The net benefits of a least-cost mix of solar PV, wind and flexibility should be directed towards policies that support coal workers
Photo by: ENERTRAG
As outlined previously, an electricity system made up of solar photovoltaic (PV) plants, wind farms and flexible generators will employ at least 30% more people than a comparable energy-equivalent coal fleet (see the Transition Talk column in the February 22-28 edition of Engineering News). This net jobs advantage is, however, disguised by the geographically disbursed nature of renewable-energy investments.
When juxtaposed against South Africa’s highly concentrated coal industry, which is located mainly in the northern provinces of Mpumalanga, the Free State and Limpopo, such spatial diffusion presents a serious obstacle in persuading those whose livelihoods are currently inextricably tied to coal to support a clean-energy transition.
The net jobs upside, as well as the health and environmental benefits, of transitioning to a renewables-led system are undoubtedly significant. For the individual coal miner, however, these benefits are not accessible to mitigate the potential loss of income, or the disruption associated with relocating to where the new electricity prospects may be arising. To secure support from such individuals it is, thus, not enough to point only to the positive net employment and environmental effects. They also need to be shown how these positive net effects will directly benefit them, their families and the communities most affected by the changes taking place.
Absent any policy intervention, entire energy structures will fall away in certain regions, although large-scale retrenchments will not take place overnight, as older power stations are likely to be shut down unit by unit, rather than in one go. Many workers will also still be required to carry out orderly decommissioning and site rehabili- tation. Nevertheless, unless plans are put in place to facilitate what is known internationally as a ‘just energy transition’, coal workers, as well as entire communities in regions such as Mpumalanga, will understandably resist.
With a series of studies, as well as the Integrated Resource Plan (IRP), confirming that it is now cost-optimal to aim for a 70% to 90% renewable-energy electricity share by 2050, it makes little economic sense to protect coal workers by extending the life of the current poorly maintained fleet, or by building new coal power stations. Instead, government should seek to steer the net benefits of a least-cost mix of solar PV, wind and flexibility towards policies that directly support coal workers and help finance a just energy transition.
For instance, government could take a proactive policy decision to direct the construction of new energy infrastructure to territories where old energy infrastructure will be ramped down. Renewable-power generators could be built in mining areas, with the requirement that the total number of permanent jobs in the region must stay at least the same.
The obvious downside is that the new renewables plants will be built in areas with less solar and wind resources than the Northern Cape, Western Cape and Eastern Cape provinces. From a system perspective, however, it is possible for those higher generation costs to be partially, or even entirely, offset by the lower grid-integration costs associated with situating plants in close proximity to well established transmission infrastructure and load centres.
South Africa could also consider creating special industrial zones to attract manufacturers of renewable-energy components and systems, batteries, hydrogen fuel cells and electrolysers, datacentres, other manufacturing activities, and so on, to regions such as Mpumalanga and the Free State. Such factories should also be directed to offer preferential placements to individuals previously employed in the coal sector.
Further, the steep fall in renewable- energy costs has created an opportunity for South African policymakers to ‘burden’ the renewables industry with the responsibility of financing a just transition. Such a proposition would have been inconceivable even five years ago when most countries, including South Africa, were subsidising new renewables investments. One option is to redirect the 1% development fee paid by independent power producers as a lump sum towards the capitalisation of a ‘coal transition fund’. Such a fund could be specifically ringfenced to fund retraining schemes for coal workers, provide bursaries for the children of coal miners, or incentivise the development of alternative economic activities in mining towns.
Another option would be to ensure that mineworker and Eskom pension funds are given right-of-first-refusal to participate as equity participants in renewable-energy projects so that coal workers and their families can become direct beneficiaries of the transition. So, as the one industry declines, the other industry grows and a portion of the equity in the growing industry is given to coal miners through their pensions. Unlike the current debate about whether community trusts should receive benefits earlier in the operational life of a plant, a delayed windfall could work well for mineworkers, where payments could be gleaned at the end of their careers.
In sum, with clear-sighted policy- making, sound planning and diligent implementation, South Africa has a unique opportunity to reposition its energy system, accelerate industrial development around the electricity transition and ensure those most threatened by the changes become direct beneficiaries.