Natural gas a smart pivot for SA in energy transition
The world is navigating the complex terrain of energy transition, and growing demand for natural gas globally underscores its significance in that landscape.
Natural gas emerges as a pivot that could propel SA towards sustainability. With McKinsey’s Gas Outlook 2050 Report projecting a surge in global demand for natural gas in the next two decades, it becomes important to explore the multifaceted potential of natural gas in facilitating integration of renewable energy sources within SA’s energy framework.
Amid mounting concern about climate change and the pressing need to curb carbon emissions, natural gas emerges as a viable facilitator in transitioning from conventional fossil fuels, thanks to its lower carbon footprint. Its versatility and abundance make it an appealing choice for countries aiming to balance energy security, economic growth and environmental sustainability.
The emergence of liquefied natural gas (LNG) technology has revolutionised the transport and storage capabilities of natural gas, rendering it accessible to regions previously unable to exploit this resource.
LNG technology facilitates efficient and cost-effective transport of natural gas across vast distances, opening up new markets and opportunities for countries such as SA to diversify their energy mix.
Natural gas therefore offers SA a route to address the dual challenge of reducing emissions from its transport sector — trucks and ships in particular — while ensuring energy security and affordability.
Advances in vehicle efficiency, alongside the emergence of biofuels, hydrogen and electric mobility, complement the role of natural gas in fostering a more sustainable transport ecosystem.
Realising the full potential of natural gas as a transition fuel necessitates robust stakeholder collaboration and partnerships. Government departments, state-owned entities and private companies must synchronise their efforts to drive policy reforms, invest in infrastructure development and promote the adoption of natural gas technologies in the market.
For SA there is a greater need to develop public-private partnerships that will facilitate the offtake of natural gas while ensuring the market is based on sound economic models.
Government departments are critical in shaping the regulatory landscape and providing incentives to spur the adoption of natural gas.
Policies that encourage investment in LNG infrastructure, streamline licensing and permitting processes, off-taker agreements and establish favourable tax regimes can stimulate private sector involvement and propel market growth.
The availability of natural gas in neighbouring countries such as Mozambique and Namibia presents an opportunity for intergovernment collaboration to harness regional resources and facilitate the growth of the gas industry in SA. The discovery of offshore gas reserves in SA further underscores the potential for cross-border co-operation in the development and utilisation of natural gas resources.
The economic benefits of embracing offshore natural gas in SA could be significant. It offers cost-effective energy solutions, stimulates job creation and investment in exploration, development, infrastructure, and enhances energy security.
Moreover, it will foster innovation in the transportation and electricity sectors and create export opportunities, driving economic growth and competitiveness while advancing sustainability goals.
However, for this economic potential to be reached decisive policy choices and publicprivate partnerships will be required.
GOVERNMENT DEPARTMENTS ARE CRITICAL IN SHAPING THE REGULATORY LANDSCAPE