As a country with one of the most emissions-intensive power sectors in the world, and a nation that is particularly vulnerable to the impacts of climate change, South Africa understands the need to transition its economy and to decarbonise, as well as to build resilience to the impacts of climate change.
The central finding of a new report, Decarbonising South Africa’s Power System, released this week by the National Business Initiative (NBI), together with Business Unity South Africa (BUSA) and Boston Consulting Group (BCG), shows that South Africa can fully decarbonise its power sector.
The Power Sector Decarbonisation Report is part of the NBI’s Just Transition and Climate Pathways project and is the first in a series of reports on decarbonisation pathways for sectors of the South African economy.
The NBI, in partnership with BUSA and BCG, have worked with leaders in business, government, civil society, and academia to identify decarbonisation pathways for key economic sectors aligned to an aspiration of achieving net-zero emissions by 2050. The report also considers how to achieve a just transition that is economically and environmentally sustainable and which leaves no one behind.
“Results from the work to date show that this can be done – but that efforts must begin now. Timing is of the essence and there is no time like the present to create the regulatory and policy environment to support transitioning the economy. This is why business has committed to supporting South Africa’s commitment to find ways to transition to a net-zero emission economy by 2050,” says Joanne Yawitch, NBI CEO.
Climate change is undoubtedly one of the defining challenges of today, the world is facing increasing risks to natural and human systems, with the consequences of the growing frequency of extreme weather events already apparent. South Africa is one of the countries at greatest risk. Rising temperatures, increased aridity and rainfall variability will have significant consequences, not only for the country’s agricultural sector and its biodiversity, but also the health and wellbeing of its people.
The case for change is undeniable and is additionally driven by trade risk as South Africa’s key trading partners implement their low-carbon commitments, with some, like the European Union planning to introduce carbon border tax adjustments. This will create mounting pressure for South Africa, especially in key economic export sectors like mining, manufacturing and agriculture.
A balancing act: mitigating risks to rapidly move to a resilient, renewable future
“South Africa has a unique balancing act that it needs to navigate: the country must carefully juggle the urgent need for economic transition and growth with its reality of a high rate of inequality, poverty and unemployment and its dependence on a fossil fuel-based energy system in order to effectively mitigate risks and make a just transition to a low-carbon future that is resilient and inclusive,” says Lucas Chaumontet, Managing Director and Partner at BCG, Johannesburg.
Making this transition, particularly in the predominantly coal-based electricity sector, will be complex. The report identified 10 key findings around the future of the power sector, and decarbonisation, in South Africa:
- By leveraging its world class renewable energy sources, South Africa can fully decarbonise its power sector, while unlocking the opportunity to stimulate economic growth and job creation.
- South Africa’s complementary wind and solar resources are among the best renewable energy resources in the world, available on vast amounts of unused land.
- By 2050, a renewables-dominated power system is the most cost-competitive system for South Africa.
- Transitioning South Africa’s power system to net-zero would require the deployment of approximately 150GW wind and solar capacity by 2050 – this is almost four times the total capacity of South Africa’s coal power plants today – and an investment of about ZAR3 trillion within the next 30 years, requiring significant expansion and upgrade to the transmission and distribution infrastructure.
- To reach net-zero by 2050, South Africa would need to speed up deployment of renewable energy capacity; at least 4GW of renewables will need to be installed every year – roughly ten times the current pace of new-build.
- 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.
- The transformation of South Africa’s power system can result in net-positive job creation, if South Africa can successfully localise elements of the renewable energy value chain and effectively re-skill the workforce.
- South Africa’s world class renewable energy resources also allows a highly competitive production cost of H2 below 1.60 $/kg by 2030, putting South Africa as potentially one of the largest global exporters of green H2 and green fuels.
- To help fund this journey and ensure competitive cost of capital, access to international green finance will be required to succeed.
- To enable this pathway, cross-sector collaboration and a conducive policy environment will be critical.
Unlocking South Africa’s vision of a just transition against this backdrop, at national and sectoral levels, hinges on key building blocks being in place:
- An enabling policy framework to support reindustrialisation and the creation of new industries;
- Job creation;
- Social and ecological welfare;
- Managing geographic and cultural dislocation of communities;
- Education, capacitation and reskilling;
- Economic inclusion and participation (especially of the youth and black women);
- More distributed ownership;
- Improved quality of work;
- Infrastructure planning and rollout;
- Policy and governance; and
Navigating the transition will be complex and will require a high degree of collaboration across industries and amongst government, private sector and the public.
“Ultimately, a just transition needs to be built on a national conversation that includes all stakeholders,” says Yawitch. “This is why the NBI membership together with BCG and BUSA are supporting the efforts that the South African government are leading through the Presidential Climate Commission and the National Planning Commission to drive broad multi-stakeholder engagement and understand net-zero decarbonisation pathways, sector by sector.”
A copy of the power sector report can be downloaded here by clicking the ‘View Report’ button for the Decarbonising South Africa’s Power System report. Reports for each sector will be released as they are completed.