“Let the environmentalists protest, chant, and agitate. They have many valid arguments that can and must be considered when the pros and cons of economic activity are weighed up.
“But we cannot allow them to dominate to the detriment of the majority, especially those whose agendas are explicitly antigrowth and anti-employment,” said Minister of Mineral Resources and Energy, Gwede Matashe on Friday at the National Energy Dialogue in Johannesburg.
The dialogue was aimed at discussing South Africa’s approach to the just energy transition.
Mantashe was quoting from a Business Live article, which would set the tone of the day.
Whether it was intentional or not, a line was drawn in the sand between those who consider the economic opportunities of renewables and those who justify sticking with coal for as long as viable, as being in the interest of the people of South Africa.
Mantashe’s energy mix
In his address, Mantashe emphasised the importance of an energy mix that includes renewables (wind and solar), gas, nuclear, coal, hydro, and battery storage – as laid out in the 2019 Integrated Resource Plan.
Renewables
He said there are plenty of plans to implement renewables.
“Between now and 2030 renewable energy will receive the lion’s share of the new energy generation capacity to be developed,” said Mantashe.
“Renewables are expected to grow by 18% of energy supply, coal is expected to be reduced from 75- to 60% – as one goes up, one comes down. Lobbyists never look at those numbers,” he said.
Mantashe added that bid windows 5 to 7 will add approximately 7,800 megawatts of additional energy from renewables to the grid to address the current shortfall of 4,000 megawatts of electricity that President Cyril Ramaphosa announced in the 2022 State of the Nation Address.
But Mantashe was quick to note that being “angels” and “clean” would have negative economic outcomes.
“We always pretend to be an island of angels, but driven to poverty. We like that as a country – [pretending] that we’re angels, we’re clean.
“I can tell you the route we’re taking, we’re going soon to be [the] number five, number six [economy in Africa],” said Mantashe.
Alex Lenferna, climate justice campaigner at 350Africa.org, and secretary of the Climate Justice Coalition said, “Mr Mantashe and DMRE love to talk about how many renewables they’re building. But if we looked to the likes of the National Business Institute … they say that we need to be building renewables at 10 times the current speed if we have to meet South Africans, arguably insufficient commitments to climate change”.
Gas as part of the just transition
Mantashe added that if South Africa wanted to ensure energy security and to have uninterrupted energy supply, it would need gas, nuclear and some coal in the mix.
South Africa will be procuring 3,000 megawatts of gas power between now and 2030 – in line with the IRP, the minister said.
Additionally, he said the upstream petroleum industry needed to be established and developed. The upstream sector includes searching for underground or underwater crude oil and natural gas fields, drilling exploratory wells, and then drilling and operating the wells that recover and bring the crude oil or raw natural gas to the surface.
Dr Phindile Masangane, CEO of Petroleum Agency South Africa said during a panel discussion after Mantashe’s address, that South Africa has to “understand we are transitioning, we are not switching to, and that oil and gas will still play a significant role, even in the transition”, while pointing out how the UK and Norway have issued many explorations for oil and gas as part of their transition.
More coal
In accordance with the 2019 IRP, 1,500MW of coal power will be procured between now and 2030.
“Without disregarding the outcry of the environmental lobby, coal is necessary to sustain some level of baseload power, also for research and development in clean coal technologies,” said Mantashe.
As he has done in several addresses before, Mantashe emphasised that the agreement that came out of COP26 was to reduce, not phase out, coal use.
Nuclear
“In South Africa gas and nuclear are regarded as dirty products… Europe has labelled nuclear and gas as part of the green transition,” said Mantashe, saying that nuclear offers good baseload energy.
In the interest of the people?
“Just transition is not just about numbers. It is about people, it is about communities,” said Mantashe, arguing, as he has in previous addresses, that sticking with coal is in the interest of the people, as many rely on the sector for income.
Mpumelelo Mkhabela, the chairman of Menar, a private investment company with a portfolio of mostly mining assets, said with many South Africans being reliant on coal, “the debate about coal versus renewals, I think, is a false debate”.
