Ineffective South African energy diplomacy out of kilt with coal geopolitics
Opinion / 15 January 2020, 08:00am / Siyabonga Hadebe
PRETORIA – South Africa appears to stumble from one crisis to another and this has become a norm rather than an exception. The biggest crisis the country faces at the moment concerns rolling blackouts that reached Stage Six in the past weeks.
Load shedding stages allow for the national power utility company Eskom to pull increasing amounts of power off the national grid to prevent a total blackout. Online publication Business Tech explains that “a combination of further unplanned breakdowns, heavy rains, inability to restock fuel reserves and alleged sabotage pushed the outages far past 12,500MW, necessitating the higher stages of load-shedding.” However, these are among just a few reasons provided to explain why Eskom is unable to keep the lights on.
The biggest problem is the global ideology on coal which has also been embraced by local players, including government departments and agencies. The argument of this piece is that it doesn’t matter whether Eskom’s challenges are solved or not, the government needs to be clearer on its position coal which the country desperately needs for energy production. So far, energy minister Gwede Mantashe is the lone voice in the current administration that speaks for coal and its benefits.
“People want us to move at speed. They even want us to switch off all the coal-fired generators... [and when this happens] We’ll breathe the fresh air in darkness!,” Mantashe told the annual Africa Oil Week conference in Cape Town on 5 November 2019. But who are these people? It is difficult to extrapolate but signals point to the global agenda against coal in general. As stated earlier, government itself appears to be deeply divided on coal and how to go about reducing the country’s dependence but without hurting the economy and lives of people.
The concern is that nobody seems to be talking about is the tension that exists between the policies of the energy and environment departments - they are complete opposites and if this dichotomous relationship is not addressed as a matter of priority, all efforts to curb load-shedding could be a serious waste of time. This is something that requires immediate action. Government cannot promise to end power cuts while it closes power stations at the same time.
The problem arises from the structure of government which allows what former president Thabo Mbeki called “confederation of ministries” to signify high degrees of lack of cohesion between these units of state. It is not only in the energy space that these challenges are experienced. For example, the ministers of home affairs and tourism engaged in a public alteration over travel regulations for children. Also, the economic recovery plans also excluded key departments in the economic cluster. There are many examples to highlight this point.
Now going back to energy. The newly created department of mineral resources and energy is responsible for mining and energy policies. Environmental policy is the responsibility of another government department. Empirical evidence and experience show that the mandates of these departments are not complementary and could therefore plunge the country into eternal darkness as far as energy production from coal is concerned. This is an ideological argument rather than an administration one.
The department of mineral resources and energy in October 2019 gazetted the Integrated Resources Plan (IRP) 2019. This document is “the state's official blueprint for future energy generation, including things like projected electricity demand, cost estimates, and from what sources power will be generated, for the next decade.” According to energy minister Gwede Mantashe, the IRP2019 promotes a diversified energy mix for the country, i.e. renewables, nuclear energy, gas, hydropower, nuclear power and coal.
It is the inclusion of coal that seems to be a talking point as far as power generation is concerned. Minister Mantashe emphasizes that the country's 16 coal-fired power stations “will be around for a long time.” However, it appears that Mantashe is becoming a dinosaur in the eyes of some in his belief in coal resources. He is very correct to put a strong case for coal because South Africa gets most its power from coal, and other sources like renewables and nuclear are far behind.
Energy production from coal has been under pressure from different quarters, both locally and internationally, for many years to date. The challenge that is presently being experienced in South Africa, however, is the swiftness that some people are eager to discard coal as evidenced with the rushed signing of independent power producers to supply Eskom with renewables, which are now said to be draining Eskom’s already pressure financial resources.
One may argue that part of biggest challenge with this approach is that the Eskom business model cannot be changed over night. This is more like trying to make a large, heavy vessel to do a u-turn in the middle of the Panama Canal. It will simply crash. But one has to understand the reasons behind the eagerness to dump coal and introduce renewables, it is not just privatization but a much more bigger global agenda.
In 2016, the G7 countries – the United Kingdom, United States, Canada, Japan, Italy, France and Germany – declared that they will stop providing subsidies for coal, gas and oil. These include financing coal-fired power stations and gas plants and other forms of tax breaks like subsidizing the price of fuel at the pump. Japan and the US are exceptions because they decided not to go along with other G7 nations. Japan has not made it a secret for support of power generation from coal. And the Trump administration is backing out of the Paris Agreement on Climate Change and will formalize the US exit late in 2020.
