Eskom CEO André de Ruyter on Tuesday sketched out a bold vision of an Eskom that could drive the green industrialisation of SA by transitioning to renewable energy and anchoring demand for the manufacturing of green goods, such as electric vehicles (EVs).
Eskom is responsible for 40% of SA’s carbon emissions and produces 85% of its electricity using coal. There have been strong arguments from policymakers, including mineral resources & energy minister Gwede Mantashe, that SA must use its coal resources and transition at its own pace.
Speaking at the Van der Bijl memorial lecture at the University of Pretoria, De Ruyter underlined the inevitability of the movement to decarbonise, saying that neither Eskom, SA nor its companies had any choice but to transition to clean energy as global financial and trade restrictions loomed in a rapidly changing world.
But there were opportunities to be grasped in pivoting away from coal, said De Ruyter.
“Our economy, on a per capita basis, is 25% more carbon intensive than China and double the global average. We cannot ignore our carbon footprint. In addition, the world is penalising heavy carbon emitters.
“It is becoming virtually impossible to secure funding for new coal-generation projects, and insurance companies are targeting large carbon emitters with punitive premiums or outright refusal to cover, as they seek to address the root cause of increased claims caused by climate change,” he said.
SA exports such as motor vehicles and commodities will also be negatively affected.
“The EU’s consideration is to implement a carbon export tax by 2023. If the proposal is adopted, the EU will reportedly impose a levy on imports in carbon-intensive sectors such as steel from countries with lower environmental standards than itself,” said De Ruyter.
But to execute his vision, the green transition will need more government momentum.
Green financing
For Eskom, De Ruyter hopes to tap into R150bn of concessional green financing from development finance institutions, for which he believes there is a limited window of opportunity. He has previously urged that this be concluded before the COP26 conference in November, but government progress has been slow.
The funding would enable Eskom to build 7,400MW of clean capacity and at least 244MWh of battery storage in five years. It would replace the 8,000MW to 10,000MW of coal generation that must be retired over the next decade.
De Ruyter also believes Eskom can play a broader role in driving green manufacturing.
“Eskom is keen to act as an anchor market for electric vehicles, not least because we see it as an important growth opportunity for our business.
“Eskom wants to explore the opportunity to pivot the motor industry to electric vehicles by using its own demand for locally manufactured EVs to enable investment,” said De Ruyter. However, he pointed out that only 1,000 electric vehicles had been sold in SA since 2015.
Trade policy, in particular import duties on electric vehicles, needed to be “adjusted to seed this new segment and encourage local investment. The higher price of EVs due to 45% import taxes and duties has been one of the key factors limiting the growth of this market.”
He proposed that the government emulate the motor industry development programme — known as the Automotive Production and Development Programme — for the production of renewable energy components.
Hendrik Johannes van der Bijl, after whom the annual lecture is named, was the Afrikaner industrialist who founded Eskom, Iscor and Armscor.
“In the spirit of Van der Bijl, who in his lifetime achieved his vision of affordable electricity ... [we] can collectively reinvent and reimagine a future for SA”, De Ruyter concluded.
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