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Does Mantashe have a point on coal?

LUKANYO MNYANDA

Could Gwede Mantashe, the self proclaimed “coal fundamentalist” have a point? It’s not a question usually posed with any seriousness as the mineral resources & energy minister is assumed to be out of touch and not much of a realist when it comes to the country’s future energy needs.

Which is something that may even make the question academic in nature.

The UN climate change summit is just two weeks away and SA, the continent’s largest emitter of greenhouse gases and the 12th globally, is set to take centrestage. It is assumed that unveiling a plan that moves SA towards a so-called green transition will be one of the markers for success. Speaking at a Jewish Board of Deputies conference on Sunday, Eskom CEO André de Ruyter spoke of a moral imperative, on top of the economic incentives, to protect the country’s exports from potential penalties on carbon-intensive products.

But last week, Mantashe told Bloomberg that while the country is keen on getting funding to help reduce its environmental footprint, this should not come with any conditions, such as a ban on new coal-powered projects.

It’s worth noting here that the country’s long-term energy strategy envisages the development of 1,500MW of new coal capacity. The dirty fuel accounts for 80% of the country’s electricity, and any transition is going to be hard work.

What makes Mantashe’s comments interesting is the timing. Not just two weeks before the Glasgow conference but at a time when the world is facing an energy crunch and the rich countries seem to be losing their nerve. It might seem ludicrous now to say just 18 months ago that the price of crude oil was negative, and people were openly questioning whether Sasol, SA’s secondbiggest individual emitter, would even survive.

Last week, The Economist pointed out that the green era, which has barely begun has already had its first big energy shock, with a basket of oil, coal and gas having surged almost 95% since May. Quite a few big countries are already wavering in their net zero commitments.

France, which relies almost as heavily on nuclear as SA does on coal, has launched an energy plan that calls for new generation reactors at a cost of €1bn to the fiscus. There is a raging debate in Europe about whether nuclear should be regarded clean and therefore central to the region’s decarbonisation plans.

Coal has long ceased to be a main component of the UK’s energy mix, contributing just 1.6% in 2020, down from about 25% just five years ago. It was just two months ago that the prime minister, Boris Johnson, invited outrage by giving credit to Margaret Thatcher’s mine closures in the 1980s, which were all about breaking trade unions’ power and nothing to do with the environment, for giving the country a “big early start” in fighting climate change.

A combination of low winds and surging demand, and prices, for natural gas led the country to turning its coal powered stations back on. According to a report on Sky News, this meant that up to 5% of the UK’s power was coming from coal, in a country that’s been long assumed to have jettisoned the fuel source.

So in this context it might not seem unreasonable to ask, as Mantashe does, why SA’s government should tie its hands and those of future administrations based on an agreement signed with foreign governments and institutions. SA is a democracy after all, and shouldn’t it also retain the type of flexibility that governments in France, the UK and China have?

The answer could be that SA is different in that it’s the one that’s asking others to fund its transitions, and it’s therefore a little naive to expect the R180bn it reportedly wants to come with no strings attached.

There are lots of numbers doing the rounds, such as the forecast that SA may need about $300bn, not far short of the country’s GDP, to expand renewable energy sources and move away from coal over the next three decades.

“They must not give us conditions, they are developed countries,” Mantashe told Bloomberg. “We are a developing economy, they must talk to our programme.” What’s not clear is why they should be concerned with “our programme” at all.

While there is an incentive for SA to be, as the Brookings Institute’s Amar Bhattacharya put it at a webinar on Friday, a “poster child” of what’s needed, there’s also surely a limit to that and SA can’t expect to be dictating the terms.

With COP26 coming at a time when there is an energy crisis and questions are being asked whether long term decarbonisation plans are compatible with energy needs today, it might be easy to argue that Mantashe’s scepticism has been proved correct. But that will be the wrong conclusion.

SA probably doesn’t need to make pledges about noninvestment in new coal plants and outwardly cease sovereignty to foreign entities.

The economics will take care of that. Mantashe can talk about new coal plants as much as he likes, but the reality is that such projects are unlikely to find funders.

The main question to be answered in Glasgow is whether the investment in renewable energy will be fast enough to meet current and growing energy demand.

There might well be temptation to backtrack, with China last week having suggested that it will slow its green transition with a focus on the stable supply of energy.

This might turn out to be a pointless debate for SA.

Bhattacharya said the answer is to move faster on the transition to renewable energy. Mantashe may, or may not be correct. Ultimately it won’t matter as SA has less wiggle room than he imagines.

HE CAN TALK ABOUT NEW COAL PLANTS BUT SUCH PROJECTS ARE UNLIKELY TO FIND FUNDERS

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2021-10-18T07:00:00.0000000Z

2021-10-18T07:00:00.0000000Z

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