Over the past decade, the global energy landscape has been shifting towards more sustainable sources, moving away from fossil fuels in line with United Nations Sustainable Development Goal 7 (SDG 7). This goal envisions universal access to affordable, reliable, sustainable, and modern energy. South Africa‘s Integrated Resources Plan, 2019 (IRP), serves as a strategic roadmap for regulating energy demand and supply until 2030. It emphasizes a “just transition,” balancing the imperative to reduce carbon emissions with the need to mitigate potential job losses in the coal sector. Given South Africa’s current heavy reliance on coal for electricity generation, this transition is likely to be gradual. A critical question arises: how can the mining sector contribute to a just energy transition within South Africa?
South Africa’s energy profile and the role of coal
South Africa’s energy sector is predominantly coal-based, with coal-fired power plants generating 38 Gigawatts (GW) of electricity, accounting for approximately 74% of the country’s installed capacity in 2019. In contrast, hydro and pumped storage contribute about 3% and 5% respectively, while renewable energy makes up 7%, and nuclear power provides 4% of the installed capacity. South Africa is the 13th highest emitter of carbon dioxide (CO2), currently emitting 452 metric tonnes of CO2 annually. Despite its environmental impact, coal mining plays a vital role in the South African economy, significantly contributing to the Gross Domestic Product (GDP) and being the largest growth driver in the first quarter of 2021.
Progress in renewable energy development
South Africa has made substantial progress in renewable energy development. In April 2022, the Department of Mineral Resources and Energy launched the sixth bidding window for the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), aiming to procure an additional 2600 Megawatts (MW) of renewable energy. Legislative reforms have also been enacted to facilitate greater participation by Independent Power Producers (IPPs). An amendment to Schedule 2 of the Electricity Regulation Act, 2006, effective October 5, 2021, raised the electricity generation license exemption threshold from 1 MW to 100 MW. This change allows certain IPPs to bypass the licensing process, requiring only registration with the National Energy Regulator of South Africa.
The imperative for a just transition
The IRP underscores the need for a “just transition,” reflecting South Africa’s socio-economic realities. Coal will continue to play a role in the energy mix alongside a diversification towards renewables. Many countries, including South Africa, are part of the Paris Climate Agreement, which aims to reduce global CO2 emissions to avert climate catastrophe. At the G20 Summit in October 2021, major coal-producing and consuming nations, including South Africa, committed to ending the financing of offshore coal power plants. However, no commitment was made regarding domestic coal plants. The IRP does advocate for decommissioning poorly performing coal power plants in South Africa.
The mining sector’s role in the energy transition
The mining sector is poised to play a critical role in South Africa’s energy transition. The rise of battery storage, the use of Platinum Group Metals (PGMs) in fuel cells, and the development of green hydrogen are key areas where mining is central. Battery storage, essential for overcoming the intermittency of renewable energy sources, requires minerals like lithium. South Africa, which holds 90% of the world’s platinum reserves, is well-positioned to benefit from the growing fuel cell industry. PGMs are crucial for fuel cells, a technology that represents a significant opportunity for alternative energy development and job creation in South Africa.
Green hydrogen, which is produced by electrolysis of water using renewable energy, offers another promising avenue. Unlike hydrogen produced from natural gas, green hydrogen can be stored more easily and for longer periods, enhancing energy security. The South African Department of Science and Innovation (DSI) has launched the country’s first government-led hydrogen roadmap, inviting industry stakeholders to collaborate in shaping future policies for green hydrogen development.
Challenges and opportunities in the energy transition
The transition to renewable energy presents both challenges and opportunities for South Africa’s mining sector. The coal industry is a significant employer and contributor to GDP, and coal remains crucial for power generation. However, the IRP indicates that coal will continue to play a role in the country’s energy future, albeit alongside increasing contributions from renewable sources.
The energy transition also presents substantial opportunities for the mining sector. Minerals essential for renewable energy technologies, such as those needed for batteries, are abundant in South Africa. Policymakers must ensure that this transition is equitable, taking into account South Africa’s socio-economic conditions, the reliance on coal-fired power stations, and the necessity for a diversified energy mix.
Conclusion
South Africa stands at a crossroads in its energy transition journey, balancing the economic importance of coal with the urgent need to embrace renewable energy. The mining sector will play a pivotal role in this transition, not only in supporting traditional energy needs but also in advancing the development of new, sustainable technologies. By ensuring a just transition, South Africa can achieve a more sustainable and resilient energy future, aligning with global trends and environmental imperatives while fostering economic growth and job creation.
