According to the CSIR, approximately 80% of South Africa's electricity was generated from coal in 2022. But the goal is to close more than half of old, unreliable coal-fired power plants and replace them with new solar and renewable energy by the end of 2030.
Eskom has always struggled to provide a stable electricity supply. Despite the climate benefits, the public and miners are worried that the plan will ultimately cost hundreds of thousands of jobs and cost the nation There are concerns that this may have unforeseen social consequences.
The energy crisis and the issue of ensuring continuous electricity supply is a hot topic in South Africa, especially during SONA 2023. During February. The focus of the speech was on addressing Eskom's debt burden and providing incentives to encourage the use of renewable energy sources for power generation.
After nearly a decade of mismanagement and corruption allegations, Eskom is struggling to keep the lights on. Despite supplying more than 80% of South Africa's intermittent electricity, the company's two newest coal-fired power plants, the Medupi and Kusil facilities, are facing cost overruns and design flaws. More than 10 years after construction began, he said, 9GW of combined capacity from these plants is still not being sent to the grid.
Objectives of COP27 – “Africa COP”
27th The annual Conference of the Parties (COP27) was held in Egypt in November 2022. The objective of the conference was to chart a sustainable path to reducing carbon emissions and limiting the effects of climate change. The conference expressed high hopes for the continent to move towards greater use of renewable energy resources. This provided participants with an opportunity to review progress towards achieving the goals set out in the Paris Agreement, the international treaty on climate change signed by 196 countries at COP21 in 2015. These commitments aim to achieve several environmental goals, including the reduction of environmental problems. Reduce emissions to net zero by 2050 and limit global temperature rise to 1.5 degrees Celsius by the end of the century.
The key is to hold developed countries accountable for their role in climate change and encourage them to invest in technologies that reduce carbon emissions, shifting fossil fuel-based energy production to sustainable sources such as wind and solar. It is expected to accelerate the transition to alternative energy.
What kind of progress do you expect from COP27?
Many argue that the conference failed to achieve the desired effect in terms of the necessary efforts. Nor did it indicate that global emissions would fall significantly. This seems to have been the conference's biggest failure. Time constraints on achieving the goal of limiting temperature rise have prevented us from emphasizing the need for a more aggressive approach to reducing emissions.
An important breakthrough was announced regarding joint efforts by Member States to finance loss and damage to vulnerable countries vulnerable to climate disasters.
Where does South Africa stand on that commitment?
Figure 1 below shows South Africa's historical carbon emissions from 1990 to 2020 in black on the left. The colored bands then indicate the projected assessment categories for achieving global warming targets by 2100. There are two potential pathways for action that can be taken to reduce emissions: the current trajectory of policies and actions, or the implementation of planned policies. Based on current policies and actions, South Africa's progress is considered to be “insufficient” to meet its commitments.
Figure 1: SA GHG emissions (MtCO2e/year) and scenario projections up to 2030.
Source: Climate Action Tracker, 2022
As it stands, and as is clear from Figure 1 above, the speed of implementation of South Africa's current policies and frameworks is not sufficient to achieve its ambitious goals of reducing carbon emissions in the short term. South Carolina's fossil fuel-dependent economic structure and slow transition to renewable energy sources are some of the main reasons the state is not on track to meet its commitments. If the planned policies are implemented, South Africa is expected to be within the targets set by the NDC. It is estimated that the temperature contribution of SA is less than 2 degrees Celsius, which is “almost sufficient”. Policies need to be revisited and a more proactive approach adopted to meet the 1.5 degree target.
Despite the above, the following advances have been made:
South Africa has made progress towards reducing greenhouse gas emissions. One of the key initiatives was the implementation of the climate change bill. The bill aims to reduce carbon emissions by 45% by 2035 compared to 2010 levels. The country also adopted an Integrated Resource Plan (IRP) to phase out coal and switch to renewable energy production. These steps demonstrated South Africa's commitment to achieving the goals set out in the Paris Agreement.
The recent National Budget speech introduced tax incentives to encourage businesses and households to turn to renewable energy sources. Over the next two years, companies will be able to reduce their taxable income by 125% of the cost of investing in renewable energy. An individual can only claim a 25% rebate on solar panels and the amount spent is limited to R15,000. This is in line with the key interventions noted by the President in his State of the Union address in February 2023, aimed at addressing the issue of restoring South Africa's energy security.
- Refurbish Eskom's coal-fired power stations and improve the availability of existing supply.
- Enabling and accelerating private investment in power generation capacity.
- Accelerate the procurement of new capacity from renewable energy, gas and battery storage.
- Encourage businesses and households to invest in rooftop solar power.and
- Fundamentally transforming the power sector to achieve long-term energy security.
Encouragingly, South Africa's plan to phase out coal was approved at the COP27 climate conference. Officials from the UK, France, Germany, US and EU signed an $8.5 billion pledge to help fund the country's early stages.
What more can I do? And how can I track this quickly?
Developed countries, which are responsible for most of the carbon emissions to date, need to provide the leadership, innovation and finance needed to ensure a smooth transition to a low-carbon future.
The South African government needs to do more to encourage renewable energy production and focus on expanding access to renewable energy sources. The urgency of the climate crisis demands bold political action and collective responsibility. Leaders must act decisively to reduce greenhouse gas emissions, promote clean energy and support climate resilience in vulnerable countries. To accelerate progress, South Africa needs strong policies and practical frameworks that enable and support the transition to a low-carbon future. Raising market awareness, collaboration and education can encourage behavioral change, which in turn will contribute to building a sustainable world for future generations.
In addition to this, success in restricting energy providers and tackling corruption and theft will go a long way in improving South Africa's energy situation, thereby ensuring that we as a country You will be able to focus on reducing your dependence on
Initiatives like COP27 aim to bring governments together to accelerate global efforts to tackle the climate crisis, but implementation and investment in key areas is critical. Despite progress in tackling climate change, South Africa has a long way to go. Structural reforms and the deployment of finance to alternative energy sources are critical to achieving the transition to a new climate future. Therefore, by implementing a sustainable approach to energy production, South Africa will be able to enjoy the benefits of a cleaner environment while fostering economic growth. DM/BM
author: Alyssa April – Quantitative Analyst at Prescient Investment Management.
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