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Out of step

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Out of step

21st February 2020

By: Terence Creamer
Creamer Media Editor

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There were indications already at the World Economic Forum, in Davos, Switzerland, that South Africa was out of step with the main themes occupying the minds of most global government and business leaders. The overwhelming thrust of the 2020 gathering was about dealing with the existential threat posed by climate change in a way that did not undermine economic growth and development.

South Africa, by contrast, stuck to its far more parochial open-for-investment message, despite the fact that one of the main ingredients for attracting investment – reliable and cleaner power – remained elusive. Even more bemusing for potential foreign investors was the fact that South Africa was making very little effort to leverage its natural-resource advantage in a way that could derisk its power sector, which is widely acknowledged to pose the single biggest threat to investment and growth.

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The solution, from the outside at least, is blindingly obvious: rapidly scale up renewable energy. Why? Because wind and solar photovoltaic (PV) represent the country’s cheapest new-build option and investing in such generators at a time of supply shortages is, thus, a no-regret move. What’s more, investors are increasingly concerned about the source of their electricity, and many are actively seeking cleaner energy platforms on which to operate so as to mitigate any possible future trade, regulatory, tax or consumer penalties.

The importance, to the international community, of this clean-energy transition was amplified again last week when the International Energy Agency hosted the latest in its ‘Big Ideas Speaker Series’ in Paris, France. Ministers, ambassadors and high-ranking officials representing countries as diverse as the UK, the US, Japan, Spain, Poland, Denmark, Singapore and Kenya were united in the view that a transition to carbon neutrality was not only urgent but also increasingly non-negotiable.

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Making such a transition, the participants acknowledged, would depend largely on scaling up investments into wind and solar PV to decarbonise the electricity component of the energy sector. Once achieved, the other components, such as mobility and heating, could then be partly decarbonised through greater electrification. For those difficult-to-electrify sectors, meanwhile, attention should be given to ramping up the production of clean hydrogen solutions.

Also accepted was the need for an accelerated ramp-down of existing coal and a decisive pull-back from any new coal. The UK’s Business, Energy and Clean Growth Minister, Kwasi Kwarteng, was the most strident in making the case for an accelerated withdrawal. Britain, he noted, had, at one point, been more dependent on coal for its industrial development than any other country. At their peak, in 1913, the country’s mines produced 287-million tons of coal. By 2016, the figure had fallen to four-million tons and, remarkably, in 2019, coal accounted for only 2% of UK electricity generation.

“We have managed to reduce that footprint almost without any major negative economic effect and I think we have demonstrated that it is possible to wean ourselves off coal as a global community more quickly than many people think,” Kwarteng said

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