CAPE TOWN – Energy Minister Jeff Radebe must have been smoking his socks last week when he stood before an audience of local and foreign business people in the energy business and told them that there remains a place for coal in power stations in the future.
An equivalent faux pas would have been trying to lobby for the health benefits of cigarette smoking at a lung cancer convention.
At least he acknowledged some of the changes that are occurring in the global energy industry. The short and the long of it is that coal is dying, because climate change has made its environmental cost too high.
Coal is the biggest contributor to climate change.
The Intergovernmental Panel on Climate Change said recently that coal-power generation needs to be substantially cut by 2030 and phased out by 2050.
New coal plants, which could have a lifespan of more than 30 years or more, are impossible to reconcile with these requirements.
Institute for Energy Economics and Financial Analysis research, according to reports, shows that more than 100 major global financial institutions have introduced policies restricting coal funding. In South Africa, three of the top four banks will no longer fund the building of coal power stations.
Chinese financial institutions have been picking up the baton of funding new coal plants outside its borders, but this credit has become harder to access as the trade dispute between the US and that country worsens.
Coal is well on its way out in developed countries, though. In the US, coal-fired power plants have been closing steadily since 2013.
Germany, one of the biggest coal users on the planet, announced this year that it will close all 84 of its coal power stations over 19 years. Sweden’s last coal plant will close in 2022.
Austria, Italy and Ireland will phase out coal by 2025, France by 2021 and Denmark by 2023.
In South Africa, more than 80percent of Eskom’s electricity is from coal, and with their average coal power plant age at 37 years, big decisions will need to be made within the next 10 years about what to replace them with.
It emerged last week from a conference in Cape Town that the cost of replacing and bolting-on new power plants just to meet anticipated demand over 10 years might cost R1trillion.
Eskom is already struggling to keep the lights on and deal with R500billion of debt, never mind trying to find the muscle to pay for additional generation capacity in the years ahead.
But aside from the financial dilemma, there are likely to still be debates as to what is going to drive electricity production in the future. The Department of Energy’s new Integrated Resource Plan, expected to be made public soon, is not likely to be the last word on this.
Will it be renewables such as solar and/or wind, for which, at this stage at least, there seems to be substantial natural and financial resources; or will it be nuclear?
Will the country begin sourcing a greater amount of energy from the renewables projects of its neighbours? Will a national gas pipeline grid be set up so that we can participate in large gas finds in Mozambique, Namibia and in the Southern Ocean?
Radebe still seems to think there will be a case for so-called clean coal technology, or carbon, capture and storage technology.
But this technology is still not yet commercialised – any new technology in the energy field, especially untried, is likely to cost a great deal more to produce electricity, than conventional energy generation sources.
Eskom has said it wants 44percent of its energy supply to be from coal by 2030 and it will then reduce to 30percent.
But honestly, why bother with coal. Do not invest in dying technology.
Environmental concerns and focused policy are starting to play a bigger role in the lives of ordinary people, as evidenced by the introduction of next month’s carbon tax.
Pressure to quit South Africa’s addiction to coal will not go away.
In contrast, there has been no shortage of private sector funding for the renewable energy programme – it has attracted R250bn of funding for projects – and the growth of these operations could counter the effects of 87000 coal mining jobs that might be lost over time.
Also research and economies of scale are bringing down the costs of solar and wind energy production, all the time. Clearly there is no single, quick-fix solution to South Africa’s electricity woes.
But why swim against a global tide, with solutions that nobody else is trying? South Africa could have cheaper, cleaner and more reliable electricity – and fulfil its climate-change commitments – if it swops to renewable energy sooner rather than later.
As with all movements of global change, especially when there is technology involved, you either become part of it, or you fall behind.
It’s that simple.