THE MAKING OF A SUCCESSFUL GREENTECH SPECIAL ECONOMIC ZONE (SEZ) IN UNCERTAIN TIMES

THE ATLANTIS GREENTECH SPECIAL ECONOMIC ZONE GIVES ANSWERS TO HOW GREEN INDUSTRIALIZATION WILL LOOK, FEEL AND WORK

By Matt Cullinan

UNCTAD’s World Investment Report in 2019 highlighted that SEZs, whilst needing to get the basics right (including their strategic focus, governance/management and investment promotion), have to step up to the challenges brought about by the sustainable development imperative, the new industrial revolution and changing patterns of international production.

This is backed by growing awareness of the sustainability imperative amongst consumers and voters. Check any general news site and you will come across something related to the climate and the growing pressure to act on greenhouse gas emissions and ensure sustainable development.

The Covid 19 pandemic has also emphasised the fragility of supply chains and also the fragile existence of the majority of the world’s population. It is not enough to just grow the economy, this must be done in an inclusive and just manner. This is often referred to as the “just transition” to a green economy.

Quite a challenge.

On the other hand there is a growing, sometime bewildering, array of new technologies and processes which promise and usually deliver sustainable solutions. These (often niche) green technologies, or greentech as they are also known, are key focus areas for the growing green economy. UNEP defines the green economy as, “low-carbon, resource-efficient and sociallyinclusive”. Resource efficiency refers to the Matt Cullinan, Infrastructure Development Executive ways in which resources are used to deliver value to society and aims to reduce the amount of resources needed, and emissions and waste generated, per unit of product or service. Green technologies that support sustainable development and resource efficiency impact four main areas. Namely, energy, water, waste and natural systems.

Some of these technologies, like solar and wind energy, have reached a point of being well understood. Solar and wind energy utilities and their suppliers are increasingly included in conventional investment portfolios. Others, like utility scale battery storage, are still open to competing technologies (Lithium batteries work well at small scale, but face challenges and limitations the larger the application). One thing is clear, whilst the past compromised single big solutions (big coal and nuclear for example), the future will almost certainly see a growing array of different technologies and solutions, with bespoke solutions tailored to specific situations and applications. From a technology perspective, a sustainable future is likely to see smaller and geographically distributed utility solutions, connected but individually managed at smaller scale (e.g. municipal or site vs national), diverse in technology, varied in application and (probably) technologically resilient and adaptable as result.

It is an exciting time, but also challenging if certainty and predictability is what you need. For special economic zones, such as the Atlantis SEZ which is specifically positioning itself to support greentech investors, it requires a flexible and adaptable approach. A willingness to get going, to learn and test is key as one evolves an approach that speaks to investor tenant demands and that grows an exciting and compelling locational proposition.

Tom Farole, a World Bank economist, who has researched and written extensively on SEZs suggests that there are three points to consider to approaching a SEZ and its associated strategy. The first is to be clear on the problem you are trying to solve. The second is to ask if an SEZ is indeed the correct tool to solve the problem. Then third, and assuming it is the right strategy, then be bold and push the boundaries of what is possible. Design the zone and its strategy based on the problem to be solved. Make it special.

The need for green skills is steadily growing globally, resulting in future-proof career opportunities.”

As an example, for the Atlantis Greentech SEZ the greentech focus is a key defining feature in terms of the tenants and investors we attract, but also how we run and operate the park. In addition to the core principles of good governance, good location and good promotion, the greentech offers the differentiator. The term ‘living lab’ is specifically used in addition to the Eco-Industrial Park (EIP) terminology as it embodies the idea of the SEZ testing and showing greentech. It is about testing how industrial development, and industrial development zones, can be low carbon, resource efficient and socially inclusive. Lessons learned can be shared and hopefully lead to adoption of low carbon, resource efficient and socially inclusive industrial development elsewhere.

The whole Eco-Industrial Park model has been developed by UNIDO and in South Africa is actively championed by the DTIC’s Regional Industrial Development unit and run by the National Cleaner Production Centre (with various international and local support agencies). Interestingly there are considerable benefits for investors. For example, improved energy security through local generation of electricity via rooftop solar. Another example is through utilising waste as a resource through an actively managed industrial symbiosis programme. Building on this, the Atlantis SEZ is now exploring green star rating for the precinct and its buildings. All this contributes positively to what an Eco-Industrial park can offer tenants. This is especially the case when marketing products to consumers who are increasingly demanding that companies and corporations act responsibly and sustainability. What started out as a process of showcasing emerging greentech utilities for running a sustainable industrial zone, has quickly become a major asset and selling point for the SEZ. This is something the Eco-Industrial Park ‘label’ clearly signifies.

No person is an island is the saying, but this is equally true of an SEZ. Just as we are made and defined by other people, so too is an SEZ made and defined by its relationship to its neighbours and community. In fact the benefits and impacts of an SEZ can be greatly enhanced by actively encouraging companies in the SEZ to connect to regional value chains and to support skills and enterprises located in close proximity. This is about focusing on the so-called “spillover” benefits of SEZs.

It is still early days, but we can already see some key advantages of this focus emerging. These include growing collaborative efforts to grow skills and enterprises in the local economy and community. The ability to draw in, and connect with, various project partners, most notably across the three spheres of government is a huge asset. This structure is represented in the collaborative efforts shown in programmes that are being implemented in Atlantis. There is a focus on building skill sets relevant for the green economy, not just in the SEZ, but also for the regional and national economy. The need for green skills is steadily growing globally, resulting in future-proof career opportunities for suitably skilled citizens. In all this we continually emphasise, as part of the company culture, the role and value of active investment facilitation in ensuring that investors looking to get into the exciting greentech market are supported and given a solid and secure base from which to operate.

At the Atlantis SEZ we are working the challenge of the just transition to a green economy everyday. This means trying out, testing, learning and doing in a constant cycle of learning. It is part of being an innovation laboratory for the green economy. It is also a key part of what makes us a compelling and attractive investment destination. That is true of any SEZ.