Picture: REUTERS/Mike Hutchings – Pylons carry electricity from South African power utility Eskom’s Koeberg nuclear plant near Cape Town, in this picture taken November 28, 2015.
By Ndzalama Cleopatra Mathebula
Eskom’s woes have been immensely felt throughout the country recently, from prompting businesses to seek energy alternatives to rising unregulated prices and damaging household appliances. Undoubtedly the trajectory of the power utility has presented shortcomings that are unsalvageable. Looking at the current poor condition of Eskom, the persistent load shedding, and the current global consensus on combating climate change, the latter deems load shedding rational.
There is reason to believe that load shedding is not only a technical problem or a management challenge but an indicator of global dialogue on climate change. Dating back to 2007, when load shedding started, and 15 years later, the challenge is not only pronounced an energy catastrophe but also qualifies as a risk that costs South Africa’s economy an estimated 4 billion per day on stage six load shedding; six hours without electricity per day. 2019 first quarter displayed the impact of load-shedding when it reduced the GDP to 3.2%, costing the economy an additional 500 million a day in lost activity. Consequently, the lost economic activity also reads as job shedding in the sluggish economy trying to recover from the COVID pandemic herein; load shedding further instigates the mounting challenges of the country’s battles.
Undoubtedly corruption and debt accumulated by the power utility are the main reasons for the load shedding, together with poor maintenance and decayed power plants. At the same time, the debt weighs heavily on the country’s already constrained fiscus, which brings us to whether Eskom is worth saving.
From a South African economic position, saving Eskom comes with avoiding significant economic fallout that risks many jobs the economy cannot afford. At the same time, a total shutdown of the utility threatens a total blackout and an impossible condition to do business and drives away significant investment. However, reading the current environmental risk climate, saving Eskom is a risk multiplier.
This argument is authenticated by a recently published report by S&P global noting the top five country risk states should be aware of in 2023; amongst those risks, energy trade-offs came in second place, stating that 2023 fiscal priorities should be aimed at accelerating green energy transitions globally.
Herein, geopolitics landscapes and combating climate change should be par, which points to policy and practice amendments at a country level. South Africa is not exempted from these climate aspirations due to its commitment to the Paris Climate Agreement and the need to curb Eskom’s carbon emissions.
Mainly because of South Africa’s COP27 commitments aimed at informing a rapid change in South Africa’s energy economy and the aim to reach net zero emissions by 2050 through a Just Transition. The responsibility should mirror practical and measurable strides that complement this net zero ambition for the greater good of energy and food security and towards combating climate change, considering what happened in the KZN province early last year.
However, there is a greater risk provided that the country’s COP27 and climate change aspirations remain a document without any implementation. The reluctant energy transition risks losing a 1.5 trillion Just Energy Transition investment, presented by President Cyril Ramaphosa at COP27, endorsed by the International Partners Group. Along with a just transition partnership between South Africa, the European Union, The United States of America, The United Kingdom, France, and Germany.
Reluctance to rapidly implement the green transition further risks, South Africa, losing an estimated 50% of its export value as a trading partner since trade commerce should reflect each country’s green energy transition commitments. At the same time, China has declared not to fund new coal-fired power plants beyond its country’s premises. Moreover, the European Union pledges to impose significant tariffs on imports from high carbon markets or countries within the European territories while banning sales of new petrol and diesel cars from 2035.
Interestingly it is good to know that South Africa is taking all necessary strides to reduce its carbon emissions. As the world achieved a reduction in carbon intensity of 0.5% in 2021, South Africa saw a decline higher than the global average of 4.6% in 2021. This is attributed to the real GDP growth of 4.9, being more significant than the 0.1 growth from energy-related emissions. However, the main reason stems from the decline in hydrocarbon-based fuels and an increase in the use of renewables. This push into high renewable usage is credited to the high persistent load shedding during 2021, where Eskom shed 2 521 GW hours, while in 2022, there was a carbon shade average of 626 GW hours per month in the first nine months of 2022.
From the evidence provided above, it can be deduced that load shedding is a prominent way Eskom can reduce its carbon emissions since Eskom has been exempting carbon compliance for several years. Eskom has struggled with air pollution standards compliance, where they have been postponing instead. Eskom is already amongst the worst polluters in the world, with 471.6 million matrix tons of carbon emitted in 2019.
In 2021 however, Dr Thuli Khumalo, the chief operations officer of the Presidential Climate Commission, rejected Eskom’s application to postpone compliance with the Minimum Emission Standards (MES) for all Eskom’s power plants. The MES was first published in 2010, a decade later, and the entity is still applying for exemption due to the failure to comply. Load shedding has been the only practical way Eskom can reduce its carbon footprint.
In establishing the nexus between Eskom, energy risk, and the global climate change consensus, it is safe to say that load shedding is a risk for South Africa’s economy. Nonetheless, its persistence does highlight two directives needed in the country’s economy. Persistent load shedding equates to job sheds but also carbon emission sheds. Thus, constant load shedding pushes the country to embrace a just energy transition.
The second directive is that of decentralizing the energy market of South Africa. Loadshedding can accelerate the Electricity Regulation Act of 2006, chapter 3’s amendments on electricity licensing. This amendment will decentralize the energy monopoly and establish a healthy competitive energy market in the country since this act states that no person may produce electricity without a license issued by the regulator. However, due to the failure of the utility to produce enough electricity for the whole country, there is a need to bring in private investors and have everyone that can produce electricity do so.
Conclusively, the betterment of Eskom is a direct contradiction of South Africa’s net zero commitment that comes with significant carbon sanctions in terms of trade and investment. This is not to say that load shedding is deliberate; however, saving it comes with a high cost that pronounces the shortcoming of South Africa’s already sluggish economy. On the other hand, persistent load-shedding point to two directives that embraces a just energy transition and the decentralization of the oligopolistic energy market oaf South Africa.
Mathebula is an MA candidate from the Department of Politics and International Relations, University of Johannesburg.