Nonprofit shareholder activism and responsible investment organisation Just Share has questioned the wisdom of pursuing a natural gas strategy in South Africa.

The organisation has made several technological and economical arguments opposing the Department of Mineral Resources and Energy’s (DMRE’s) Gas Masterplan Basecase Report.

The DMRE published its Gas Masterplan Basecase Report for public input on December 14 last year, with the deadline for public comments on January 31. The deadline has since been extended to February 15.

The purpose of the basecase report was to establish baseline information for the natural gas sector in South Africa, the DMRE said when it was released. This included an overview of the gas value chain and regulatory framework.

The report also aimed to set the scene for the Gas Master Plan development process. Once developed, the Gas Master Plan would serve as a policy instrument, providing a roadmap for taking strategic, political and institutional decisions which would guide industry investment planning and coordinated implementation, the DMRE said.

In its submission, Just Share argued that it is “irrational to continue to invest in fossil fuels when these are not least-cost, sustainable, nor required for energy security.”

“New fossil fuel projects, as envisaged in the Integrated Resource Plan for electricity, will harm South Africa’s global competitiveness, lock the country into many more decades of harmful air pollution, environmental degradation and carbon emissions, and thwart our ability to meet ambitious emission reduction targets in the future,” it added.

In the Basecase Report, the DMRE said fossil gas would play a “very important role” in South Africa going forward, and that it had “the potential to completely change the economy by stimulating economic growth and development, stability and job creation”.

Just Share claimed that the DMRE failed to outline the scientific, policy or regulatory basis for the report’s assertion that the pursuit of significant gas development was an appropriate pathway for South Africa.

“The DMRE’s position is not supported either by independent analysis or by evidence on the ground. Instead, the Basecase report relies largely on information provided by the gas industry to support its claims about the future role of gas,” Just Share said in a statement on February 3.

The activist organisation further asserted that the report ran counter to the global pressure to reduce greenhouse-gas emissions.

“For a stable electricity system, supply and demand through the grid must be balanced. While gas plants can provide flexibility to the system, several expert studies confirm that stored energy – whether through batteries or options like ice, pumped hydropower, heat, chilled water and electrochemical, and gravity storage – could also play that role,” Just Share climate change engagement head Robyn Hugo told Engineering News.

Moreover, Just Share labelled the DMRE’s intention to create an artificial gas market by using the electricity sector as an “anchor tenant” to stimulate gas demand “irrational and unnecessary”.

The report stated that a “challenge in developing the gas sector is to bring gas demand and supply on stream at the same time and spread geographically to stimulate broader localised demand through South Africa”. It said the plan for breaking this impasse was to create significant anchor gas demand through the development of a gas-to-power programme.

However, Just Share pointed to analyst reports that said new gas capacity would not be needed to meet South Africa’s electricity demand and prevent load-shedding for at least the next decade. Just Share quoted a report by research and analysis organisation Meridian Economics, which said that the option to delay new gas development would hold "immense value for the country" and that there was no need to lock into long-term gas commitments for now.

“This least-cost scenario also avoids locking South Africa into long-term liquefied natural gas fuel purchase commitments,” Just Share said.

Just Share further asserted that, despite the intention of the DMRE’s report to establish baseline information for the fossil gas sector, and ultimately inform “strategic, political and institutional decisions which will guide industry investment planning and coordinated implementation”, it was prepared without a tool “to model the current gas sector in the country, as well as to develop immediate sector expansion scenarios”.

The organisation said the absence of robust modelling made the development of a rational Gas Master Plan impossible.

Just Share further said the Basecase report made no reference to any of the substantial research and credible modelling on the gas sector published by independent institutions and civil society, choosing to rather quote projections made by the gas industry.

“It is in the interests of fossil fuel companies, and their associated industry associations, to motivate for the increased exploitation of gas. Claims and projections made by those with vested interests must be carefully and objectively interrogated, and compared and contrasted with independent analyses,” Just Share said.

In terms of emissions, the shareholder activist organisation said the DMRE provided “no evidence” to support the report’s claims that gas was clean and environment-friendly, and that it would help South Africa meet its climate change commitments.

Moreover, the report made no mention of the 2015 Paris Agreement, any of the Intergovernmental Panel on Climate Change reports, nor South Africa’s Nationally Determined Contribution (NDC) in terms of the Paris Agreement, Just Share pointed out, adding that the report failed to demonstrate how the DMRE’s gas ambitions would align with South Africa’s climate commitments in its NDC.

In terms of the economic benefits of South Africa pursuing a gas strategy, Just Share believed there were none.

“The Basecase report provides no substantiation for its assertions that the economy will benefit from developing gas resources. . . it is inexplicable that the government would choose to follow a path which will almost certainly entrench and exacerbate existing inequality and energy challenges,” Just Share stated.

Hugo said a “wealth of evidence” demonstrated that rapid and extensive scaling up of renewable energy generation was the most cost-optimal energy pathway for South Africa – and Africa – and that it presented significant economic benefits and opportunities.