John Kane-Berman writes on the dangers of the deal the wealthy world wants to strike with SA ahead of COP26
This climate deal would make our energy crisis worse
Earlier this month envoys from several rich countries held talks in South Africa to discuss a deal they want struck in time for the UN climate change conference (COP26) that opens in Glasgow at the end of the month.
According to reports in various news media, the envoys want something exciting to announce in Glasgow. South Africa, which relies on coal for 90% of its electricity and is supposedly the world’s 12th biggest emitter of greenhouse gases, is seen as the “perfect candidate”. The French ambassador to South Africa said that “striking this agreement would be one of the most important deliverables of the COP26.” American, British, and German envoys were also in the talks, along with a representative of the European Union.
Perhaps they see a commitment from South Africa as a kind of rabbit to pull out of the hat in Glasgow to show that the world is serious about consigning “coal to history”, as Alok Sharma, president of the COP26, puts it. This when even Europe, home to many green lobbies and the leading wind champion Angela Merkel, is burning more coal than it was a year ago - as is Joe Biden’s America.
Our forestry, fisheries, and environment minister, Barbara Creecy, said South Africa could be the preferred partner for substantial funding to accelerate “decarbonisation” of the economy. The envoys are apparently especially attracted by an Eskom proposal to shut down nine of South Africa’s fifteen coal-fired power stations by 2035. In return Eskom would get money to help pay for decarbonisation and installation of greener alternatives.
No doubt any decarbonisation deal will include subsidies for European firms to participate in “renewables” projects for wind turbines and solar panels in South Africa. Banks and asset managers, wary of touching coal, will come to the party.
But not everyone is agreed on the merits of sending coal-fired power plants into early retirement. Cyril Ramaphosa speaks enthusiastically about green energy. However, the mineral resources and energy minister, Gwede Mantashe, says the transition from coal to renewables should not be done in a “rush” but managed carefully lest it have adverse consequences such as the current power outages in China, India, and the United Kingdom (UK).
South Africa was a developing country, he said, and should not be subjected to conditions laid down by developed countries. We “should not collapse our economy because we agreed to green funding”.
Mr Mantashe has of course done more than his fair share to damage the economy, but that does not invalidate his urge for caution, his worry about job losses in the coal sector, his support for the addition of new coal capacity, his scepticism about renewables, or his enthusiasm for nuclear power.
The chief executive of Eskom, André de Ruyter, has said he agrees with Mr Mantashe that “we shouldn’t rush this thing”, because “we are tinkering with the aorta of the economy”.
And Mike Teke, CEO of Seriti Resources, a major South African coal mining company, said earlier this month that the “just” transition had also to be a “responsible transition”. The first world should understand that South Africa still had to deal with poverty and could not simply shut down coal-fired power stations.
According to a recent Reuters report, the major South African banks are wary about cutting off all funding for coal “because an immediate halt would [cause] huge political and economic strains”.
This country’s government-inflicted energy crisis will be with us for decades. Shutting down coal-fired power stations prematurely risks making it worse. The current global energy crisis is a warning to South Africa of the folly of placing excessive confidence in wind turbines while trying to get rid of fossil fuels. One of the best examples of this folly is the UK, whose prime minister, Boris Johnson, will be hosting COP26.
As economies recover from lockdowns, energy shortages have caused huge rises in prices, especially the price of natural gas. There once was a time when governments believed that cheap, abundant, and reliable energy was not only the backbone of any growing economy, but also essential to making it possible for living standards to rise.
Not any more. Having itself got rich on cheap energy, the developed world now has other priorities which it expects developing countries to adopt. Top of the agenda now is not growth, rising living standards, or combating poverty but “saving the planet” by cutting global carbon emissions to “net zero” by 2050.
The formula is to get rid of fossil fuels and replace them with “renewables”. Growing pressures from governments, the media, the United Nations, the usual suspects among celebrities, and lobbyists to “decarbonise” have caused a decline in investment in coal mines, oil wells, and natural gas hubs. The result: shortages and price rises.
As usual, of course, these hurt the poor, and especially the elderly poor whose winter heating bills shoot up, the most.
The counterpart of shutting down coal plants and stigmatising any further investment in fossil fuels has been rising investment in renewables. The British and the Germans are among those that have created large wind sectors. But flagging wind power this summer has led to growing demand for fossil fuels, including natural gas, of which Russia is a major supplier.
The UK, having replaced coal with wind, has only a few coal plants left and plans to shut them by 2024. It will shut five of its eight nuclear plants by the same date. North Sea gas is running out. The UK has vast on-shore shale gas deposits, but there has been a moratorium on fracking since 2019. So the British are dependent on imports of gas – at a time when everyone else around the world is competing for the same limited supplies.
The situation is rich with irony. The green industrial revolution was supposed to save the world from fossil fuels, which satisfy 83% of primary energy demand. But the unreliability of wind energy has served merely to highlight the fact that these same fossil fuels are indispensable, as climate “denialists” have argued all along.
British tabloids have been accusing Vladimir Putin of sending gas prices soaring and having the West “over a barrel”. His retort is that Europe has staked too much on renewables without having sufficient reserves in the event of shortfalls in wind power. Even The Economist, no slouch in its enthusiasm for renewables, admits that governments have not made enough allowance for the intermittency of wind energy.
“Dirty sources of energy should be expensive,” that magazine opines. “But without reliable alternatives, price increases boost inflation, lower living standards, and make environmentalism unpopular.” It adds: “After a decade of neglecting energy security, the bill is coming due.”
The magazine’s remedy for the “grave problems with the transition to clean energy power”? Governments must “redesign energy markets”.
Just as is the case in South Africa, the current British and European energy crisis is the result of policy. The climate crisis supposedly facing the planet might or might not be man made. The current energy crisis is certainly man made – or, to be more precise, government made.
* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. Readers are invited to take a stand with the IRR by clicking here or sending an SMS with your name to 32823. Each SMS costs R1. Ts and Cs apply.