South Africa, the world’s 14th-biggest emitter of greenhouse gases, is facing a tough choice between securing its energy supply and meeting its climate commitments. The country relies on coal for more than 80% of its electricity generation, but many of its coal-fired plants are old and unreliable, causing frequent blackouts that hurt the economy.
The government has set an ambitious target to reduce its emissions by 2030 and has secured $8.8 billion in climate finance from some of the world’s richest nations to help it transition away from coal. However, the pace of adding renewable energy capacity and upgrading the transmission grid is too slow, and there is not enough transmission capacity to connect many planned projects to the grid.
To end the power outages, the quickest solution is to repair and extend the life of some of Eskom Holdings SOC Ltd.’s coal plants, which currently account for about a quarter of its coal-fired capacity. This is what the state-owned power utility and the chief executive officer of the Energy Council of South Africa, James Mackay, have suggested.
But this would come at a cost: reduced access to concessional climate finance, lower competitiveness of South African exports as the European Union imposes levies on carbon-intensive products, and delayed decarbonization targets. It would also undermine the country’s efforts to create a just transition for the workers and communities affected by the closure of coal mines and plants.
Mackay, whose organization represents major mining companies such as Anglo American Plc and Glencore Plc, said that energy security is fundamental to economic growth and activity and that the country is closing the gap between supply and demand rapidly. He expects the power outages, known locally as load-shedding, to be substantially reduced by the end of 2024.
However, he also acknowledged that the energy transition is lumpy, difficult, and challenging and that the country needs to be transparent and robust about its plans and challenges. He said that the country needs to double its growth in renewable energy to about seven or eight gigawatts a year and that it needs a clear decommissioning plan for the coal plants to attract the finance required for the transition.
South Africa is not alone in facing the coal dilemma. Many developing countries, especially in Africa and Asia, are struggling to balance their energy needs with their climate goals, while facing pressure from the international community to phase out coal. Some have argued that they should be allowed to use coal as a bridge fuel until they can access affordable and reliable alternatives, while others have pledged to leapfrog to clean energy sources.
The global community will have to find ways to support these countries in their transition while ensuring that they do not lock themselves into a high-carbon future. The upcoming COP27 climate summit in Egypt in 2024 will be a crucial opportunity to do so, as the world reviews its progress and ambition in implementing the Paris Agreement.
Source: Bloomberg
