundtable (GSDR), must use it as a tool to promote the improvement of the sovereign debt architecture. The FfD4 Compromiso calls for the creation of a working group to propose a set of principles for responsible sovereign borrowing and lending that can make sovereign debt transactions and the international debt architecture more effective, efficient and more supportive of optimal development outcomes. The GSDR was established as an informal G20-linked forum, chaired by the G20 presidency, the IMF and the World Bank. It brings together a diverse array of creditors, debtors and other stakeholders to discuss how to make the sovereign debt process work better for all stakeholders. South Africa should convene a meeting of the GSDR to begin discussing the framework for promoting responsible sovereign borrowing and lending, including the planning and management of such transactions and their outcomes. Panel of technical experts South Africa must advocate for the G20 to appoint a panel of technical experts to study the barriers to affordable, adequate and predictable flows of development finance to African sovereigns and make recommendations on what the G20 can do to remedy this situation. This can complement the work of the African Experts Panel, which has a broader mandate of 'exploring and defining strategies that advance Africa's collective developmental interests'. South Africa's G20 presidency should not be the end of this year's advocacy for a new and more developmentally responsible debt architecture. These actions should also be promoted at the World Social Summit and the COP30 in Brazil. DM Daniel D Bradlow is a part-time G20 Senior Fellow at the South African Institute of International Affairs (SAIIA), where his research focuses on the finance track of the G20 and related Think20 issues.
eNCA
9 hours ago
- eNCA
SA industries brace for 30% USA import tariffs
JOHANNESBURG - South African businesses are in the brace position. The Donald Trump administration in the US says it plans to impose a 30% tariff on exports from South Africa to America and, without a deal, this scenario is set to take effect on August the 1st.
Daily Maverick
10 hours ago
- Daily Maverick
Mercedes' East London production pause highlights urgent need to transform automotive industry
Mercedes-Benz has the red light on at its East London plant for July. If we don't start making electric cars soon, temporary closures could become permanent along with thousands of jobs lost. Last month, Mercedes-Benz South Africa halted operations at its East London manufacturing plant for the entire month of July. While the company insists this is 'standard procedure' and typical maintenance scheduling, the timing reveals a more troubling narrative. The East London factory has been assembling cars since 1958. Now, this important outpost has gone silent. The perfect storm The shutdown may well be connected to escalating trade tensions initiated by US President Donald Trump's April announcement of 25% tariffs on automotive imports, tariffs that have since intensified to 30% last week. These protectionist measures significantly undermine the economic viability of exporting locally manufactured vehicles, such as the Mercedes-Benz C-Class sedans produced in East London, to the United States, one of South Africa's five largest automotive export markets. However, the challenges extend beyond tariff barriers. South Africa's automotive sector faces diminishing global appetite for traditional internal combustion engine vehicles, as international markets increasingly transition toward electrification. This structural shift threatens similar production curtailments, regardless of trade policy considerations. The global shift is unstoppabl e The future is unequivocal: the global automotive industry is transitioning toward zero-emission mobility in response to tightening worldwide vehicle emission regulations. South Africa's automotive sector remains locked in first gear during this global transformation, with predominantly petrol and diesel-based production and limited hybrid manufacturing. Despite sustained engagement from local manufacturers and industry bodies stretching back years, South Africa's automotive policy is lacking alignment with progressive global markets. Only in 2026 will car manufacturers establishing new investments qualify for tax incentives for producing 'new-energy vehicles'. Here lies the fundamental problem: it takes approximately seven years for automotive manufacturing cycles for new models. What will the global market look like by then? This production pause isn't merely a difficult month for East London's economy — it's a warning signal for the entire South African automotive industry. Consider this: in January 2024, Ethiopia announced an immediate ban on petrol and diesel car imports, a global first signalling regulatory change across developing markets. South Africa's primary car export markets in Europe and the UK have firmed 2035 and 2030 as their respective bans on petrol and diesel car imports. The revolution was televised Globally, electric cars aren't some distant trend but today's reality. The past seven years have witnessed nearly 800% growth in passenger electric car sales. From Norway to China, car buyers increasingly choose electric over internal combustion engines — driven not necessarily by sustainability ambitions, but by direct financial benefits. Automakers like Volkswagen, Ford, and BMW are investing tens of billions into electric car production lines worldwide. Mercedes-Benz, the very company halting production in East London, has declared its intention to go all-electric by decade's end in markets where conditions permit. Carbon taxes will devastate our exports The European Union (EU) has introduced the Carbon Border Adjustment Mechanism, a carbon tariff that imposes levies on goods exported to the EU based on production emissions. South Africa's carbon-intensive industrial sector will pay dearly. The automotive industry represents our largest manufacturing sector, with Europe as its primary customer. Approximately 75% of locally manufactured cars are shipped abroad, with the EU consuming 60% of this output. Under the Carbon Border Adjustment Mechanism, internal combustion engine models and associated components will face additional costs that make them less competitive compared with electric alternatives manufactured elsewhere. It's a lose-lose situation: either already financially strained car makers absorb the cost, or they lose customers. We have the raw materials The transition to electric cars isn't a threat but an opportunity. Southern Africa possesses abundant raw materials such as manganese and nickel, essential for lithium batteries. What we lack is political action and market supply side policies mandating manufacturers to locally produce affordable electric cars for local, regional, and international markets. Mercedes-Benz South Africa's July shutdown should serve as the warning light demanding political action to accelerate progressive policies such as fuel efficiency standards and vehicle emission standards to shape domestic markets, while critically providing manufacturing incentives across the value chain towards localisation. No time to coast Thankfully, the Mercedes-Benz plant isn't closing permanently, and hopefully this costly downtime will be used to realign toward zero-emission vehicle technologies under incoming CEO Abey Kgotle. If the East London plant doesn't start moving toward that future, it risks being excluded from the group's long-term plans entirely. The same applies to Volkswagen in Uitenhage, Toyota in Durban, and all other manufacturers. These companies participate in global supply chains now oriented around decarbonisation. If they don't meet new global standards, South Africa won't make the cut. South Africa boasts a strong automotive legacy, celebrating 100 years of the industry in 2024. But legacy isn't a business model, and nostalgia doesn't pay salaries. We stand at a crossroads, and the road forward is toward zero-emission cars. If we fail to act, July's pause may become August's retrenchments and next year's closures. If we seize this moment, however, we can ensure South Africa becomes not merely a producer of cars, but a global hub for the sustainable mobility revolution. The Mercedes plant's pause should be a wake-up call to policymakers for critical action. The question isn't whether the transition will happen, but whether South Africa will be part of it. DM
