NKOSANA MAHLANGU: What LNG offers SA’s youth

SA is moving away from fossil fuels into cleaner energy sources. This shift is driven by the need for decarbonisation by European countries, in particular the UK, the largest foreign investor in SA. While decarbonisation is a global trend, the shift in SA is more driven by local energy needs, global climate commitments such as the Paris Agreement, and economic considerations.

There is also a significant need for the country to industrialise, as the unresolved issues such as inequalities generated during apartheid are still prevalent. Addressing the unresolved issues requires industrialisation and economic growth as the primary drivers that may help to solve our current inequalities, poverty and unemployment, though the success of achieving this lies in effective policy implementation. 

The country has developed a framework to ensure renewables are supported by both the state and the private sector, as seen through the state’s backing of the industry through the Renewable Energy Independent Power Producer Programme (REIPPP) and the deregulation of the industry by the means of various policy measures such as raising the exemption threshold for self-generation from 1MW-100MW. A similar approach is necessary to ensure that the Gas Master Plan is successful.

The government has recognised that establishing administrative offices such as the Independent Power Producer Office (IPPO) addresses state inefficiencies and accelerates the development of sectors and industries by providing businesses with a direct liaison with the state. Establishing the IPPO has streamlined renewable energy adoption and accelerated the industry’s growth. Thus, developing a clear, actionable framework such as REIPPP and incorporating an administrative office to propel liquefied natural gas (LNG) infrastructure is crucial for ensuring energy security, grid stability and, more importantly, providing the youth with economic opportunities.

The revival of the sector by focusing on gas-to-power and the appointment of a gas programme manager by the IPPO is strategic in driving the sector forward and ensuring there is demand for the fuel within the country. This lies at the crux of ensuring there is an equitable energy mix within the country to ensure cheap, reliable energy to support economic growth and ensure national security.    

The Gas Master Plan serves as a strategic blueprint that outlines various road maps for gas development in SA. By addressing infrastructure and policy bottlenecks, the sector can foster significant economic growth opportunities within the country. The lack of specific provisions in the Gas Act of 2001 regarding LNG creates regulatory gaps, necessitating additional policies or amendments to provide clearer guidelines for LNG development. This includes establishing procedures for LNG importation, regasification and distribution.

Addressing these policy issues can actuate private sector investment interest and allow new players in the space, even those without previous experience since they will have clear operational guidelines. 

SA faces declining domestic gas production, which may pose challenges for the just energy transition, as gas is regarded as a transitional fuel according to the Gas Master Plan. The lack of domestic gas production could hinder the progress made by renewables. Baseload capacity is required as renewables are intermittent, and gas is essential in ensuring that SA achieves its energy goals. Gas can be cheaper than other forms of renewables such as battery energy storage systems, depending on the type of modelling employed.

The lack of new gas discoveries that have been explored and developed makes the industry appear to be in its infancy within the SA landscape. This can be solved through domestic capital investments into the industry by development finance institutions. A short-term alternative can be achieved through imports from the region that may help support the industry, yet there are significant infrastructure requirements to import and distribute LNG at scale to meet our energy needs. There have been delays at Richards Bay and other ports in ensuring commercial operation for LNG, worsening the risks involved. 

The immeasurable economic opportunities LNG may bring to the country, particularly in addressing youth unemployment, can arise from distribution, storage and regasification. Alternatively, this can also introduce a new class of young entrepreneurs into the SA landscape, as it provides opportunities that require substantial capital at each stage. LNG can help mitigate our current trilemma of poverty, unemployment and inequality by offering immediate opportunities to the underprivileged, from the infrastructure development phase to the provision of services within the sector.

The renewable energy sector serves as an excellent anchor example of what can be achieved by government intervention, aiming to resolve inefficiencies and provide support to a sector during its infancy. 

• Mahlangu is an activist advocating for SA youth.