LANDIWE J MAHLANGU: The million jobs conundrum when ICE is iced

COP27 has come and gone, leaving in its wake ambitions and agreements and, hopefully, igniting some action. There are plenty of unresolved matters too, and judging from previous COPs most of the commitments and agreements will remain on paper rather than being implemented. One thing is certain though: the days of the internal combustion engine (ICE) are numbered.

Few of us ever imagined that in our lifetimes we would see the demise of probably the most visible and ubiquitous symbol of the industrial revolution. It is almost surreal that what we have taken for granted for so long — what rapidly became the world’s preferred mode of mobility more than 100 years ago — is on its way out.

ICE vehicles have been aspirational as well as grudge purchases. But it should be noted that ICE cars will not disappear from the roads all of a sudden. What will happen is that they will gradually become fewer. The vehicles on the roads will be quieter, quicker in some respects and over time relatively cheaper than those powered by ICEs. They will also have longer lifespans and break down less frequently.

This development has significant implications for the SA economy in general and the automotive industry in particular. The automotive sector is the largest manufacturing sector in SA, with at least seven of the world’s major automotive manufacturers based here. According to KPMG, in 2020 the industry contributed 4.9% to SA’s GDP, despite a 2% post-Covid drop. Total earnings through the SA automotive industry were projected at R641bn for 2022.

The automotive sector has a significant knock-on effect on general manufacturing, accounting, directly and indirectly, for more than 30% of SA’s manufacturing output. In 2018 vehicle exports totalled R201.7bn, 15.5% of total exports. A record 387,125 vehicles worth R148bn were exported in 2019, mainly to Europe, a major destination for SA-built vehicles.

Perhaps most importantly, according to Naamsa, the automotive manufacturing industry employs roughly 120,000 people directly and is responsible for about 457,000 jobs across the formal sector.

If you take into account the multiplier effect to include induced jobs in the informal sector, the total figure may be double that. A large proportion of small businesses are linked to ICE vehicles, particularly in the townships, from auto mechanics to engineering workshops and exhaust repairers. My point is that the number of jobs affected by a significant reduction in the number of ICE vehicles on our roads could be as high as 1-million.

The shift to electric vehicles (EVs) in Europe and the US is already well under way and is expected to accelerate, especially since compared with ICE vehicles EVs are already as much as 10 times cheaper to run on a per kilometre basis, including charging costs and maintenance given that EVs have fewer moving parts to fix or replace. EVs have on average 18 moving parts, compared with up to 2,000 in most ICE vehicles. EV lifespans are up to 2.5 times longer than conventional vehicles. Little wonder that it is projected that by 2030 — just seven years from now — almost every new vehicle produced worldwide will be an EV.

Passenger transport, particularly private vehicles, is the largest contributor to CO₂ emissions. The SA Greenhouse Gas Inventory, an initiative of the department of forestry, fisheries & the environment, estimates that in 2010 energy used in passenger transport contributed a total of 47.4-million tonnes of CO₂ equivalent, or 8.4% of SA’s direct greenhouse gas emissions, the so-called scope 1 emissions. Private transport is thought to make up a little over half of these emissions. The case for a mass conversion to EVs in this sector is overwhelming. 

In fact, the international debate concerns “how” more than “if”. It is about the range and frequency of charging points for EVs rather than whether the conversion should happen. Some countries, such as Sweden, have already banned the production of diesel engines from 2030.

In SA, where there is extreme inequality, unemployment is at a historical high and the economic recovery is tepid, this transition presents a real conundrum. The need for a broad energy transition is clear, but it needs to be just in the sense of balancing the climate response with new, sustainable opportunities for work, particularly among communities that are reliant on high-emission industries for their livelihoods.

The decarbonisation of passenger transport will not be confined to private passenger vehicles, which in Gauteng are estimated to account for at least 69% of emissions. Public transport will be another area of focus, followed by commercial fleets and trucks. In fact, the bus fleets of some of the metros are already running on liquefied petroleum gas, and there are moves to electrify these fleets.

Even the taxi industry seems keen to join the trend towards electrification. The likely cumulative effects of these changes will no doubt be good for our environment and air quality, as it will further reduce the number of private passenger cars. But the effect on the downstream oil sector, including petrol stations, will be nothing short of catastrophic when it comes to jobs.

This challenge is not confined to the automotive industry. Coal-related industries are facing similar transition challenges. The question on everyone’s mind will be whether the national power grid will be able to cope with the inevitable surge in demand for electricity.

The transition will also require that charging stations be rolled out throughout the country. It is cold comfort to know that other countries around the world are wrestling with the same issues. In some neighbourhoods in England it is reported that substations are tripping due to too many EVs being charged simultaneously. 

• Mahlangu, a former chair of the Municipal Demarcation Board, is chief economist and director of Amazwe Advisory.