Despite the momentum to reform the troubled domestic power sector, rising electricity prices have contributed to SA’s slide of four places down the World Economic Forum’s (WEF) annual Energy Transition Index.
SA ranks near the bottom of the pile, at 110 out of 115 countries on the index, as published in the organisation’s annual energy transition report, “Fostering Effective Energy Transition 2021”.
SA’s ranking is lower than in 2020, when it came in 106th. Though this year’s report, released on Wednesday, uses a revised methodology, which takes into account changes in the global energy landscape and the urgency of climate change action, SA still would have ranked 106th last year even if the new methodology was used, the organisation said.
SA’s energy sector is dominated by Eskom, which is gripped by financial and operational crises. As electricity sales steadily dwindle, the utility is pursuing tariff hikes that reflect its costs. On April 1, tariffs increased 15%.
The index benchmarks the countries on the performance of their energy systems across the three dimensions of an “energy triangle”: economic development and growth, environmental sustainability, and energy security and access indicators. It also considers their readiness to transition to secure, sustainable, affordable, and inclusive energy systems.
Over the past 10 years, SA has remained broadly flat in its overall energy transition index score, the WEF noted.
The report found SA has considerably improved in its energy system performance over the past 10 years, mainly supported by gains in energy access in electricity and clean cooking fuels.
SA’s scores relating to environmental sustainability have also improved due to reduction in energy intensity of the GDP. But challenges remain.
“Share of coal in electricity, and carbon intensity of the energy mix remain high in SA, highlighting the need to accelerate efforts to decarbonise the energy mix, through measures such as energy efficiency, expansion of renewable resources, electrification, as well as use of carbon capture technologies,” the WEF said.
The complexity of energy transition is evident in SA’s declining scores on the economic development and growth dimension — primarily due to an increase in electricity prices for households and industries.
More broadly, the index’s results show the positive direction of the global energy transition, the WEF noted, with 92 out of 115 countries increasing their aggregate score over the past 10 years. However, only 13 countries have made steady gains in the past decade, highlighting uneven progress.
“It is critical to root the energy transition in economic, political and social practices to ensure sustainable progress,” the WEF said.
Leading the pack are Sweden, which ranked highest for the fourth consecutive year, followed by Norway and Denmark. Ranking below SA are Venezuela, Lebanon, Mongolia, Haiti, with Zimbabwe last.
Given the importance of extractive industries to the SA economy, the WEF said pursuing “just transition” pathways will be critical to make accelerated progress on energy transition in SA.
A “just transition” refers to securing the future and livelihoods of workers and their communities in the transition to a low-carbon economy and is a particularly pressing topic in SA, where the coal-mining industry supports 90,000 jobs and is a major export earner.
An in-principle commitment by Eskom to reach net-zero emissions by 2050 is a step in the right direction and indicates the increase in political commitment and strengthening regulatory environment, the WEF said.
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