Coal will remain a major part of the energy mix well into the 2030 to 2050 period, officials from the Presidency told parliament’s portfolio committee on electricity and energy on Wednesday.
(Guillem Sartorio/AFP)
South Africa’s R1.48 trillion just energy transition (JET) is progressing as plans gain momentum to upskills workers for renewable energy generation and to assist small businesses to roll out green projects.
But coal will remain a major part of the energy mix well into the 2030 to 2050 period, officials from the Presidency told parliament’s portfolio committee on electricity and energy on Wednesday.
The country’s Africa’s JET Investment Plan 2023–2027 sets out the scale of need and the early-stage investments required for the transition to a low-carbon and climate-resilient economy, in line with its updated nationally determined contribution lodged with the United Nations Framework Convention on Climate Change in 2021, said Joanne Yawitch, head of the Jet project management unit in the presidency.
In terms of the plan, to decarbonise the economy to within the target range by 2030, requires initial funding of almost R1.5 trillion from multiple sources in electricity, new energy vehicles and green hydrogen from 2023 to 2027.
This funding is needed for skills development and municipalities and sources include developed countries, private sector investors, development finance institutions, government, philanthropies and mulit-lateral development banks.
The JET funding requirements include R711.4 billion for the electricity sector, R128.1 billion for the new energy vehicle sector, R319 billion for green hydrogen, R2.7 billion for skills development and R319.1 billion for municipalities.
Yawitch said the R2.7 billion set aside for skills development had been deemed inadequate during public consultations and work was under way to increase the allocation.
She said South Africa has so far attracted $13.897 billion (R235.16 billion) in grant and loan pledges for the JET from sovereign bilateral partners such as Spain, Germany and France, as well as the European Union/European Investment Bank, the African Development Bank, climate investment funds and the World Bank. A further R1 trillion must come from the private and public sectors.
By December 2023, the private sector had invested R354.2 billion in energy infrastructure. Yawitch said the bulk of R600 billion in debt and equity funding would go to independent power producer projects and to support the country’s transmission system.
“We are expecting going forward, that there is a significant amount of finance that will come in from the private sector, that we can expect to see more government, more of the fiscal budgets being allocated to the just energy transition and as well as looking at the way that we can mobilise finance at scale for municipal distribution infrastructure to support the rollout of electric vehicle sector, particularly for the purposes of improving the public transport sector, and then in relation to green hydrogen,” she said.
“We still need large scale investments by both private and public sectors.”
She said about $630 million of the $835 million in pledged grant funds had already been “programmed”.
“That doesn’t mean that all the activities have been implemented, but there is a process under way. ”
Yawitch said the unit had set up a pilot debt funding platform in Mpumalalanga on 25 October to match trade unions and small medium and micro enterprises with international funding partners so they can get finance for technical support and project preparation to start green energy projects and to upskill workers entering the green economy.
“The money will also be used for research, innovation and intermediary support for communities, enabling communities to build the institutions that would enable them to undertake the activities that they want. We’re looking at capacity building for state institutions, municipalities, in particular, trade unions and community-based organisations,” she said.
“We want to capacitate municipalities to deliver on their JET plans. We want to support them in adjusting their operating models for changing energy markets. We are looking to work with them on how we support equitable access to energy for the poor, and support energy efficiency in investments.
“It really focuses on capacity, capability, planning and investments in distribution infrastructure and in ways that the municipal system can support access to renewable energy for the poor.”
She said the unit was working with the department of higher education to set up a JET skills desk.
“We are establishing three skills development zones that will be linked to TVET [technical vocational education and training] colleges and providers in three areas with critical value chains: one in Mpumalanga linked to the electricity sector, one in the Eastern Cape linked to the new energy vehicle sector, and one in the Northern Cape linked to the green hydrogen economy,” Yawitch said.
“The intention of all of that is to bring everybody together to build their capacity, on the one hand to ensure quality of what is being provided, and then to ensure that all of the education service providers those areas are working in one direction to ensure we are providing the right skills at the right times for the right industries.”
Commenting on the presentation, Economic Freedom Fighters MP Nazier Paulsen said “it always looks very nice on paper but the devil is in the detail”.
He asked how many workers in the coal industry would be affected by the closure of coal-fired power stations and whether developed donor countries helping to drive the Jet were continuing to buy South Africa’s coal reserves that could last up to 500 years.
African Christian Democratic Party MP Wayne Thring said international climate change legislation benefited countries in the Global North that continue to burn coal.
“Africa, with 54 countries, contributes less than 4% of the carbon emissions, so what is South Africa’s contribution of carbon emissions? It must be zero point something, percent of carbon emissions,” he said.
“We cannot be placing onerous legislative, climate legislation on our economy, where previous economies used coal, industrialised their nations and they are where they are because of their industrial revolutions.”
He also questioned the narrative regarding South Africa’s 15 coal-fired power stations compared with other countries.
“When one looks at China, they have over 1 000 plus, and are currently building 100 or so coal power stations. The United States has over 200 coal power stations, Germany is looking at firing up again,” Thring said.
“What is our position? There is silence around these other larger nations, like China and others in Europe now that are going back to gas and coal. And the excuse is, ‘well, we
have a war’ [between] Russia and Ukraine. The war is not in Europe.
“We have a war. We have a war of unemployment. We have a war of poverty in South Africa, where 25% of South Africans go to bed hungry. If we do not address these challenges and ensure that the JET is just then we are setting ourselves up for failure.”
Democratic Alliance MP Edwin Baptie said he was most concerned about the social effect of the JET and the protection of people’s existing livelihoods as well as opportunities for more people to be employed.
“This energy transition can only be about finding alternatives for people who are currently employed, it must involve growth,” he said.
ANC MP Vusumuzi Nkosi said he was concerned that the transition and closure of coal-fired power stations should ensure there is sufficient capacity to meet the increasing demand for electricity.
Nkosi said he was also “not convinced” that the JET would boost economic growth and not lead to job losses and the creation of ghost towns when coal-fired plants shut down.
Responding to questions Rudi Dicks, the head of the project management office in the office of the president, said the unit is managing the transition “at a pace that the country can afford that does not put workers and the economy in a worse state”.
“We are one of the more intensive carbon emission countries per capita, relative for example to China and the EU is relatively high and that is because our energy is largely coal based at 42% of our total emissions,” he said.
“If we are able to transition and ensure a much better energy mix, and it is not only about renewables. It includes gas, it includes nuclear.”
He said it was important to move the energy mix away from carbon intensity given that currently 85% of energy is generated by coal fired-power stations whereas countries like China and EU nations had an energy mix comprising 60% coal, gas and nuclear energy, and 40% renewables.
Dicks said it is “fundamental” that the transition be just. “The just component is about ensuring this is a long-term transition. We have to take workers and communities along and we have to find an alternative.”
He added that the coal value chain remained an important part of the mining sector and the decommissioning schedule was not on the basis of being forced to shut power stations but because they are old and have reached their end of life.
“The entire value chain has about 170 000 workers and about 70 000 in the coal sector. Certainly, a large chunk of our coal will continue to be exported to the EU, Australia and China. Many of our power stations will continue to be around until the 2030s, 40s and 50s,” he said.
He said the coal-fired power plants, Kusile and Madupe, would continue to operate until 2050 or 2060.