In this opinion piece, Jarredine Morris argues that it is important that the socioeconomic impacts, including the impact on employment, are assessed as South Africa transitions to a lower-carbon electricity sector
Despite knowing that both coal mines and coal-fired power stations have a finite life, it speaks to poor planning and the poor implementation of policy in South Africa, that nothing has been done to address what comes after or to deal with the need to transition to a lower-carbon economy.
Misinformation in statements published by the media earlier this year, stating that the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) was to blame for the early decommissioning of coal-fired power stations and coal mines, spurred protest action and inflamed workers. The Coal Transporters Forum has applied for a court interdict to halt further Power Purchase Agreements for REIPPPPs. Cosatu has notified the National Economic Development and Labour Council of its intention to protest, if no resolution is found to their list of demands regarding current and future REIPPPPs.
The current REIPPPPs are based on Ministerial Determinations made in line with requirements set out in the Integrated Resource Plan (IRP2010). This includes Bid Window 1 through Bid Window 4 Expedited. Parties on every side of the debate on the future of South Africa’s energy mix, agree that this plan needs to be updated. Different parties argue in favour of their preferred technology or price or demand. It is unclear what the IRP2016 (to be published early 2018) base-case will be, or any of the policy-adjusted scenarios. It is hoped that the plan is rational and least-cost and that any policy or other adjustments are declared and accounted for. It is however certain that there will be a carbon constraint in the new IRP, and there will be less reliance on fossil-fuel based power in the future energy mix.
The decommissioning dates included in the IRP2010, draft IRP2016 and any new IRPs, will be based on the life of the power plant. Arnot, Hendrina and Camden stations are due for end of life decommission between 2020 and 2025. The other ten coal-fired stations owned and operated by Eskom, will be decommissioned between 2025 and 2050, even if costly emission abatement retrofits are undertaken. The draft IRP2016 results in coal comprising 33% of the energy mix by 2050, if a more stringent carbon constraint is imposed, this drops to 15%. The Council for Scientific and Industrial Research’s (CSIR's) so-called “unconstrained, least-cost” base-case model, which includes a much deeper penetration of renewables and no nuclear, results in coal comprising 11% of the mix by 2050.
The work of the CSIR also addresses concerns raised regarding the costs of technologies and the reliability of supply from different technologies. The impact of the REIPPPP on Eskom’s costs and financial sustainability, must form part of an important but separate dialogue, as these costs are by no means the only or the biggest concern in this respect.
Statements that the REIPPPP projects are the cause of early decommissioning are misleading. However, megawatts coming online from new coal-fired plants, Medupi and Kusile, will at least equal megawatts that have come online from renewable energy technologies. There are many causes for the current state of surplus capacity, and it makes sense to plan, build or purchase in line with realistic demand. However, preference should be given to least-cost options and reasonable policy-adjustments.
South Africa has committed to reducing greenhouse gas (GHG) emissions in line with the peak, plateau and decline trajectories; this commitment was re-affirmed by the country in 2016, through the ratification of the Paris Agreement and the country’s National Determined Contributions. Approximately 80% of South Africa’s GHG emissions come from the energy sector, which is dominated by fossil-fuel power.
There needs to be a transition away from coal-fired power and this should be internalised in policy such as the IRP for the energy sector. It is important that the socioeconomic impacts, including the impact on employment of the transition, are assessed.
There have been many studies to show that a greener economy brings employment opportunities. Likewise, there have been many reports on the number of jobs expected to be lost in the coal mining sector. The fact that there are opportunities is clear, what is less clear is what plan is in place to address the skills gap between the skills required for mining and those required in a green economy.
In 2011, the Department of Environmental Affairs published the National Climate Change Response Policy . Section 9 on page 34 of this policy, states that the Economic Development Department should conduct a National Employment Vulnerability Assessment. This assessment needs to identify the impact of climate change on jobs, and climate change responses by sector and location. This work should in turn inform the development of Sector Job Resilient Plans (SJRPs). SJRPs will, along with other objectives, investigate and identify the potential for sustainable net job creation in each sector. This work would contribute to building capacity, developing skills, and re-skilling individuals to find alternative employment.
Other socioeconomic impacts and interventions also need to be explored, and there are lessons to be learned from other countries that have already made the transition, albeit for different reasons. The need to mitigate climate change increases the urgency of the transition. However, technological advances and economic developments are likely to impact negatively on the demand for coal. The key to ensuring the best possible outcomes for all will depend on the way in which the transition is managed. Inaction, poor planning for the change, or attempting to stop or delay a change, will cause more harm and cost the economy more over time.
Morris is a senior consultant with The Eton Group, specialising in energy and climate change