Quick roll-out, consumer levies and retraining of staff are key to ensuring green economy benefits all in SA
How will we care for our coal workers as we transition to sustainability? They are people with families; they matter. And yet, their occupation is slowly expiring. Earlier this month, Eskom indicated that it plans early closure of four coal-fired power plants and that lost production will be made up from renewable sources.
Stakeholders and activists are concerned, and rightly so. There was a demonstration in Tshwane by stakeholders involved in coal transportation, and Earthlife Africa recently won the country’s first climate-change litigation in the High Court in Pretoria.
The court referred the appeal against the environmental authorisation for a coal-fired power station at Thabametsi in Limpopo back to the Department of Environmental Affairs, finding that its climate-change effects had not been properly considered.
Change is in the air, domestically and internationally, and the news is good — if we can manage a compassionate transition that delivers new economic opportunities in the place of those lost as a result of reduced coal demand. A rapid roll-out of renewable energy can do this.
Let’s start with where things are going internationally. TheFinancial Times reported that coal use fell off a cliff in the UK in 2016, down by more than half from 2015, when the landmark Paris Agreement was signed. The deal was supported by all major countries and envisions complete decarbonisation after 2050.
Bloomberg reports that the cost of offshore wind power fell 22% in 2016 and looks set to join onshore wind in being more affordable than coal or nuclear.
Installed solar photovoltaic (PV) power doubled globally between 2013 and 2016 and will also have doubled between 2014 and 2017. The long-term growth rate for onshore wind is well above 20% a year. Jobs in renewable energy reached more than 8-million in 2016, according to REN21’s Global Status Report.
The competitive advantage of renewables is set to increase substantially in the next 10 years, as reported in data compiled by the International Renewable Energy Agency (Irena). The parallel transition in SA is inevitable.
Renewable energy is performing well — costs are already at or below the projected 2025 Irena rates for onshore wind and solar PV, and studies by the Council for Scientific and Industrial Research show that a future path of renewables plus flexibility (gas/storage) saves the country tens of billions of rand a year, saves water and reduces carbon emissions.
It also brings hundreds of billions of rand in private investment into infrastructure development and removes the risk of power plant cost overruns for consumers. The future system is robust and dependable, able to meet the demands of a modern economy.
What we’re seeing in SA is a microcosm of a global society having to adjust to a new and far more sustainable world order. The change will be disruptive — the challenge will be to make the transition work for incumbents in coal and other sectors that will be phased out over the next three decades.
About 80,000 people work in our coal mines. If we add the entire supply chain, it might be 100,000. Many will work out their productive careers and then retire where they are now — the steep cuts in coal use will only start in about 10 years and then accelerate. So by 2030, at most there might be 30,000 in aggregate, with the majority of these redundancies only happening after 2025.
To put the 8-million international jobs in renewable energy into a local context, the Department of Energy’s December 2016 Overview of the IPPPP (independent power producers procurement programme) report lists 29,000 person years of jobs having been created. This is in building only about 3,000MW of the perhaps 150,000MW of renewables ultimately to be constructed in SA. By 2030, in an aggressive scenario, we might have built 50,000MW.
It is thus safe to say that the country can absorb coal workers — or the equivalent numbers of retrenched workers — into a rapidly growing renewable energy sector in the years leading to 2030.
Then, the “one dollar” question: can we afford it? (“One dollar” because we so clearly can). If we assume 3,000MW of new renewables projects being procured annually, those supply chains will already absorb many. But the power we buy will be costing perhaps 20c to 30c/kWh less than Eskom’s average selling price of electricity and perhaps 40c to 50c/kWh less than new power from the Medupi and Kusile stations.
If we decide to add a 2c/kWh “low-carbon transition levy” to the electricity price of new projects in the renewable energy independent power producer procurement programme, to be recovered from the consumer, huge amounts of capital would be leveraged.
Let’s do the maths: the 3,000MW would produce perhaps 8,000 gigawatt hours of electricity a year. A levy of 2c/kWh would yield more than R160m in year one, in excess of R320m in year two, and more than R2bn per annum by 2030.
This is clearly sufficient to support former coal workers while we retrain them in renewable energy and other aspects of the green economy, should they be willing.
Already, the country has a world-class training facility called the South African Renewable Energy Technology Centre (Saretec) where wind turbine technicians can be trained to such a high standard that it opens up serving the world market. The centre also trains people in solar power and energy efficiency.
The South African Renewable Energy Business Incubator works to support and build capacity for smaller businesses that are responding to opportunities in this space.
From the consumer’s perspective, paying this levy is still an incredibly good deal. The risk of huge cost overruns at megaprojects such as Medupi, Kusile and Ingula would be retired for good, as would the need for the country to “pay as you go” on building new power plants. Capital would be sourced from the private sector and the country would only pay for electricity when it is connected to the grid and producing. Over time, the cheap renewables would abate the trend of steeply increasing electricity prices, eventually halting it.
A deliberate attempt to ensure the wellbeing of the coal workforce will create additional political capital and impetus for the transition. Indeed, creating a green economy was a fundamental consideration in the National Economic Development and Labour Council when the decision was made about seven years ago to create the progressive Green Economy Accord between the government, business, labour and civil society and to roll out the renewable energy independent power producer procurement programme.
There are many ways to make a mindful transition to a low-carbon future; it is for us as South Africans to decide collectively how best to do it. What matters is that it makes sense, that we have the capacity and that however we may structure the finances, the benefits are far greater than the cost.
SA has blazed an international trail in combining renewable energy development with sustainable development. It is often said that the latter is a “people-planet-prosperity” triangle. We have the chance to be a global pioneer again in the way we care for and redeploy workers in the coal sector. They deserve it, and we can afford it. This is an occasion where we can all win.
• Van den Berg is a member of the Ministerial Advisory Council on Energy. He writes in his capacity as team leader at Skrander.
Source Business Day