A just energy transition is a global hot-button topic, especially in South Africa where the coal industry is a major supplier of jobs. The two opposing schools of thought seem unable to find a middle ground, so perhaps compromise will have to be the name of the game.
By Stanley Semelane
Posted on 27th February 2021
The missing link in the South African energy transition is a solid plan that will ensure a reasonable and just transition for the workforce in the coal sector. The plan needs to acknowledge that social, environmental and economic aspects matter, especially for most South Africans, who are still confronted with poverty realities.
It seems the country’s energy transition is biased, like beauty (beautiful in the eye of the beholder) – very often acceptable to those who are not involved in the coal economy nor likely to be economically and adversely affected by the consequences. This means the minerals-energy complex will bear the consequences of poor planning associated with the transition.
There are two schools of thought, canvassed from extremes in the debate. The first – representing activists for carbon-emission reduction at all costs – is biased towards environmental science. It can be referred to as an environmental and economic costs-driven group. They maintain that the costs of emissions are far too high for human life so we need to accelerate the decarbonisation agenda.
Furthermore, this group has started singing a new anthem that is enhanced by the falling prices of renewable energy technologies. Activists reported recently that “renewable energy-generated electricity is cheaper than coal”. In 2010, the anthem was the need to reduce greenhouse gases and meet the Kyoto Protocol objectives. Ten years later, the melody seems to have swung towards the transcripts that amplify energy production costs.
The second school of activists can be referred to as the status quo group, which argues that the environmental consequences of the coal sector are insignificant relative to advanced economies such as the US and China, so there is no need for change. They say South Africa is endowed with enough coal resources and reserves to last many years, thus creating jobs and contributing to the gross domestic product (GDP).
This group also repeatedly says the accelerated adoption of renewable technologies might result in an unbalanced energy system owing to their variable nature. We all know the sun doesn’t shine all the time and that the wind doesn’t blow 24 hours, and this group has advanced the need for a baseload requirement in the country’s power system.
There is merit in their argument: the energy system does need to be balanced and the current renewable energy power plants will not balance the system without a baseload.
In response, the environmental and economic costs-driven group has started rehearsing a new melody in the area of natural gas and green hydrogen, arguing that these are flexible and therefore suitable for balancing the system.
The status quo group advances nuclear power as a solution to the baseload challenge, saying it addresses the environmental concerns raised by their opponents. The latter criticise nuclear technology due to exorbitant costs, while others remind us of the Fukushima nuclear accident in Japan on 11 March 2011, as well as the risks in handling nuclear waste.
The energy industry associates sometimes want to sound diplomatic, with statements such as “we need all the technologies” and “the energy technologies complement each other”.
I am from the school of thought that says “if you don’t stand for something, you will fall for anything”. We know the average age of Eskom’s power stations is 42 years and the most recently built coal-fired power stations in South Africa, Kusile and Medupi, are underperforming and consequently blamed for sinking the economy.
It doesn’t take long to understand there is something wrong with the country’s energy provision services. Eskom’s coal fleet problems have worsened unreasonably. There has not been any accountability, while electrification working groups have not helped to mitigate load shedding. As such, the renewable energy activists are leading the debate, having positioned themselves as a pragmatic solution to Eskom’s problems.
The dilemma is that the very same Eskom that has financial challenges will need to buy electricity generated by independent power producers. We know the utility’s balance sheet is not healthy, so it cannot implement any strategic diversification options for the business.
A few voices have called for the privatisation of Eskom to raise capital, but this will not translate to a well-functioning coal power fleet in the short to medium term.
All the above energy system challenges signal a deep-rooted problem that has tied ordinary South Africans to a state-owned entity (SOE) on the brink of collapse. The national fiscus position does not allow the government to keep funding unsustainable SOEs such as Eskom and SA Airways.
So what could be the missing link in our energy policy? Is it time for the government to appoint the country’s energy sector experts to government departments? I believe it is high time the Department of Mineral Resources and Energy (DMRE) establishes an energy think tank division responsible for energy security in South Africa. It should hire full-time experts.
While the two schools of thought clash on energy options, the state should have the technical capacity to decide on the best technologies, considering several factors such as value addition to the GDP, job creation and sustainability principles.
Some studies show an energy transition can be unjust. Countries that have embarked on the transition have had winners and losers. South Africa has no sound plan for a just energy transition, and although we know coal power stations will phase out, there is no dedicated team to evaluate diversification options for the coal economy. We have ratified the Paris Agreement on climate change, but this simply means we need to reduce our dependence on the coal economy.
The status quo group has also called for “clean coal technologies”, which simply means capturing carbon dioxide for reuse. One coal-sector employee has at least three dependants, so it is prudent to ask: is the government going to offer just energy transition packages for those who are likely to be losers?
Several social plans could be considered for a just energy transition, but at the moment there is poor coordination on the transition. While the two schools of thought debate different energy technologies there are ordinary South Africans who will eventually lose their jobs and probably be unemployable in these economic conditions. Coal miners are more vulnerable and have the highest unemployment potential in the near future.
It is as if two kings are involved in a battle over which energy technologies should be adopted while ordinary people suffer the consequences.
That South Africa cannot manufacture components such as solar PV panels more cheaply than a country like China means the state needs to dig deeper for a just energy transition that falls between the two schools of thought. DM