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New coal power will cost South Africans much more, report shows

15 November 2021 at 11:31 am

Expert analyses completed by the Energy Systems Research Group (ESRG) at the University of Cape Town and the Climate Equity Reference Project (CERP) have found that government’s plans to procure 1500 MW of new coal-powered electricity will cost at least R23-billion more than a least-cost optimal electricity plan for SA and will result in 25 000 economy-wide job losses by 2030.

Government’s plan to procure 1500 MW of new coal-powered electricity generation will result in South Africans footing the bill for more expensive electricity, while increasing greenhouse gas emissions to levels that are incompatible with South Africa’s commitment to reduce its emissions under the Paris Climate Agreement. This, as South Africa currently participates in the 26th annual climate change COP in Glasgow and has just committed to a coal phase out deal with the EU.

This is the expert analysis of a new report by ESRG that investigates two scenarios to assess the consequences of building the new coal capacity targets contained in the 2019 IRP.

The first scenario, or reference scenario, takes into account recent trends in the decline of economic growth rates, the economic impact of Covid-19, lower electricity demand, and Eskom’s fleet performance to closely reflect current and projected reality in South Africa. The second, or climate policy, scenario, assumes that South Africa has revised its Nationally Determined Contribution (NDC) to be compatible with the global goals contained within the Paris Agreement to limit warming to well below 2oC and pursue efforts towards 1.5oC. An addendum also models the impact of building this 1.5 GW of new coal in light of the recently revised stricter emission targets in the NDC of September 2021.

The assessment was commissioned by the Centre for Environmental Rights (CER) on behalf of the African Climate AlliancegroundWork, and the Vukani Environmental Movement in Action.

A least cost electricity plan for SA would not include any investment in coal

“Our modelling shows that under the two scenarios tested, new investments into coal-based power generation are costly and unnecessary for South Africa. Building the planned 1.5 GW would both increase greenhouse gas emissions and power system costs,” explains Jesse Burton, a researcher at ESRG.

In each scenario, the models were run with and without the 1500 MW of new coal capacity forced in, to note the differences in various indicators when new coal plants are included in the system relative to when coal plants are excluded from the power system. The results were clear: forcing new coal into a plan that meets electricity demand consistently to 2030 and beyond would incur additional costs of at least R23-billion in the reference case, or a 0.5 percent increase in the electricity price.

“Building new coal into South Africa’s electricity system will raise costs even when climate goals are not considered, and it also makes the achievement of the country’s fair share contribution to climate change vastly more expensive. If a new least cost plan were to be adopted, it would not contain any new coal power investments,” Burton says. “This is because building new coal plants, with today’s realities, simply does not make economic sense, when compared with more affordable, feasible and cleaner alternatives”.

When ESRG ran the model using South Africa’s recently updated greenhouse gas emission targets in the NDC pursuing emissions reductions and new coal power would increase costs to between R74-billion and R109-billion. In other words, if South Africa is serious about meeting its international and Constitutional obligations to reduce greenhouse gas emissions in line with its recently updated NDC, and still plans to build the 1.5 GW of new coal, the additional costs to SA of pursuing this new coal capacity would be between R74 and R109 billion.

New coal-fired power will result in long-term job losses

In addition to the unwarranted expense, new coal-powered electricity generation will result in a small negative GDP impact, reducing economic growth by 0.11 percent in 2030 and 0.08 percent in 2040 compared to the reference scenario without forced coal. It will also result in job losses of around 25 000 in 2030 across the economy.

“When we assess the employment creation opportunities in South Africa of different power system build plans we find that the highest employment creation across the economy comes from a high renewables system,” Burton says.

New coal-fired power incompatible with South Africa’s climate Fair Share

 The results of the ESRG report also underscore the findings from a report by the Climate Equity Reference Project (CERP), which finds that new coal investment as outlined in the 2019 IRP is inconsistent with South Africa’s fair share of the global mitigation effort required to adhere to the Paris Agreement temperature goal to limit global temperature increase to 1.5°C.

According to report: South Africa is the leading economy in Africa and an important member of the global community that stands among the top 15 greenhouse gas emitters. Given that trust in a global cooperative solution to the climate challenge depends fundamentally on countries making equitable contributions, South Africa would be contributing to undermining that trust, and diminishing the global resolve to address climate change, if it were not to fulfil its fair share. This, in turn, threatens the climate, safety, and livelihoods of South Africa’s own citizens.”

“Proponents of new coal often argue that it is cheap, that it is important for jobs and that power systems require coal plants to provide reliable power. In fact, our investigation shows that coal power is no longer competitive or technically necessary and that a high coal future actually leads to significant job losses in the country compared to a renewables-dominated build plan,” Burton says.

Watch Jesse Burton in conversation with Chris Yelland.

FOR EDITORS:

ESRG’s assessment of the cost of new coal power generation and CERP’s report on South Africa’s climate Fair Share are the final reports in a series of expert analyses of the consequences of new coal-powered electricity generation in South Africa, commissioned by CER in support of the #CancelCoal campaign. Other reports in the series have examined how future climate change harms will affect the lives of people living in South Africa in the future, the mental health consequences of climate change in South Africa and the myth of clean coal.

For more information and copies of the reports please contact Nozuko Poni: [email protected]

The Centre for Environmental Rights is a non-profit organisation and law clinic based in Cape Town, South Africa. As a group of activist lawyers, the CER helps communities and civil society organisations in South Africa to realise our Constitutional right to a healthy environment by advocating and litigating for environmental justice.