SA can’t afford to be left behind in the energy transition, but it must be managed
The country must continue its transition from fossil fuels to renewable energy, and resist growing pressure to slow it down
The global energy transition from fossil fuels to renewable energy is gathering speed, thanks to technology advances, falling costs and the growing realisation that climate change is a growing threat — and this shift is likely to have a dramatic impact on the world.
The International Renewable Energy Agency (IRENA) has noted that the transition will result in geopolitical and socio-economic shifts, including “changes in the relative position of states, the emergence of new energy leaders, more diverse energy actors, changed trade relationships and the emergence of new alliances”. Countries that fail to adapt, risk being left behind.
In SA, the energy transition is under way: as energy minister Jeff Radebe, recently pointed out, consultations on this date back to 1998 when the White Paper on Energy Policy was published. But it still has a long way to go; the World Economic Forum’s energy transition index, published in March, ranks SA 114th out of 115 economies in measuring progress in the transition towards a more sustainable and secure global energy system.
Part of the problem is that, while the country’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) launched in 2011 is widely regarded as a model for what can be achieved through private-sector inclusion, its potential has been compromised by stop-start procurement in recent years. This potential is further threatened by growing resistance from groups with vested interests in the status quo such as the Coal Transporters Forum (CTF), which in 2017 sought to interdict Eskom from signing duly procured power purchase agreements with preferred bidders.
The CTF case was dismissed with costs by the high court in Pretoria last month. In the ruling, the court pointed out that policymakers have long recognised that coal has a significant detrimental impact both on the environment and on the health of South Africans and that there is a need to diversify the source of supply. Government’s energy policy thus overtly supports and promotes investment in renewable energy to achieve a more sustainable energy mix.
There is clear and mounting evidence that this is a wise policy choice. Aside from the environmental and health benefits, SA has much to lose economically if it delays its transition further. The London-based Climate Policy Initiative (CPI) report released last week states that SA could lose as much as $124bn between now and 2035 if it does not shift.
The demand for SA’s coal is likely to peak then fall in the next few years as countries like China and India, currently the main importers of SA coal, themselves adapt to meet their carbon reduction targets, states the report. This would drive down the price of coal directly affecting coal miners and communities.
The timing of government action to mitigate these risks is therefore crucial. But while the government has articulated a clear vision for SA’s transition and backed this up with policy and implementation, it is also under growing pressure to slow the transition down. This is partly because the country faces unique challenges, which make our transition especially difficult. SA’s economic growth has long been associated with coal-fired power and transitioning away from this dependence on coal will no doubt result in job losses in the coal sector.
The likelihood of job losses is particularly worrying as democratic SA continues to deal with the triple challenge of intergenerational unemployment, inequality and poverty. Managing the energy transition in these circumstances is not easy, but it can be achieved if social partners take collective responsibility for limiting negative effects.
In SA, the renewables sector has already demonstrated that it is willing to play its part in building a resilient energy future that helps to offset impacts of a declining role for coal. In 2018, members of the SA Wind Energy Association (SAWEA) — companies that are invested in the wind energy value chain — outlined a number of commitments to the SA public, stating that they will seek to actively further contribute to the improvement of the quality of life of South Africans, particularly those in the rural areas surrounding utility-scale wind and solar farms.
Utility-scale renewable energy has, to date, contributed over R200bn (24% of which is foreign direct investment) to the SA economy and created about 36,500 job years, defined as full-time employment for one person for one year. Minister Jeff Radebe recently stated that the sector has the potential to create up to 114,000 job years.
The wind industry alone has also already invested R640.3m into socio-economic development in local communities and R204.6m in local enterprise development.
To add to these early socioeconomic contributions, the renewables sector is anticipating that the updated Integrated Resource Plan (IRP) will confirm smoothed procurement of renewable energy to 2030. In its submissions to government SAWEA has demonstrated that by adopting an approach that smooths out the procurement allocation and raises annual procurement allocations of renewables, both job creation and GDP can be boosted. Through smoothed allocation of 1.5GW of wind a year between 2021 and 2030, the country can expect a total GDP impact by the wind industry alone of about R200bn by 2030 along with the realisation of over 70,000 job years (from construction, operations and maintenance).
There is much at stake, but with all concerned parties working together, the benefits of the transition have a greater chance of being fully realised. Collective responsibility for managing the transition rather than continuing to delay it, is vital.
• Brenda Martin is the CEO of the SA Wind Energy Association (SAWEA).