Extending coal plants lifespan will not solve anything, says Crispian Olver

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The Presidential Climate Commission (PCC) objects to extending coal-fired power stations beyond their natural lifespan in its latest report on the Just Energy Transition Investment Plan (JET-IP).

Speaking at a media briefing, PCC’s executive director, Crispian Olver presented its critique of the just energy transition investment plan following widespread sectoral consultations.

He urged President Cyril Ramaphosa not to succumb to pressure to extend the power stations “as keeping them would be financially detrimental”.

Olver said the commission presented its recommendations to Ramaphosa last week highlighting that although it sympathised with the energy crunch, it supported decommissioning of plants as soon as the power crunch eases.

Last year, the president requested the PCC to conduct public and sectoral consultations on the transition plan with the intention of making a collective recommendation to the president and government in the first quarter of 2023.   

He argued that extending the lifespan of power stations would be more expensive and would not receive enough investment as many countries are moving into cleaner renewable energy.

“The least costly pathway is to pull these power stations off at the end of their economic life. Moving the decommissioning of particular coal plants by a couple of years is neither here nor there,” Olver said.

Olver suggested that the government’s overriding priority right now should be Eskom’s plan to expand the transmission grid by 8 500km by 2031.

“Grid capacity is a major constraint to scaling up the energy transition and that is a view across the board — every stakeholder, government, business, labour, civil society. Grid capacity is a national priority to solve, not only for our transition needs but also for our short-term emergency to solve load-shedding,” he said.

An expanded grid is essential for renewable energy projects to take shape. As it stands, renewable energy can be left stranded because the grid does not have the capacity for them.

Olver added that unlocking the national grid at speed and scale is key to many elements of the transition. He also added that funding in the implementation plan should be aligned with National Treasury’s evolving policy, paying particular attention to the need to simplify public-private partnerships for financing of infrastructure.

Once South Africa added sufficient new renewables, storage and peaking capacity, Olver believed there might be potential to opportunistically close more expensive coal units down ahead of their official decommissioning dates.

This comes after Electricity Minister Kgosientso Ramokgopa received the go-ahead from the ANC and cabinet in delaying the decommissioning of power plants to help stabilise the energy grid.

In its report presented to the president, the PCC recommended that alternative investment models, including public-private partnerships (PPPs), be explored to expand and strengthen South Africa’s electricity grid as an immediate solution.

The report notes that public-private partnerships funding models, with appropriate risk sharing, have been proven effective globally and in Africa and “can be a highly bankable, solid credit investment for the private sector”.

The report said the JET-IP needs to clearly indicate how the grid expansion will be financed, despite the constraints on public sector funding.

“It may be worth exploring alternative models for new investments in the state-owned transmission grid,” Olver said.

The report comes after the PCC conducted intensive public consultation with labour, business and community stakeholders.

It argues that the grid should be the key focus of the JET-IP in the coming five years and that the implementation plan should be fully aligned with Eskom’s Transmission Development Plan.

Olver said when the government drafts its implementation plan for the JET-investment plan presented at COP27, it should consider redrafting the allocation of funds to accommodate skill development, economic diversification, mine rehabilitation and worker support should be substantially reviewed, and investments increased.

The plan was drafted and signed between the South African government and the governments of France, Germany, the UK, the US and the EU at the COP26, which gave rise to the establishment of the transition plan. 

He added that the JET-IP implementation plan is being finalised and is expected to be published soon, “drawing on the recommendations arising from the consultation process, during which stakeholders also agreed that the just elements of the plan had been inadequately prioritised”.

Olver added that the PCC recommends that the electric vehicle and green hydrogen components of the plan be located within a national industrial strategy which sets out fiscal incentives and enabling infrastructure to grow the sectors, rather than to use the JET-IP as a replacement for such policy support.

Olver said he was hopeful that the country would be able to meet decarbonisation commitments, despite the likelihood of the coal decommissioning schedule being revised in light of intense load-shedding.

Last week, forestry, fisheries and the environment minister Barbara Creecy released the department’s eighth national greenhouse gas inventory report which found that South Africa’s net carbon emissions decreased by about 0.8% between 2000 and 2020.

According to the report, South Africa’s net emissions in carbon dioxide declined from an equivalent of 446 million tonnes in 2000 to 442 million tonnes in 2020.

“The greenhouse gas inventory is central to tracking the implementation of South Africa’s nationally determined contribution,” it reads.

Mandisa Nyathi is a climate reporting fellow, funded by the Open Society Foundation for South Africa