One positive outcome of Glasgow’s Climate Summit was the announcement that South Africa secured commitments for $8.5 billion in financing over the next five years from Britain, France, Germany, the United States and the European Union to support the transition towards a low-carbon future, including the phase-out of coal and installation of renewable energy. The announcement represents a great opportunity for South Africa to develop new economic opportunities and create the right environment to develop local value chains and drive the creation of new jobs.
The announcement came after a commitment from the South African government to increase its national determined contributions (NDCs) which are much more ambitious than what the country put forward in 2016. However, the country remains the most carbon intensive economy in Africa — and among the G20 countries — which means the reduction in emissions should accelerate at a faster rate if the economy is to stay on track to reach net-zero.
AFRY Management Consulting completed a study in December 2021 which suggests that the NDCs presented in September 2021 would correspond to an emission reduction from the current level of 434 to 385 Mt of CO2e per year by 2030. AFRY’s preliminary assessment suggests that in order to be on track to achieve emission reductions consistent with the Paris Target, annual emissions should reduce to approximately 290 MtCO₂e by 2030, 25% lower than laid out in the Spetember 2021 NDCs. Strong NDCs accompanied by sound policy implementation could lead unlock significant opportunities in the economy.
Most of the reductions are expected to come from the phase-out of coal, which currently generates 85% of the power used in the economy. Around 120,000 people are currently employed in the coal sector, at power plants and mines. Understandably the implications of the coal phase-out have been politically contentious. Job implications need to be part of any transition plan, if the transition is to be fair and it is crucial that nobody is left behind in the shift towards a low carbon economy.
It is important to see the energy transition as an opportunity to create new jobs. A shift to renewable energy is expected to increase energy sector jobs globally and there is no reason this should not apply in South Africa too. A recent report produced by the Council for Scientific and Industrial Research found that under the most ambitious decarbonisation scenario, up to 72 000 direct, indirect and induced jobs could be created in Mpumalanga by 2030. Another earlier study conduced by HIS Markit suggested that, with a supportive policy and regulatory framework, South Africa could attract $106-billion in incremental investment to help realise its green hydrogen potential and create 370 000 jobs.
In order to reap the benefits of the transition, it is of pivotal importance to start planning now. Collaboration among stakeholders including local municipalities, labour unions and regulators is necessary to develop a re-skilling plan that has realistic timelines and that leaves no-one behind. While details about how the $8.5 billion financing will be employed have not been announced yet, part of this should be focused on capacity building and re-skilling workers that are currently employed in carbon-intensive industries. Financing could be used to set-up renewable training programmes — which could be directed to workers employed in the coal industry or integrated in secondary education. Crucially, we must ensure that any plan to shift the workforce towards renewable industries includes a plan to support women, who are currently underrepresented in energy value chains in South Africa and overrepresented among the unemployed.
The transition must also be gender balanced and studies have shown that women bring new perspectives and improve collaboration in the workplace, which will be critical to successful delivery of a fair transition that leaves no-one behind.
As a member of the Foundation, AFRY shares and supports RES4Africa’s mission and objectives. The AFRY team has been working alongside the foundation since 2014 and is committed to working with RES4Africa to support a fair energy transition in Africa. To reinforce this commitment to support the Foundation’s activities, AFRY has appointed Giuseppe De Beni (Senior Advisor with significant experience delivering projects in Africa) to further strengthen and lead the work of the AFRY team going forward.
Antonio Nodari, Head of Region Central & South Europe at AFRY Management Consulting