It all hinges on renewables: the urgent energy transformation SA needs to get right

SA has punched above its economic weight in influencing climate change discussions internationally, and still has a critical leadership role to play.

Given the country’s open economy, vulnerability to physical climate risk, global changes in trade and policy, concentration of energy intensive export commodities, its weak balance sheet and need for international support, it is critical that we maintain that leadership position.  

Responding to climate change is fundamentally about economic competitiveness and our ability to lift people out of poverty, inequality and unemployment while contributing to the global goal of reducing carbon emissions.

Critical to maintaining this leadership position is recognition of the science, and the imperative to transition our economy to one that is net-zero by 2050 — and achieve this within a “fair share” carbon budget (estimated at 7-9 gigatonnes by 2050). This means we cannot emit any carbon that we cannot capture and store after 2050, and total cumulative emissions of SA’s net-zero “pathway” should not exceed 9Gt.

Given that carbon capture and storage options in SA are limited, this means we must eliminate nearly all of our emissions by 2050, with obvious implications for our economy. The required change is enormous, but the transition is an opportunity to restructure our economy to one that is more equal, inclusive and prosperous — a just transition. 

Over the past two years the National Business Initiative, Business Unity SA and the Boston Consulting Group have explored what it will take to get to a net-zero economy within a fair share carbon budget, and in the process lift our people out of poverty, inequality and unemployment. It is an ongoing project and a number of detailed analytical and model-based sector level reports have been released.

The work has been developed in consultation with more than 400 expert stakeholders from business, government, civil society and labour. Throughout this process, as we learnt, we have continuously honed our analysis to generate useful, evidence-based inputs into the critical and urgent national discussion on SA’s climate response, and to inform our country’s choices.

Our reports present a range of scenarios, each of them feasible, net-zero and within the realms of possibility. The chances of success of each scenario depend on factors in our control but that are also highly complex and include major policy decisions, enormous mobilisation of finance, disruptive behavioural changes and our ability to rapidly reskill workers. It also depends on factors out of our control like global economic and technology drivers.

As with all modelling, the sources of variability are sometimes large, so deterministic predictions are a fool’s game. Hence our scenario-based approach. We have carefully aligned with our broad group of stakeholders on the scenarios we should actively pursue. Within these transition scenarios there are actions of which we are certain are across all scenarios, and there are actions subject to uncertainty.

What we are certain of is that under all scenarios we must build renewable energy infrastructure (wind and solar) at an unprecedented scale. To get to net-zero will require at least 150GW of renewables by 2050, which amounts to about 5GW per year every year for the next 30 years or more.

To capture the opportunity presented by the green hydrogen economy to its full potential, the annual build rate increases to about 9GW per year. To put that in perspective, SA has an installed capacity of about 5GW of renewables today, which took us more than a decade to build. We cannot emphasise the scale and complexity of this challenge enough, it all hinges on renewables.

This must therefore be elevated as a national priority and should serve as the guiding vision for our transition. We do not see a case for building new nuclear capacity, nor new coal capacity, and we should consider the key trade-offs of closing down our coal-power infrastructure entirely by as early as 2042.

In addition, we must fast-track the strengthening and modernisation of our transmission and distribution grid infrastructure. Without it we cannot connect this scale of renewable energy to the homes and businesses that so urgently require clean, reliable and affordable sources of energy. This is a challenge the rest of the world also faces, so fast-tracking our grid-strengthening and modernisation efforts can also be a source of global competitive advantage for SA as it enables the fast scale-up of new green industries.

Lastly, under all scenarios, gas is required in limited volumes and for a limited period of time with a flexible and short payback liquefied natural gas (LNG) infrastructure (for example, floating storage) to balance and enable a larger and faster scale-up of renewables, as well as the competitive decarbonisation of other sectors, with a plan to replace gas with batteries (for short-term power balancing) and green hydrogen (for system balancing), sustainable sources of carbon (for feedstock substitution) and direct electrification (for industrial process heat) as soon as cost parity can be achieved with these green alternatives.

We conclude that there is no need for exploiting “untapped gas reserves” in Southern Africa given the long lead times for first production, and the long payback period, which yields a high risk of stranded assets. This outweighs the socioeconomic benefit of upstream development.

The past two years have been an incredible learning journey for us. This has been one of the most robust, transparent and inclusive climate studies undertaken in SA. This project, alongside the collective efforts of global movements such as the Task Force on Climate-Related Financial Disclosures, the impact of hard-working long-term modelling teams (like the University of Cape Town’s Energy Systems Research Group and the Council for Scientific & Industrial Research, and the important work of civil society, labour and government campaigners, has contributed to far higher climate ambition for both the government and private sector.

The joint National Business Initiative and Business Unity SA statement committing business to net-zero by 2050 pathways has been a high point of the project. This has supported the shift to more ambitious targets and policies across a number of key SA companies. The collective effort by the SA climate community, supported by a robust fact base, helped unlock historical and much needed international financial support that will help kick-start us on this critical transition journey.

Our learning and the journey has only just begun, and we welcome any robust and fact-driven perspective on how we could successfully accelerate this transition and the move away from fossil fuels.

• Yawitch is CEO of the National Business Initiative and Chaumontet MD & partner at Boston Consulting Group.