South Africa will be shut out of global trade if it doesn’t have a clean technology industrial base by 2030. This will lead to a rapid deindustrialisation of the economy.
This is according to James MacKay, CEO of the Energy Council, who says there’s no more time to engage in ideological debates about protection of coal constituencies when there’s a rapid shift towards cleaner energy in other parts of the world.
“That was a good ideological position 10 years ago when we still had time, but right now we can’t hold back a global shift and we are in the decade where all the big moves are being made. If we don’t have a clean industrialised platform ready to go by late 2028, 29, 30, we are going to rapidly be ejected from global platforms in the 2030s.”
Speaking to Business Times this week, he said although South Africa was the only African country to legislate its intent to have net zero emissions by 2050, in line with global climate change commitments, and even instituted a carbon tax, we were still moving too slowly in decarbonising our industrial base.
“We’ve got a huge amount of work to do to position ourselves for 2040 and 2050. We are still anchoring down coal and fossil fuels. We haven’t got clean tech innovation and we are not moving in that direction. What we are going to find is we are shut out of global trade. If we are not going to shift with global trends, we are going to deindustrialise.”
The Energy Council of South Africa is the brainchild of private- and public-sector players in the energy economy who want to create an apex organisation to engage government and civil society on related policy and legislation, and offer support where needed.
According to MacKay, continuous debates about protecting communities dependent on fossil fuels for their livelihoods were self-defeating because innovation and disruption cannot be reversed
Founding members include Sasol, Anglo-American, Toyota, Exxaro, TotalEnergies and the National Automobile Manufacturers of South Africa (Naamsa). Public-sector members include Eskom, PetroSA, the Central Energy Fund and the Industrial Development Corporation (IDC).
MacKay said business was frustrated about policy disconnect related to the energy transition and clean tech industrialisation. There were big shifts in the past few months, including a commitment by government to finally develop policy on the production of electric vehicles, but this was not enough, he added.
“Part of the problem is the narrative of the energy transition has not been about industrialisation. It’s been about picking a technology, and these technology ideologies are mostly anchored in baseload such as coal, gas and nuclear vs variable technologies such as wind, solar and hydrogen. The reality is we need all of them.”
According to MacKay, continuous debates about protecting communities dependent on fossil fuels for their livelihoods were self-defeating because innovation and disruption cannot be reversed. When banks were moving from physical branches and digitising the banking process, there were no debates about where all the bank tellers would be employed, he said.
“Innovation disruption ... no-one stops to say who’s being left behind. What everyone asks is: ‘How are we going to optimise the value that’s being created by new tech and new innovation, and as that disruption happens, who’s being disrupted and is it fair?'”
The argument that should be taking place is how to reskill those who might be left behind by this big movement towards clean energy and how to support those who cannot be reskilled and do get left behind. In the US, when coal and textile industries moved production to the Far East, the government had a plan to support those losing their jobs. South Africa doesn’t have that luxury, he said.
“The United States ... can afford to say: ‘OK, we are going to pay out those who get left behind.’ We don’t have that money. So if we don’t build future money and future jobs, we are not going to save ourselves.”
MacKay, who is also a member of the National Energy Crisis Committee (Necom), a partnership between government and the private sector to end load-shedding, was more upbeat about blackouts ending in the next 24 months.
A big step was taken last month when President Cyril Ramaphosa and eight ministers met private-sector CEOs and other business leaders. They agreed to create two more crisis committees to tackle logistic bottlenecks and another to help fight crime and corruption.
He stressed that these were partnerships, not platforms for business to lecture government on how to fix problems.
“We can’t have 40 business people running into the room to tell cabinet what to do, what milestones to put in place and what KPIs [they want to measure them on]. That’s not going to work.
“We are asking government: ‘What can business bring to the table in terms of capacity and support to help you make decisions?'”
As a result of Necom work, business was able to put together and deploy a team of civil and structural engineers, and a project management expert, to Kusile power station at the request of Eskom to engage with management on work being done to repair the flue-gas desulphurisation duct, a section of which collapsed in October 2022, forcing units 2 and 3 to be taken offline.
We can’t have 40 business people running into the room to tell cabinet what to do, what milestones to put in place and what KPIs [they want to measure them on]. That’s not going to work
Business is also going to mobilise teams for deployment to Matla, Kriel, Kendal and Majuba power stations to help Eskom manage technical challenges that lead to trips, failures and load losses.
MacKay is confident 4.9GW will be available in the next 24 months when three units at Kusile, a generator at Medupi and the Koeberg nuclear power station come back online. At least 2.5GW from these generating units will return in the next 12 months.
Over and above that, there’s about 1.5GW of power that will be sourced through various programmes, including emergency generation and from the southern African pool over the next year. Bid Window 7 of the renewable energy independent power producers programme, which has been scaled up to 5GW, is also about to get under way.
“If you take all of those numbers, you’ve probably got about 9GW to 10GW of generation that will come online in the next two to three years, and that’s enough to end load-shedding.”
To create enough transmission capacity to handle this extra generation, the amended Electricity Regulation Act, which was approved by cabinet and will liberalise the market by creating an independent transmission company, has to be processed and passed by parliament before the end of this year, MacKay urged.
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