New deal to boost clean energy
Ahistoric climate finance deal for South Africa to meet its new climate commitments is expected to initiate difficult conversations in the country on its energy master plan.
The agreement, announced at the COP26 United Nations climate talks this week, commits France, Germany, the UK and the US to provide South Africa with $8.5-billion over the next three to five years, in the form of multi- and bilateral grants, concessional loans, guarantees and private investment.
South Africa is to use the funds to meet the lower end of its commitment to reduce carbon emissions.
It also includes the technical support to achieve a just energy transition that does not leave people reliant on the coal economy stranded.
“As a major contributor to South Africa’s carbon footprint, Eskom will play a pivotal role in enabling a just energy transition from coal to low and no carbon sources of electricity generation,” said Eskom chief executive André de Ruyter in reaction to the announcement.
“The estimated cost of the transition is between $30-billion to $35-billion over 15 years. The agreement announced at COP26 is therefore an important first step towards funding the transition in a socially and economically just way, while enabling South Africa to meet its new climate targets,” he said on Wednesday.
Possible conditions of the finance may require South Africa to accelerate its plans to phase out coal power. Eskom plans to use new gas as a “transition fuel” to phase out coal, despite the risks methane gas carries for the climate emergency.
The Life After Coal campaign, comprising groundwork, Earthlife Africa and the Centre for Environmental Rights, said it believed the finance must be on condition that South Africa abandon’s the new coal envisaged in the country’s Integrated Resource Plan of 2019 (IRP2019).
“This must include gas and Eskom’s proposed R85-billion gas plant. Gas plants are a mature technology — if essential for flexibility in the power system, these can be funded by the private sector,” the campaign said. “We cannot use meagre climate finance for new gas, which is a GHG [greenhouse gas] emission-intensive fossil fuel. Climate finance could instead be used to fund medium-duration energy storage to provide flexibility without locking in new gas infrastructure.”
Researchers have highlighted the need to use the new finance deal to limit the effect on people of decommissioning coal-fired power stations and ending the coal value chain between now and 2050.
Energy systems researcher Jesse Burton said the deal is a first of its kind between developed nations and carbon-intensive developing
The partnership with France, Germany, the UK and the US is intended to assist South Africa meet the lower end of its newly revised commitment to reduce carbon emissions, writes Tunicia Phillips. Eskom is on board but the mineral resources and energy minister is dragging his heels
countries such as South Africa.
“Political discussions about coal closures have been wracked by tensions; ambitious climate policy was unthinkable a few years ago. It marks a pivot for Eskom, our utility behemoth, which, for years, was a block to climate policy and is in an operational and financial crisis,” she said in a social media commentary on Tuesday evening.
Burton said the financing deal would mean 15 gigawatts (GW) more renewable energy than contemplated in the Integrated Resource Plan, which includes 1.5GW of new coal-fired power plants in the final policy-adjusted scenario.
The updated climate commitment submitted to the United Nations to cut greenhouse gas emissions was a product of dialogues hosted by President Cyril Ramaphosa’s climate commission, which recommended South Africa raise its targets to qualify for international finance for the energy transition, with a particular focus on the social effects of doing so.
The commission is developing and overseeing the country’s just transition framework.
If South Africa achieves its lower end of the new commitment to the UN — reducing 350 megatonnes of carbon dioxide equivalent — the country will be in line with scientific recommendations to keep the planet’s warming below 1.5°C.
South Africa’s updated climate commitment has been described as a positive shift and an ambitious goal to accelerate decarbonisation.
Burton said: “Eskom’s financial crisis means that it cannot fund a just transition, or finance needed for transmission investments, [which prevents] the roll-out of new renewables in areas with the best resources.
“South Africa’s most pressing need is a just transition for workers and communities where plants and mines are already closing. This is needed where coal mining has left ecological degradation that limits alternative opportunities and includes new infrastructure and economic activities in Mpumalanga,” she said.
When coal goes
Environmental rights groups are also calling for people living in coalaffected areas to have a say in the energy transition planning.
“It is not only workers, but also communities in the coal-affected areas, who must have a say, and benefit from the just transition,” said the Life After Coal campaign. “Women, in particular, bear the burden of coal pollution and the detrimental effects of declining employment in these areas. They also must have a real say and their requirements met.”
Eskom is moving ahead with a pilot project to kick-start South Africa’s shift to alternative energy. The coal-fired power station in Komatipoort is set for decommissioning. It is here where Eskom will produce solar containers to provide off-grid electricity connections and, among other projects, showcase commitment to mitigate the effect on people living in the affected area.
Eskom’s just energy transition head, Mandy Rambharos, said: “It doesn’t require highly skilled labour. You can use lower level skills, you know, because you got containers that you need to spray paint and refurbish [and] assemble the solar panels and put them on to the awnings, doing the awnings themselves — all of that we can use local labour,” she said.
“So we are getting the warehouse ready and turning it into a factory and then you — if you have a production line going — you could employ up to 40 people, if you’re doing one or two containers a week. Or, if we had more orders, we could get quite a lot of demand and then get a bigger assembly line going and employ more people. We’ve already had interest from a number of people to buy these from us.”
Eskom is also kick-starting a project where solar photovoltaic power will be coupled with farming on the same land.
And Komatipoort will be a hub for producing battery storage for renewable energies.
“As we know, Mpumalanga does not have the best solar and wind resources in the country, but we have existing transmission infrastructure that we absolutely must optimise on,” said Rambharos. “And it is not mutually exclusive from developing the Northern Cape and the Eastern Cape wind, and solar facilities; we will do that as well. But we need transmission infrastructure, which will take 10 years to build,” she said.
Battle for fossil fuels
The need is for ‘a just transition for workers and communities where plants and mines are closing’
Mineral Resources and Energy Minister Gwede Mantashe has been opposed to an accelerated phasing out of coal and skipped a meeting with climate envoys from the US, the UK, France and Germany ahead of this week’s announcement at COP26 of the financial deal offered to South Africa.
When Public Enterprises Minister Pravin Gordhan and Environment, Forestry and Fisheries Minister Barabara Creecy were meeting the climate envoys, Mantashe was at a coal conference saying that there should be no rush to abandon coal for renewable energy. He said he opposed energy finance being conditional on phasing out coal, according to Bloomberg.
Mantashe supports the Integrated Resource Plan for energy, which includes an additional 1500 megawatts of new coal coming onto the grid by 2030.
Last week his office told the Mail & Guardian that Mantashe was not in favour of one source of energy over others.
“The minister has always maintained that the transition from high to low carbon emissions should be inclusive of mixed energy sources as directed by IRP2019,” his office said in a response to the M&G’S questions.
COP26 president Alok Sharma has repeatedly called for coal to be consigned to history.
HSBC, Lloyds Banking Group and Natwest Group joined a partnership at COP26 called the Powering Past Coal Alliance, which commits the banks to phase out coal finance by 2030.
Campaigners such Greenpeace, Life After Coal and 350.org are relying on governments to end fossil fuel subsidies and on financial institutions to stop bankrolling new coal builds.
Although progress was made with one group of financiers, the Financial Times said other banks were distancing themselves from the latest recommendations for the energy industry to stop activities affecting climate change.
The Financial Times reported that it had in its possession communication between big banks and proponents of a move to push banks away from coal finance. “Fossil fuel companies have struggled to convince leading banks to agree to end financing of all new oil, gas and coal exploration projects this year,” it reported.
Representatives of banks allegedly told the Glasgow Financial Alliance for Net Zero leader, former Bank of England governor Mark Carney, that the International Energy Agency’s recommendation on reaching netzero carbon emissions in 2050 was a “fairy tale”.