‘Just transition’, a term frequently heard in adaptation to climate change, refers to the need to preserve the livelihoods of workers as countries move towards a climate-resilient and low-carbon economy and society. .
In his October 11 bulletin, President Cyril Ramaphosa said that many important sectors of the economy would be affected by the just transition, including agriculture, tourism, mining, energy, transport, manufacturing and the economics of biodiversity.
“A transition to a low-carbon economy must meet the needs of workers in these industries and affected communities,” he wrote. “The transition process must be based on the full involvement of unions and businesses in targeted retraining and skills development programs, job creation and the provision of other forms of support to ensure that workers are the main beneficiaries of our transition to a greener future.
The government, through the Presidential Climate Commission, has given a first indication of its key priorities over the next 24 months on just transition. It plans a series of meetings to build consensus, which can be relatively difficult to achieve, given the wealth gap and political rifts between government, business and workers.
This includes updating the Integrated Resource Plan (IRP 2019), which maps out the country’s future energy mix until 2030, so as not to show any new purchases of coal-fired electricity until 2030. and beyond. The government wants to increase the allocation to renewable energies in the IRP 2019 to at least 30 GW by 2030 and accelerate its purchases. At the same time, he wants to find ways to speed up the dismantling of Eskom’s coal plants and decide on their reallocation.
Eskom met with green energy financiers to secure concessional financing to reallocate decommissioned coal-fired power plants. Encouragingly, Eskom has created its own Just Energy Transition Office, which is evaluating green financing options. It offers a $ 10 billion plan to global lenders to help them shut down most of its coal plants by 2050 and embrace renewables. Eskom is expected to present to COP26 plans to re-power its Komati power plant, using solar power and battery storage, to demonstrate that it is serious about reducing emissions.
The government sees gas as an essential ingredient in the transition to renewable energy, although many environmental lobbyists oppose it. It can provide reliable baseload power to supplement the intermittency of wind and solar. While batteries and pumped storage are probably better options in the long run, they are still evolving technologies.
It is important to get a consensus on the inclusion of gas in the IRP and to quantify the quantity that will be needed beyond 2030. Obviously, nuclear has also been considered, with an extension of the duration of the gas. life expected at Koeberg, but it can be argued that the new nuclear is problematic as around the world nuclear projects over the past decade have fallen behind and exceeded their budget.
Another government priority is to develop a national green hydrogen strategy, and there are exciting developments in this regard, including the participation of Sasol, Linde, Navitas and Enertrag in the tender to supply l green hydrogen to the German government and Sasol’s plans for a green hydrogen hub at Port Nolloth.
For the power system, the government has identified an urgent need to set up a strategic task force for grid expansion. Currently there is no grid capacity in the Northern Cape, which has the best solar radiation in South Africa, and other areas also need to be addressed.
The government intends to initiate the market reform study on Eskom unbundling and the creation of an independent systems market operator (Ismo). Ismo must be separated from Eskom so that independent generators can be sure that Eskom will not be favored as a seller of electricity and consumers can be sure of receiving a competitive tariff.
In the just transition, there must be an element of localization for manufacturing renewable components and a recycling program for displaced workers in the coal value chain. The long delay after 2014 in issuing new renewable energy tenders forced entities that had established manufacturing capacity for items such as solar panels, wind turbines and towers to go out of business. Even today, the reluctance to take this risk remains. The government must convince manufacturers that the renewable energy program will continue.
The Presidential Climate Commission (PCC)
The PCC, which includes representatives from Cabinet and other stakeholder bodies, was established to provide independent advice on the country’s response to climate change. Former Deputy Finance Minister Mcebisi Jonas argued that the just transition is very achievable, given the deployment of renewable energy, and more jobs will be created than those lost in coal-fired power plants. But it is essential that declared renewable energy development zones facilitate the transition in coal-producing areas, in order to avoid economic collapse.
The CCP also warned that if South Africa did not succeed in this transition, it would lose investments and face increasing trade and export barriers. The Minerals Council has supported a properly planned and funded transition to a low carbon economy.
I am convinced that the just transition will continue in South Africa. The uncertainty lies in the mixed messages received from the government, as the Minister of Minerals and Energy expressed support for continued coal-fired power generation and research into clean coal technologies. There is clearly a need for greater consensus between government, unions and the private sector. DM
Jason van der Poel is a partner at the law firm Webber Wentzel. He acted as counsel for the Karpowership SA consortium.