JUST Energy Transition! This is a concept that continues to permeate debates in governments, corporations and civil societies in countries across both the global north and global south, writes Lungile Mashele …
Just what is Just Energy Transition (JET) and why does it matter?
Project 90 by 2030 defines a just energy transition as “a transition towards a sustainable, low carbon and equitable energy system which is better for people and the planet”. Greenpeace, an organisation campaigning for a cleaner environment, sees a just transition as “moving to a more sustainable economy in a way that’s fair to everyone – including people working in polluting industries.”
Both Eskom, South Africa’s electricity utility company, and the International Trade Union Confederation (ITUC) are of the view that JET is about not bringing harm to affected communities, protecting affected workers and a gradual move to a low carbon future.
On the one hand, Eskom specifically believes that “‘transition’ is the gradual movement towards lower carbon technologies”, while the word ‘Just’ qualifies that this transition will not negatively impact society, jobs and livelihoods.“
On the other hand, ITUC is of the view that a “just transition secures the future and livelihoods of workers and their communities in the transition to a low-carbon economy”; that it is based on social dialogue between workers and their unions, employers, government and communities”; and that “a plan for a just transition provides and guarantees better and decent jobs, social protection, more training opportunities and greater job security for all workers affected by global warming and climate change policies”.
The just energy transition in South Africa is a culmination of a series of conversations that have been had by the government, Eskom, the private sector, financial institutions as well as non-governmental organisations. South Africa needs to have more coherent energy policies to drive JET. The current just energy transition move is not premised on any one government policy or an integrated energy plan, requires specific targets and incentives.
Much of the world’s energy transition has been driven by public pressure due to falling renewable energy costs and improving technology.
Currently, South Africa has no clear policy targets for JET nor any methods for evaluating its successes or failures. As the Public Investment Corporation (PIC), we are of the view that the energy transition should not only be focused on moving away from coal, however, it needs to be an integrated plan that increases renewable energy contribution to the total energy mix while considering the acutely high unemployment rate.
It is ideal that the foundations of a just energy transition should be rooted in a country’s economic growth plan – be it the intention to industrialise or become a service economy. There is a potential trade-off in pursuing industrialisation and decarbonising efforts in emerging and frontier markets.
Our country finds itself at a crossroads of potential socio-economic turmoil. There is low economic growth, slow post Covid-19 recovery, worsening inequality, corruption, worsening load shedding, poverty, highest unemployment – particularly youth unemployment, impending recession and dysfunctional utilities. An energy transition seems far from reach given the challenges that the country faces.
What kind of economy does South Africa intend to become? What are our economic growth targets? How will we go about achieving this growth?
Moreover, South Africa wants to stop load shedding, decarbonise, create green jobs, halt local content of PV components, keep Eskom sustainable, introduce Eskom 2.0, privatise the energy sector, increase embedded generation, add variable renewables to a constrained grid while not wanting to pay a cost reflective tariff.
The answer to these questions seems to lie in a mix between the new Integrated Resource Plan (IRP), a country investment strategy and an integrated energy plan. It is imperative that these initiatives pull in the same direction to have any success.
Energy transitions in Europe have largely been premised on China manufacturing everything and Russia providing unlimited gas. This has led to a false narrative in the market which made some countries look like they were transitioning when, instead, the recent evidence has proved to be contrary.
We have experienced reclassification of gas and nuclear as green and that, despite reserve margin in excess of 200% in countries such as Germany, there is increased demand for coal and gas in order to meet baseload demand.
In some countries, energy transition was driven by the need to grow new industries – hence the offering of renewable feed in tariffs, energy subsidies, production tax and renewable energy credits. This was done to drive the mass adoption of renewables so that they could gain competitive advantage, achieve economies of scale and mass produce for global consumption.
This strategy has worked well for Germany, the US, South Korea and China who are in the Top 10 photovoltaic (PV) panel manufacturers in the world.
We are told South Africa should transition so that it can start its green industries. However, a strategy that relies on South Africa manufacturing panels locally fails to appreciate South Africa’s limited capabilities.
Over the last decade the world has moved swiftly from poly to monocrystalline panels, panels fit for trackers and more recently panels with bifacials. This is a function of a brilliant schooling system, as is the case in China and South Korea where there is sufficient funding for research and development, as well as innovation. Investing in local manufacturing must consider market demand, policy certainty, skills, innovation, and funding.
Why does South Africa want an energy transition – what’s in it for us? Why does the world want South Africa to pursue an accelerated energy transition – what’s in it for them? At COP26 held in 2021, France, Germany, UK, US and the EU launched a “groundbreaking” International Just Energy Transition Partnership with South Africa – the leaders of these nations pledged to support South Africa’s accelerated transition.
Since then, the UK, Germany and the US have reactivated their coal plants, stockpiled gas or extended their nuclear shutdown plans due to gas shortages.
The funding package of US$8.5 billion is currently insufficient and inadequate to justify closure of coal mines and the negative social impact it will have in regions such as Mpumalanga.
The Prime Minister of Barbados, Mia Mottley, said; “National solutions to global problems do not work.” South Africa which contributes to half of Africa’s 3.8% greenhouse gas emissions is potentially being burdened with transitioning for nations that are currently or have long industrialised and have resorted to using coal and gas to avoid a bleak winter.
What then should be driving South Africa’s energy transition?
Our transition first and foremost needs to centre around people. We need to be cognisant of the impact of moving people from one province to the next as this may have untold unintended consequences and potentially create more social ills.
There should be support for countries and communities to adapt to a green economy through social protection programmes, skills upliftment and job creation mechanisms. Climate change reparations should also not be ignored. The JET should be in proportion to the contribution to greenhouse gas emissions or an objective and fair method. It is ironic that nations who contribute the least to climate change receive loans from the world’s largest emitters to lead a transition for a problem they didn’t cause.
Resilient technologies should also be considered when transitioning. Transitioning is not about moving to 100% renewables but it’s about moving from a high-carbon economy to a low-carbon economy. It’s about ensuring energy security, voltage stability, countering increasing grid inertia and a growing duck curve.
A transition will consider South Africa’s resource endowments and existing industries and try leverage those for change ie, spearheading carbon capture technology development. A transition needs a clear path to economic growth, employment and industrial development.
A true just energy transition is one rooted in fairness and equality, one that is equitable and does no harm. It is a transition that not only creates new jobs but ensures greater multi-sector employability - not just worker substitution.
A real transition will also recognise its shortcomings and be adaptable to new ideas. A just transition will be responsive to changes in geopolitics, ensure energy security and be grounded in the desire to grow the economy. A real transition is not linear – it is rather lattice, it can be paused or stopped to respond to pressing issues; and it can also be accelerated to respond to market conditions.
South Africa cannot afford an accelerated transition while the rest of the world is focused on energy security. While these issues may not be mutually exclusive, there are ways to integrate them together for the better of South Africa’s energy system. As we head to COP27, now is the time for South Africa to define its own energy transition by considering the needs and aspirations of its people.
Lungile Mashele is Sector Specialist for energy and infrastructure at the Public Investment Corporation (PIC)