subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now
Picture: Supplied
Picture: Supplied

One of the most careful balancing acts the government of national unity will have to navigate over the next two years is advancing the just energy transition, ensuring energy affordability, sorting out the regulatory environment to enable the full liberalisation of the energy market, and keeping the country on track to meet its global climate commitments.

The tension between achieving these objectives has already begun to show — most recently in the suggestion made by electricity & energy minister Kgosientsho Ramokgopa that the full implementation of carbon taxes in SA should be delayed so as to mitigate electricity price increases.

Clearly, Eskom’s proposed 36% tariff hike cannot be allowed. This would be disastrous for households and businesses, and it would quickly lay to waste any hopes of the economy growing by 2% or more within the next two years.

However, trying to address electricity tariff concerns through adjustments to the carbon tax will probably create more problems than it would solve. As the EU starts moving towards full implementation of its carbon border adjustment mechanism (CBAM), higher local carbon taxes create an opportunity for SA to keep the money here, rather than sending it to the EU.

Already the Treasury’s phased implementation of carbon taxes could leave some of SA’s exports to the EU more exposed to high import tariffs.

CBAM taxes, which implement tariffs on carbon emissions linked to imported goods, can be partially offset by introducing local carbon pricing through carbon taxes. By doing so SA can retain carbon tax revenue domestically. The finances collected can then be used to fund decarbonisation efforts here.

The government also needs to be careful not to view carbon taxes as an unnecessary expense for polluters such as Eskom. The effects of climate change are real and expensive, and we are already experiencing this. Now, all of society is made to pay for the damage caused by extreme weather events. It is time the government starts entrenching in our society that it should be the companies that benefit from emissions that must pay for the consequences.

Another source of tension in SA’s changing energy landscape is the need to preserve sources of income for Eskom and municipalities, while disrupting the business models they have come to rely on.

Creating an investor-friendly, liberalised energy market — which SA desperately needs so as to attract the magnitude of investment needed in electricity generation and transmission — will mean that Eskom (previously the monopoly supplier) and municipalities (which rely on the resale of electricity for a large portion of their income) will have to embrace the principles of a truly competitive market. Eskom seems to be making better progress on this through its unbundling process, but there is still no real plan for municipalities.

Setting up a new tariff regime is one of the most urgent next steps in opening the electricity market. To ensure that cheaper, cleaner renewable energy will be accessible to all South Africans, new, unbundled tariffs cannot include exorbitant network and legacy charges.

Even more urgent is overhauling the national energy regulator to ensure it has the will, expertise and capacity to facilitate the complex planning and negotiating that will be needed to redesign electricity tariffs.

SA is almost halfway through the five years initially attached to the landmark Just Energy Transition Partnership, and there is still very little to show. The pressure is now on to launch projects that will make SA’s international partners — which are providing the money — and local communities, which will be most affected by the transition, believe the just transition can be a net positive for the country.

For years, the government’s go-to line on SA’s climate change response has been that the country is committed to achieving its globally committed emission reduction targets, which include progressing towards net zero by 2050, but at a pace and scale it can afford.

What has been lacking, for as long as we have been hearing this, is a definition and quantification of this pace and scale. Until there is clarity in that regard, the danger remains that SA will move at a slow, comfortable pace when what we really need is uncomfortable but achievable.

subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now

Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.