South Africa’s energy sector is at a crossroads, facing several challenges that will significantly impact the country’s future. These challenges include rising energy demand, the need to reduce carbon emissions, an ageing and unreliable electricity infrastructure, and the necessity to provide affordable energy to all South Africans and businesses of varying sizes. More acutely, we know that loadshedding is having an enormous impact on our economy, with Stage 6 loadshedding costing the South African economy R1 billion a day, resulting in lower economic output and job losses.
We need to address our current energy crisis; there is no debate on that. And this must be done with urgency and a strong bias for action over talk. In this regard, we must recognize the continued efforts by so many in the country to work together to solve the critical challenges in the country. The partnership agreement between government and organized business through Business for South Africa last month is a testament to the desire by all of us to remove the barriers to inclusive economic growth and job creation – including the energy crisis through the National Energy Crisis Committee (NECOM).
There is broad agreement that this renewed partnership between business and government can create room for change and speed up the reforms required to build an inclusive economy from which all South Africans can benefit. But to achieve this, a laser-like focus and flawless execution of three immediate priorities – improving logistics performance, dealing decisively with crime and corruption and stabilizing energy supply – is paramount.
As we address our energy crisis, we must, in tandem, cast our eyes beyond it and toward an energy transition that provides security for growth and prosperity in the long term. How we tackle it is contested, but there is broad consensus that the transition must be just – delivering equitable gains for South Africans.
This mammoth task must be planned inclusively, helping bring about affordable electricity, involving and empowering communities in power generation, and protecting the environment.
South Africa must manage this transition while addressing deep economic and social deficits. The risk of further economic and social decline is very real if the industries that shape and drive our economy are not supported through the transition, which must be done as we capitalize on vital new energy generation growth opportunities. This will require a collective national effort and strong partnerships between government and business.
A lot is at stake here, and South Africa must shift its energy policy from theory to action — or risk our ability to attract investment and fund the planned transition.
In a recently-released research report, titled Powering Progress: Policy shifts and economic frameworks to enable South Africa’s energy transition, sponsored by Anglo American, working with the Economist Intelligence Unit (EIU), a way forward is explored through the lens of regulatory and fiscal interventions needed to enable a just energy transition in South Africa.
One of the most crucial findings of the research is the importance of implementing creative and timely social policies to ensure a just transition, particularly with a focus on the affected groups, such as South Africa’s
youth. This is what embracing a just energy transition is all about: delivering equitable gains while transforming energy systems that are built on inclusive principles.
Powering progress requires action
Making a plan for South Africa’s current reality must address the need to restore crucial energy to the grid and fulfil our climate commitments to unlock investment.
One approach that offers a proven method for expanding power infrastructure is public-private partnerships (PPPs). By combining government guarantees for power purchases with private-sector financing and technical expertise, PPPs play a critical role in advancing the transition to the next stage.
In the short to medium term, one other essential intervention and cause for hope is the Resource Mobilization Fund (RMF). Established by Business for South Africa, the RMF serves as a way for local businesses to support the implementation of the Energy Action Plan. It embodies the necessary collaborative approach we need between government and social partners. To that end, Anglo American has already donated R10 million to the RMF, which will be used to provide technical support and capacity to NECOM.
This dovetails with another significant long-term initiative: South Africa’s Just Energy Transition Investment Plan (JET-IP). Together with NECOM and other initiatives, the JET-IP represents an important and positive step the country is taking toward addressing the needs of key stakeholders and creating a partnership that will deliver on the implementation of plans at both a national and community level.
By establishing supportive regulatory frameworks and implementing policies, we can quickly create a catalyst for new and more extensive investment. The opportunity to access global pools of capital to support such investment is nearly immeasurable, and South Africa must demonstrate its readiness and willingness to attract that investment.
How can we leverage the transition to clean and reliable energy as a springboard for unlocking a nation’s growth and development potential?
In addition to the jobs, opportunities, and businesses that arise from a supply of clean and affordable power, it is undeniable that increased grid capacity and stability will also attract new investment to South Africa, while furthering our collective decarbonization ambitions.
There is a window of opportunity for South Africa. Collectively, we must work with urgency and pace, with tangible actions that demonstrate to all South Africans that everything that can be done to address the three national priorities is being done. But also, that we’re doing everything we can do – collectively – to ensure that our country prospers in the long run. And access to clean, reliable energy is foundational to this prosperity.
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