LUNGILE MASHELE: Just what is a just energy transition and why does it matter?

The just energy transition is a concept that continues to drive debate in governments, corporations and civil societies in countries across the Global North and South. Just what is the just energy transition and why does it matter?

Project 90 by 2030 defines a just energy transition as “a transition towards a sustainable, low-carbon and equitable energy system, which is better for people and the planet”. Greenpeace, an organisation campaigning for a cleaner environment, sees a just transition as “moving to a more sustainable economy in a way that’s fair to everyone — including people working in polluting industries”.

Both Eskom and the International Trade Union Confederation (Ituc) are of the view that the just energy transition is about not bringing harm to affected communities, protecting affected workers and a gradual move to a low-carbon future. Specifically, Eskom believes that “‘transition’ is the gradual movement towards lower-carbon technologies, while the word ‘just’ qualifies that this transition will not negatively impact society, jobs and livelihoods”.

On the other hand, Ituc believes a “just transition secures the future and livelihoods of workers and their communities in the transition to a low-carbon economy”; that it is based on social dialogue between workers and their unions, employers, government and communities; and that “a plan for a just transition provides and guarantees better and decent jobs, social protection, more training opportunities and greater job security for all workers affected by global warming and climate change policies”.

The just energy transition in SA is the culmination of a series of conversations that have taken place between the government, Eskom, the private sector, financial institutions and non-governmental organisations (NGOs).

SA needs to have more coherent energy policies to drive the just energy transition. The current just move is not premised on any one government policy or an integrated energy plan, and requires specific targets and incentives.

Much of the world’s energy transition has been driven by public pressure due to falling renewable energy costs and improving technology. SA has no clear policy targets for a just energy transition, nor any methods for evaluating its successes or failures. We at the Public Investment Corporation (PIC) believe the energy transition should not only be focused on moving away from coal, but needs to be an integrated plan that increases renewable energy contribution to the total energy mix while considering the acutely high unemployment rate.

SA approaching turmoil?

It is ideal that the foundations of a just energy transition should be rooted in a country’s economic growth plan — be it the intention to industrialise or become a service economy. There is a potential trade-off in pursuing industrialisation and decarbonising efforts in emerging and frontier markets. Our country finds itself at a point of potential socioeconomic turmoil. There is low economic growth, slow post Covid-19 recovery, worsening inequality, corruption, worsening load-shedding, poverty, high unemployment — particularly among the youth — impending recession and dysfunctional utilities. An energy transition seems far from reach given these challenges.

What kind of economy does SA intend to become? What are our economic growth targets? How will we go about achieving this growth? Moreover, SA wants to stop load-shedding, decarbonise, create green jobs, keep Eskom sustainable, introduce Eskom 2.0, privatise the energy sector, increase embedded generation and add variable renewables to a constrained grid while not wanting to pay a cost reflective tariff. The answer to these questions seems to lie in a mix between the new Integrated Resource Plan (IRP), a country investment strategy and an integrated energy plan. It is imperative that these initiatives pull in the same direction to have any success.

Energy transitions in Europe have largely been premised on China manufacturing everything and Russia providing unlimited gas. This has led to a false narrative in the market, which made some countries look like they were transitioning when recent evidence has proved the contrary. We have experienced reclassification of gas and nuclear as green, and despite reserve margin in excess of 200% in countries like Germany, there is currently increased demand for coal and gas to meet baseload demand.

In some countries,the energy transition was driven by the need to grow new industries — hence the offering of renewable feed-in tariffs, energy subsidies, production tax and renewable energy credits. This was done to drive the mass adoption of renewables, so that they could gain competitive advantage, achieve economies of scale and mass produce for global consumption. This strategy has worked well for Germany, the US, South Korea and China, which are among the top 10 PV panel manufacturers in the world.

We are told SA should transition, so that it can start its green industries. However, a strategy that relies on SA manufacturing panels locally fails to appreciate the country’s limitations. Over the last decade, the world has moved swiftly from poly- to monocrystalline panels, panels fit for trackers and more recently panels with bifacials. This is a function of a brilliant schooling system, as is the case in China and South Korea where there is sufficient funding for research & development as well as innovation. Investing in local manufacturing must consider market demand, policy certainty, skills, innovation and funding.

Bleak winter

Why does SA want an energy transition — what’s in it for us? Why does the world want SA to pursue an accelerated energy transition — what’s in it for them? At COP26 in 2021, France, Germany, the UK, US and EU launched a “ground-breaking” Just Energy Transition International Partnership (JET-IP) with SA, whereby the leaders of these nations pledged to support SA’s accelerated transition. Since then, the UK, Germany and US have reactivated coal plants, stockpiled gas or extended their nuclear shutdown plans due to gas shortages.

The JET-IP funding package of $8.5bn is insufficient to justify the closure of SA’s coal mines and the negative social impact this will have in regions such as Mpumalanga. Barbados prime minister Mia Mottley has stated that “national solutions to global problems do not work”. SA, which contributes half of Africa’s relatively low greenhouse gas emissions, is potentially being burdened with transitioning on behalf of nations that are currently or have long industrialised and have now resorted to using coal and nuclear to avoid a bleak winter.

What then should be driving SA’s energy transition? Our transition first and foremost needs to be centred on people. We need to be cognisant of the impact of moving people from one province to the next, as this may have unintended consequences and potentially create more social ills. There should be support for countries and communities to adapt to a green economy through social protection programmes, skills upliftment and job creation mechanisms. Climate change reparations should also not be ignored. The JET-IP should be in proportion to the contribution to greenhouse gas emissions, or another objective and fair method. It is ironic that nations that contribute the least to climate change receive loans from the world’s largest emitters to lead a transition for a problem they didn’t cause.

Resilient technologies should also be considered when transitioning. Transitioning is not about moving to 100% renewables; it’s about moving from a high-carbon economy to a low-carbon economy. It’s about ensuring energy security and voltage stability, and countering increasing grid inertia and a growing “duck curve”. A just transition should consider SA’s resource endowments and existing industries and try leverage those for change, such as spearheading carbon capture technology development. A transition needs a clear path to economic growth, employment and industrial development.

A true just energy transition is one rooted in fairness and equality, one that is equitable and does no harm. It is a transition that not only creates new jobs, but ensures greater multisector employability — not just worker substitution. A real transition will also recognise its shortcomings and be adaptable to new ideas. A just transition will be responsive to changes in geopolitics, ensure energy security and be grounded in the desire to grow the economy.

A real just transition is not linear — it is rather a lattice. It can be paused or stopped to respond to pressing issues, and it can be accelerated to respond to market conditions. SA cannot afford an accelerated transition while the rest of the world is focused on energy security. While these issues may not be mutually exclusive, there are ways to integrate them for the better of SA’s energy system. As COP27 draws to a close, it is time for SA to define its own energy transition by considering the needs and aspirations of its people.

• Mashele is sector specialist for energy & infrastructure at the PIC.