A long-term Egyptian recovery in place since currency devaluation in 2016 can resume after the war between Russia and Ukraine ends, Mathias Althoff, ... partner at Swedish frontier markets investor Tundra Fonder, tells The Africa Report.
South Africa in 2020, used coal for 74% of its energy needs, more than twice the average of 31% among G20 countries, according to Climate Transparency. Gas has been proposed as a way to reduce that dependence.
TotalEnergies said in March that it is planning to develop its South Africa gas discoveries, and regulators expect South Africa’s first offshore gas production in the next five years. Mozambique’s LNG is also seen as a resource. Energy company Gigajoule aims to build a terminal at Matola in Mozambique in partnership with TotalEnergies to supply South Africa.
Yet the reality is that South Africa has no need for gas until at least 2035 and a decision on adoption can be delayed until around 2030, according to a report from the Canada-based International Institute for Sustainable Development (IISD) published in March. Given cost trends in renewable energy and batteries, these are likely to be the cheapest option in the 2030s, the IISD says.
- By then, new technologies such as green hydrogen may also have matured sufficiently to play a role, the report says.
- In the meantime, there should be a moratorium on the development of the gas-to-power sector, it argues.
- The short-term focus should be on the rapid addition of least-cost renewable capacity coupled with storage, and increasing energy efficiency, the report says.
The report’s conclusions are strongly supported by Emma Schuster, a climate risk analyst at shareholder activism organisation Just Share. Gas is “not clean, nor climate or environmentally friendly,” she says.
South Africa does not need to build a new, fossil-fuel-based system to ensure energy security, Schuster argues. The country cannot afford the risks associated with an investment in gas, which includes exacerbating climate change, creating stranded assets, and getting locked in to specific infrastructure formats. Renewables offer the cheapest pathway for users and are capable of offering a diversified power supply, she argues.
Investing in fossil gas is “a dangerous distraction from the urgent need to rapidly increase renewable energy production and upgrade South Africa’s transmission infrastructure,” Schuster says. “It is absolutely clear that the focus should be on the rapid build-out of an energy system based on renewables.”
While corporate actors will argue for gas to justify exploration and production, the case for gas in South Africa is “very skimpy”, says Saliem Fakir, executive director of the Africa Climate Foundation (ACF) in Cape Town.
- If the world achieves significant decarbonisation in the coming decades, then cheaper gases will still have a role as “gases of last resort,” while more expensive gases will be dropped, he says. South African gas is likely to be at the more expensive end of the range, Fakir argues.
- Renewables constitute the “most competitive resource” for South Africa, Fakir says. Solar use can be scaled up in a decentralised way which is not possible for coal, nuclear or gas, he says. “The government doesn’t have funds to build a whole system.”
- Globally, there is little point in setting net-zero targets for 2050 unless there is a “radical shift away from gas”, Fakir says. “We’ve got to invest in the alternatives much more quickly.”
A quick move into new fossil fuel infrastructure could lock South Africa on the wrong path.
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