Opinion / 12 December 2019, 7:30pm / Vuslat Bayoglu
JOHANNESBURG - As many countries, including South Africa, try to mitigate the effects of climate change, the US has taken a strategic decision that will serve its economic interests: to continue to burn fossil fuels and cut emissions at the same time.
Last month the US Department of Energy’s research agency announced up to $43million (R633.6m) in funding to develop carbon capture and storage technologies.
The envisaged technologies will enable power generators using fossil fuels to be responsive to the electricity grid that also uses renewable energy sources - solar and wind - which are naturally inconsistent.
I think the decision to invest in the development of carbon-capture technologies will simultaneously achieve three goals - all in the economic interest of the world’s largest economy, and its people.
First, it will establish a balance between the economic benefits associated with the continued use of fossil fuels, with environmental concerns. The US is well-endowed with fossil fuels. Instead of wishing these energy sources away, and risk losing economic competitiveness, it has decided to exploit them responsibly by developing the necessary technologies.
Second, the US has seen the gap for large-scale commercialisation of the new technologies that will result from the investment in research. With countries clamouring to mitigate climate change, there is no doubt of the demand for the relevant technologies.
In a statement announcing the funding in the technology development, the US Deputy Energy Secretary, Dan Brouillette, referred to the plan to “revolutionise” the energy market.
Brouillette further said: “The flexible carbon-capture and storage programme will quickly advance our carbon-capture technology to bring us closer to flexible, low-cost, net-zero carbon electricity systems.”
Third, there is an admission that renewables are intermittent and therefore traditional energy sources will continue to play an important role in the economy.
So baseload energy from fossil fuels will continue to serve the US economy, albeit in altered form.
Contrast the US decision to the proposals of Finance Minister Tito Mboweni’s “Growth Agenda” draft document, his “living” economic blueprint. The Mboweni document foresees the move towards renewables and argues that they will create more jobs than coal mining.
The document is so sure about its conclusions it even suggests that those who will profit from investment in renewables should compensate those who will lose in coal mining. It suggests, for example, that this could be done by subsidising the pensions of coal mineworkers. But Mboweni’s document is silent on cleaner-coal technologies that are currently the focus in the US.
The document does, however, make reference to the Integrated Resource Plan published by Mineral Resources and Energy Minister Gwede Mantashe. To its credit, the resource plan envisages the continued usage of coal over a long period of time, and advocates for the adoption of cleaner technologies to do so.
Neither Mboweni’s policy proposal nor Mantashe’s energy plan proposes investment in research to develop cleaner technologies.
With South Africa’s fiscal situation in precarious territory, one imagines research and development is not within the imagination of policy- makers.
Although Mboweni’s document champions competitiveness and lists among others innovation as one of three key pillars (the others being cost-effectiveness and ensuring return on investments) it does not link innovativeness to research in the development of new products. It advocates technological dependency through diffusion.
It is true that not all innovation and development of products is research-related. However, it is also true that no country can claim to be a leader or to be competitive in developing new products and technologies unless it is prepared to invest in research and development.
In fact, President Cyril Ramaphosa has spoken about South Africa being an entrepreneurial state.
He should know that entrepreneurial states like the US are leading economies precisely because they consistently develop new technologies - the usage of which they enjoy first.
It is in the field of research and development that the US and other developed countries will continue to maintain an edge over the exploitation of energy resources - coal, nuclear and renewables. They pioneered the usage of coal to industrialise their economies to first-world status.
Before developing countries can even catch up with established power- generation technologies, a major shift is coming their way: they are required to adjust to new technologies.
The failure by South Africa to make special funding provisions for the development of cleaner-coal technologies means either we won’t be able to sufficiently exploit our huge coal-resources endowment that runs into billions of tons or we will do so with costly imported technologies.
Technological dependency and global economic inequalities will continue.
The Mboweni document quotes the US Energy Department pointing out that although renewables account for only 15percent of the energy generated in the US, they provide 67percent of the jobs. This clearly excites the authors when they consider the prospects of renewables in South Africa employing more people than coal mining.
What these numbers don’t reveal is that the US is one of the top five developed countries that manufacture and export windmills and solar panels components. Countries that are consumers of this technology, like South Africa, are unlikely to create as many jobs beyond assembling of the equipment and setting up of plants.
The comparison contained in Mboweni’s document would make sense if South Africa had a competitive edge to manufacture all the input components required for renewable-energy generation.
The lesson from the US’s recent announcement is that we should manage our mining and energy- generation policies in a way that suits our economic circumstances while being cognisant of environmental concerns.
Vuslat Bayoglu is the executive chairperson of Canyon Coal.