In the COP25 meeting in Madrid on 2-13 December 2019, there was a renewed call for large European banks “to sever all lending to utilities which they say are still developing new coal-fired power plants.” This is not entirely new. Since Paris in 2015, many banks already introduced policies policies to cut lending to firms which rely on coal for a high percentage of their revenues and to end funding for new mines. These were mainly European banks and some in the US.
Not wanting to be left behind South African banks also followed their international counterparts. In an interview on Radio 702, the Council for Geoscience (CGS) chief executive officer Mosa Mabuza blasted the local banks for stopping investments in coal projects - “switch off from coal”. Mabuza is of the view that the country committed to a ‘just transition’ from high carbon emissions to low emissions. However, this just transition is misconstrued to mean dropping coal altogether. It is for the reason the CGS maintains that just transition should include coal in the basket using requisite technologies. Hence, Mabuza urged banks to reconsider that position because it is possible to attain their green footprint using coal.
The Trump administration, however, noticed that the global drive to annihilate coal to could push US banks to bankruptcy and also that some companies could close shop. The decision to pull out of the Paris Agreement thus allowed banks to embrace the coal industry once more. The analysis by an environmental group Rainforest Action Network indicates that five American banks such as Goldman Sachs, CitiGroup, Bank of America, JP Morgan and Morgan Stanley “are lending tens or hundreds of millions of dollars to coal companies again, in one case eclipsing what they lent in 2014.” Combined, the these banks issued approximately U$D1.5 billion in new coal-related loans in 2017.
On its part, South Africa as one of the countries that rely on coal has been moving fast in adopting the provisions of the Paris Agreement, which it signed in 2015. In this regard, the country is reportedly at an advanced stage “with formulating its national policy on mitigating the effects of climate change.” The view is that South Africa should tread carefully in its journey towards low emissions. Furthermore, South Africa should think about the role coal plays in providing energy security for the country.
Mabuza estimates that there are over 60 billion tons of coal in the underground, which easily translates to over 300 years of coal mining. Together with say nuclear or gas, coal should be regarded as part of the energy solution going to the future. Many people would ask where the loads of coal that are exported each day via Richards Bay going. The truth is that many countries overseas including Japan, South Korea, Germany, Poland and China rely on coal to provide a reliable base load. So, the hype about green energy sources is simply overstated and doesn’t tell the whole story.
Just last week, the cabinet announced the re-establishment of the ‘energy war room’ that will deal with “any challenges to our energy supply in the country.” The war room is made up of deputy president David Mabuza, finance minister Tito Mboweni, public enterprises minister Pravin Gordhan, and energy minister Mantashe. But one person that is not included is Barbara Creecy, the minister of forestry, fisheries and environmental affairs.
Against the long narration provided above, it would appear that the energy war room has a counterforce in stringent environmental regulations that will not help the country to break the current cycle of load-shedding. It is quite baffling to learn that the environment department has issued the Kendal power station in Mpumalanga with a notice “to shut down two of its units by 9 January 2020.” Eskom's environmental manager Deidre Herbst confirmed that the power station “hasn't met a number of emissions and environmental compliances.”
It is not that one would advocate for emissions and non-compliance, but the timing of the notice to Kendal is ill-timed and that is something that the war room could have foreseen. Government departments are engaged in policy tug-of-war at the expense of the country. The commitment to solve the devastating power cuts is therefore questionable in the bigger scheme. How does closing a power station right in the middle of a crisis help solve the load-shedding problem? The ideological warfare on coal, rather than administrative issues at Eskom, are responsible for the current energy impasse.
Environmentalists claim that Eskom is responsible for 2000 deaths a year, and have also taken government to court for what they call “failure to rein in” emissions from the national power utility. Individuals from overseas, particularly Europeans, are in the country to throttle Eskom while their countries continue to burn even much more lethal brown coal (lignite). Poland, for example, generates electricity from this type of coal. This electricity is used to provide a baseload for the entire Europe - the talk about some states cutting emissions to zero is therefore untrue. Just transition in our context should include whatever resource the country has and not exclude coal.
The posture that country has generally taken on coal and overemphasis on unreliable renewables are increasing the South Africa’s energy insecurity and are bound to contribute to sluggish economic growth.
Siyabonga Hadebe is an independent commentator on socio-economic, politics and global matters based in Pretoria.