“Because we have a lot of people employed in the mining sector right now. The true number is about 150,000 people that are employed in the mining sector.
“The reality is that our people need jobs, and our people need secure jobs,” said Mkhabela, adding that the mining sector not only provides jobs directly but also downstream (hence his elevated figure of 150,000 jobs versus Mantashe’s figure of roughly 80,000).
Peter Attard Montalto, head of capital markets research at research consultancy Intellidex, said SA needs to understand our commitments to net zero by 2050 and that the 2019 IRP is outdated – partially in terms of how it throttled renewables capacity.
“We really need a very rational, technocratic process that lays out least cost, lays our jobs maximisation and lays out a very clear carbon envelope – a window that closes down toward net zero in 2050,” said Montalto, commenting that a model of that nature would show some interesting outcomes.
“If the goal is provision of reliable and cheap energy – when you start modelling that out you come to some interesting outcomes of coal,” said Montalto.
“I think it would show some gas involved, but not a huge amount. I think it will show you that things like coal plus carbon capture and storage are simply too expensive, even considering the technology curves that the minister mentions on that front, and that nuclear power is simply too expensive.”
Montalto said he disagrees with the minister on his business point, and that investors (both local and international) are looking for clean and renewable energy.
“A key part of doing business now for local and foreign investors is showing a clear pathway to net zero as well.”
Montalto says that the CSIR “shows that a renewable led path is job maximising”.
Gray Maguire, carbon project manager at the Climate Neutral Group South Africa that covers economic issues relating to the green economy transition, said during the panel discussion, “There are many more jobs in the economy outside of coal, and how many of them are at risk as a result of us undermining our export capabilities and sitting in this extreme outlier globally, those are jobs we need to discuss.”
Maguire said South Africa being the fifth most carbon-intensive economy in the world – with our emissions being more than double the global average – is “unbelievable”.
“We need to think about what the impact is on all of the jobs,” he said, using agriculture as an example, which employs more than twice as many people as the entire mining sector combined (not just coal), and has 1,100 tonnes per million dollars worth of exports.
Maguire mentioned the value of platinum, which is fuelled by renewable energy growth in the form of catalytic converters, and has overtaken coal in terms of export earnings and in total value for the South African economy.
Going back to the topic of public participation, which Mantashe and other panellists had discussed, Maguire said it was important to speak to the platinum, agriculture, cement and motor vehicle industries.
“Let’s talk to them about how they feel about the risks that come as a result of not engaging in just transition,” said Maguire.
Lenferna added, “the evidence is clear that renewables are the most job-creating, most affordable and quickest way to bring energy online”.
“A recent Oxford University report showed that rapidly rolling out renewables and basically running the entire energy system, not just electricity, on renewables within the next 25 years, is our most economic option,” Lenferna said.
Lenferna added that CSIR and UCT energy experts believe renewables are our best option, and show that the IRP is wildy outdated.
Who are the ‘fundamentalists’ here?
Strong, somewhat polarising arguments have led both sides to label the other as “fundamentalists”.
Mantashe often comments how he is labelled a “coal fundamentalist” by activists and the media.
During the energy dialogue, the moderator read a question submitted online, where someone asked if there is fundamentalism in being a campaigner for renewables.
The moderator asked Lenferna if his campaigning is really for the greater good of all South Africa.
His response: “I think the real fundamentals might be the ones very much tied into the fossil fuel interests here,” which was met with scattered laughter from the audience.
“I don’t think that’s fundamentalism,” said Lenferna, “when you get into these discussions where everybody is an oil and gas representative and I’m the only civil society representative in the room, that makes me seem extreme. But really, it’s just because this whole discussion has been so biased in favour of these big polluting corporations and their representatives.”
In his closing remarks, Mantashe said, “I read a book by one author which cautions us that ego is the biggest enemy – when you have a big ego that fills a room, you are not open to a debate.
“Here we need a debate that helps us navigate through this transition in a balanced way that takes into account all the views.” DM/OBP
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