SA’s just energy transition: Why investing in gas is a bad idea

Unless developed nations cut greenhouse gas emissions as a matter of urgency, vulnerable, developing nations will continue to bare the brunt of climate change.

This forms part of South Africa’s Just Energy Transition Investment Plan (JET-IP) for 2023 to 2027, a detailed map of how the country plans to keep its emissions slate clean, transition from coal to cleaner energy solutions, and attempt to balance livelihoods dependent on the fossil fuel industry.

Developed nations are historically responsible for greenhouse gas emissions, with Africa contributing just 4% of global emissions. South Africa is responsible for 2% of this figure.

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Cash needed for JET-IP

According to the JET-IP South Africa’s low-carbon, climate-resistant economy comes at a cost of R1.5 trillion over the next five years.

Key to the JET-IP is restructuring Eskom’s R396 billion debt, to allow for more reliable electricity supply, reducing costs and optimising revenue.

South Africa’s precarious economic status makes it difficult to achieve a smooth energy transition without some help from other countries.

Department of Forestry, Fisheries and the Environment Minister Barbara Creecy noted during a post-COP27 media briefing that South Africa was classified as a “middle-income country”, cutting us off from bilateral aid.

This makes climate financing more challenging, especially in light of multilateral development banks being “very risk-averse”, she noted.

The JET-IP states the “preferred financing for the investment of R60 billion to cover just transition priorities will require maximum concessional and grant funds”.

Decomissoning coal plants alone will require a R475 billion boost within the renewable energy sector in capital investment over the next five years.

This is an ask, considering maintenance backlogs ranging in the R245 billion mark.

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Gas not the answer for SA

Investment in alternative energy sources to achieve net-zero carbon emissions by 2050 include replacing South Africa’s heavy reliance on coal with renewable energy, such as wind and solar power, and battery storage.

But another contentious “transition” energy source government is eyeing is liquified natural gas (LNG), which requires infrastructure even the JET-IP categorised as “sensitive”.

Gas exploration involves on- and offshore exploration, conducted in the ocean through seismic surveys, and on land through hydraulic fracturing, or fracking for short.

These processes aim to release natural gas, which is in turn used as an energy source.

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Just Share climate risk analyst Lorena Pasquini told The Citzen the JET-IP primarily considers gas to be a “peaking” or standby fuel, much like diesel currently is.

She said including gas, which is still a fossil fuel, in South Africa’s JET threatens the country’s net-zero emissions goal, and is “also a wholly unnecessary decision” with renewable energy options.

“Despite what those with vested interests would like us to believe, gas has been shown not to make financial or environmental sense, given all the other options available,” Pasquini emphasised.

Meridian Economics argued that investing in a large-scale gas-to-power strategy “creates significant economic and environmental risk”.

This refers to the country’s “Gas Master Plan” (GMP), compiled in 2012 before renewable energy costs dropped by 50%, and gas costs soared.

At the time, the plan, which formed part of the National Development Plan, saw gas as a “clean, viable replacement for coal”. But a decade later the GMP has not aged well.

Meridian pointed out that the use of any fossil fuel will also bring penalties in future, such as carbon tax costs.

Relying on gas could also reduce investor appetite and could even affect the financial support integral to assisting the country’s JET.

According to multiple recent studies, the country’s power needs “can be met both now and in the future with very little use of gas,” the organisation said.

A study published by the International Institute for Sustainable Development (IISD) argued any investment in gas in the country should be delayed “until at least 2030”.

“By the time it may be needed in a ‘balancing’ function (i.e. when SA has an energy mix that is predominantly renewables), the role for gas may well have disappeared altogether.”

Meridian Economics’ study concludes that large-scale gas used to generate power will increase the cost of electricity by over 40%, while increasing greenhouse gas emissions sevenfold, when compared to renewable energy.

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“Vested interests – those pushing a narrative that major investment in gas is necessary for South Africa’s energy access and security – are doing so for their own short-term profits.

“It will come at huge expense to the country’s long term interests,” warned Pasquini.

“Rather than providing a ‘bridge’ from a fossil fuel economy to a renewables future, investment in fossil gas exposes South Africa to multiple risks we cannot afford (like exacerbating climate change, stranded assets, infrastructure lock-in; exposure to fluctuations in global gas prices).

“We also cannot afford to miss the opportunities presented by renewables (low emissions and cheapest pathway – including most affordable for users; diversified energy supply).

“Investing in fossil gas is a dangerous distraction from the urgent need to rapidly increase renewable energy production and upgrade SA’s transmission infrastructure,” Pasquini said.

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