South Africa

South Africa has interesting energy, environmental and economic problems, interrelated of course, with heavy elements of history and social concerns impinging on policy choices and trade-offs. As the world’s 14th-largest carbon emitter, thanks to the very high remaining proportion of its power being coal-generated, it has both a long way to go and a sensitive transition to manage, given that the coal value-chain is extremely labor-intensive versus all other energy technologies. Leaving no one behind is in fact official policy, but the way to do that remains to be worked out. South Africa takes its climate commitments seriously, as it should, but it should be accorded the freedom under international protocols to develop its own solutions which include the need for aggressive economic recovery and development. 

Several important studies have confirmed the essential place of gas in the Energy Transition in Africa and South Africa. 

The National Business Initiative (NBI) is an independent, business movement of around 80 of South Africa’s largest companies and institutions. NBI published a report “Decarbonizing South Africa’s Power System” available here. It points to the essential place that gas must have in the Energy transition. Excerpts: 

Key Finding number 6 states:

“Natural gas as a transition fuel will be critical in this journey – initially growing as an enabler to the integration of wind and solar into the power system at scale, gas will then be gradually replaced by other technologies to reach net-zero emissions.” 

It then further elaborates (emphasis added): 

“Decarbonising South Africa’s power sector will require a transformation of today’s coal power dominated into a renewable energy dominated electricity system. Deployment of solar and wind generation capacity at scale will increase the need for energy storage and peaking capacity as a means to address variability of renewable energy sources. Gas is a proxy for the flexibility requirements of the RE dominant system, in line with the findings on the role of gas in the recent IEA Net Zero report.

“Leveraging natural gas as part of the energy mix in gas power plants for peaking will be key to managing seasonal variability and to lowering system cost in early years when battery storage is still expensive. As a result, gas-to-power (GTP) plants are expected to become a key demand anchor for natural gas in South Africa, with ~218PJ/a by 2030, for peaking and mid-merit load. GTP natural gas demand is quite resilient to gas price and remains constant for price ranges of $7-9/GJ. Even at $9/GJ, this is the most cost-competitive technology option for peaking and long-term seasonal variability management. Hence, in the mid-term, natural gas will play a critical role in enabling the decarbonisation of South Africa’s electricity sector.

The Industrial Gas User’s Association of Southern Africa (IGUASA) states in its Annual Report of 2021: 

“IGUA-SA believes that the transformation of the energy sector at large is an imperative and has a key role to play in unlocking the full potential of the South African economy. The development of the natural gas economy has been identified as a key enabler for the recovery of the South African economy.

“Natural gas is seen by IGUA-SA as a transitional fuel towards the decarbonisation of the environment. Demand for gas already outstrips supply as no new gas has been made available to industry over the last 5 years. Upstream availability and infrastructure capacity constraints place limitations on the ability to meet current and future gas energy needs amidst a dwindling supply and disproportionate increase in the cost of electricity. Industry requires long-term energy certainty across various energy sources to ensure and enable a low-risk fixed capital investment environment. It is in this context that various large industries are continuing to review their investment and growth strategies for South Africa on the back of energy insecurity. 

“South Africa’s reliance on natural gas energy over the next few decades needs to be emphasised. This reliance on natural gas energy is viewed in the context of South Africa’s energy transition, the IRP 2019, emergency power generation requirements, and large-scale industrial demand for gas energy that will see a significant increase in the demand for natural gas across various sectors in conjunction with the continuous increase in renewable energy uptake in time.” 

The Energy for Growth Hub did a study to illustrate how little Africa has to be concerned about the use of gas. Excerpts state: 

“We already know that the entire continent accounts for just 3% of cumulative CO2 emissions… 48 countries — and more than one billion people — responsible for less than 1% of cumulative emissions. 

“The best defense against a changing climate is development. To raise productivity, create jobs, and grow incomes, Africans will need a whole lot more energy.

“Africa is home to some of the largest natural gas reserves. What if those billion people used natural gas to generate a lot more electricity? … Taking gas off the table would clearly slow Africa’s development. But would it be effective for climate mitigation?

“Let’s take this logic to an extreme. Imagine if the one billion people living in Sub-Saharan Africa tripled their electricity consumption overnight and 100% of that new power came from natural gas. This is of course implausible for lots of reasons and no one is proposing it. It would bring tremendous benefits to the energy-poor, but would also be the hypothetical worst case scenario for those primarily concerned about blowing the global carbon budget. So, we did the math.**

“For those 48 countries and 1 billion+ people, the effect would be equivalent to 0.62% of annual global emissions. That’s less than the average yearly global increase over the past decade. And it’s smaller than the emissions of single countries like Spain, Malaysia, or Ukraine — or even just the US state of Louisiana.”

In sum, in our view, it is important that public policy not be skewed to mandate imbalanced energy, economic, environmental and social policies which ignore the full contribution that gas can and should make to the transitional energy system up to 2050, and thereafter as well. We are here to serve by enabling gas to do its share of the work.