Can South Africa Kick Its Coal Addiction?

South Africa announced last week that it would be blocking a major oil project by Shell after a court banned the proposed oil exploration. Yet, despite South Africa's reluctance to welcome new fossil fuel operations, the country still relies heavily on coal to meet its energy demand. So, if not oil, will South Africa make the move to renewables or will it continue to rely on coal? 

A South African court ruled this month that Shell will not be allowed to go ahead with using seismic waves to explore for oil and gas off its Indian Ocean waters. This comes after a temporary block on the exploration last December. Shell had aimed to gather 3D seismic data across more than 6,000 square kilometers of ocean off South Africa's Wild Coast. But environmental activists worried that the extremely loud shock waves would harm marine life. A Shell spokesperson responded to the judgment by saying that the company "respect[s] the court's decision" and intends to review the judgment to "determine our next steps".  He added, "we remain committed to South Africa and our role in the just energy transition."

Meanwhile, South Africa continues to rely heavily on coal, which provides over 80 percent of its electricity. However, the country has experienced regular outages for the last 14 years as state utility Eskom Holdings SOC Ltd. has been unable to meet the country's energy demand due to its aging and ill-kept power plants. As much of the world moves away from coal, South Africa continues with its addiction to the dirty fossil fuel, with the third highest per capita average coal emissions between 2015 and 2020 in tonnes of CO2. Although South Africa's 2019 Integrated Resource Plan (IRP) outlined plans to decommission 24,100 MW of conventional thermal power sources, specifically coal, over the next 10 to 30 years. 

With concerns rising over South Africa's reliance on fossil fuels, some are questioning whether the country will shift to renewable alternatives. However, South Africa's energy minister, Gwede Mantashe appears to have a negative view of green energy as a replacement for fossil fuels. He dismissed ideas suggesting that renewable electricity would bring an end to rolling blackouts, using Europe as an example of a failed shift away from fossil fuels. He suggested that solar and wind farms could be used in addition to coal, gas, and nuclear energy but would not be able to meet the country's energy needs alone. 

Minister Mantashe stated last week, "The excitement of moving from coal to renewables is becoming a myth." He added "Many think that renewables are the so-called saviour, and we know that it is not. Germany has learned that painfully." In fact, the very powers telling Mantashe he should shift to renewables have recently increased their coal imports from South Africa's ports in recent months, with Europe's coal demand rising by eight times in the first half of 2022.  

Yet, the government's pledge to achieve net-zero carbon emissions by 2050 will likely be unsuccessful unless the ministry of energy gets behind renewable energy development and makes a clear roadmap for the movement away from coal. However, some private firms are already welcoming renewable energy projects, with Seriti Resources, a major coal supplier to South Africa's power utility, purchasing the majority stake in renewable energy developer Windlab Africa for $55 million. Seriti will continue its coal operations but will also develop a planned 450 MW of renewable energy projects in Mpumalanga, South Africa's main coal mining province. Windlab is currently managing 3.5 GW of renewable energy projects across South Africa and countries across East Africa.

Recent developments have also been made in green ammonia as chemicals firm Sasol and the Itochu Corporation signed a memorandum of understanding to develop the industry's market and supply chain. The firm plans to use green ammonia, produced from green hydrogen, as a bunkering fuel and for power generation. Sasol hopes to produce enough green ammonia for export, using South Africa's abundant solar and wind resources to turn the country into a green hydrogen hub. 

Earlier this year, the government published its South African Hydrogen Society Roadmap (HSRM), outlining the development of the country's hydrogen industry and market. The HSRM aims to create an export market for green hydrogen and ammonia, establish a Centre of Excellence in manufacturing for hydrogen products, develop domestic hydrogen supply chains, and produce 500 kilo-tonnes of green hydrogen by 2030. The government seems to be slowly encouraging private firms to invest in the sector to support a transition toward green energy.  

While South Africa continues to rely heavily on coal for its energy demand, its recent rejection of the proposed Shell exploration for oil suggests that it is increasingly concerned about the environmental impact of its energy industry. Despite the reluctance of the country's energy minister to transition away from fossil fuels, new government policies and private funding for renewable energy suggests renewable energy has a bright future in South Africa.

By Felicity Bradstock for Oilprice.com

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