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Progress in South Africa's energy policy has been plagued with delays caused by President Jacob Zuma’s former government’s interests, unresolved questions about the ‘just transition’ away from coal-based electricity generation, and fossil fuel industry pushback. Both the Department of Energy's Integrated Resource Electricity Plan and the Government's Carbon Tax have been delayed for two years, with neither yet in place. The financially struggling state-owned power utility Eskom has only just signed long-awaited power supply contracts with renewables companies, again after two years of delays, putting the country's investment attractiveness for renewables at risk. With the inauguration of new President Matamela Cyril Ramaphosa in February 2018, the Department of Energy has yet to release its long-awaited update of South Africa’s plan for future energy supply.
After almost two years of stalling, in February 2018, the Department of Public Enterprises finally gave approval to the Department of Energy and state-owned grid operator Eskom (and owner of the majority of South Africa’s coal plants) to sign the outstanding power purchase agreements with renewable energy companies. After court action by mining worker unions caused further delays, Eskom finally signed the agreements in April 2017. Together with Eskom’s ongoing financial struggles, these events continue to create high uncertainty for the future of renewables in South Africa.
The exact start date for South Africa’s planned carbon tax remains uncertain; it may start by mid-2018 after additional Parliamentary hearings. And yet, external analysis shows the carbon tax in its final form may provide exemptions for up to 95% of emissions during the first phase up to 2022.
While South Africa may get close to meeting its 2030 NDC target; it is weak, and the CAT rates it as “Highly Insufficient”. South Africa does have a strong renewable energy target for 2030, but its coal-fired generation, which supplied 92% of electricity in 2015, is still expected to grow, with many new coal plants planned and under construction.
South Africa’s Nationally Determined Contribution (NDC) contains a target to limit greenhouse gas (GHG) emissions including land use, land use change and forestry (LULUCF) to between 398 and 614 MtCO2e over the period 2025–2030. This target is equivalent to a 19–82% increase on 1990 levels excl. LULUCF. Although South Africa is one of the few countries that has put forward absolute emission reduction targets in their NDC, we still rate this target “Highly insufficient”.
South Africa’s NDC is consistent with its pledge under the Copenhagen Accord, which proposed emissions reductions below business-as-usual (BAU) levels, incl. LULUCF, by 34% in 2020 and 42% in 2025. This represents a 19–73% increase in emissions excl. LULUCF in 2020 and a 19–82% increase in 2025 on 1990 levels, excl. LULUCF.
According to our analysis, under its currently implemented policies and continued low economic growth, South Africa will reach the higher end of its 2030 emission reduction targets in 2020 and 2025, and gets close to its mitigation target in 2030. Emissions projections for 2030 are 27 MtCO2e higher than the upper end of the target for 2030. The CAT’s projections show South Africa’s emissions trajectory under its implemented policies in 2020 and 2030 are expected to increase by 74% and 90%, respectively, on 1990 levels excl. LULUCF. If South Africa’s economy were to grow again, emissions levels up to 2030 may be expected to increase.
One of South Africa’s key policies to reduce emissions is the Integrated Resource Electricity Plan (IRP) 2010–2030, which sets a renewable capacity target of total 17.8 GW for 2030. However, the plan foresees coal generation growing at a similar rate. By 2030, the IRP base case expects South Africa to have 21% of electricity generation from renewable energy and 48% from coal.
Renewables deployment has been hampered because Eskom, South Africa’s state-owned grid operator and owner of most South African coal plants, stalled for months on signing power purchase agreements with renewable energy companies - finally signing them in April 2018. This delay put the financial future of those companies at risk, along with the renewable energy capacity target, and has reduced the country’s renewable energy investment attractiveness. Uncertainty around Eskom’s financial solvency will remain a contributing factor to overall planning uncertainty and delays in progress on renewable capacity extension. A carbon tax bill has finally entered the Parliamentary process in February 2018 after two years of consultations. The final draft is expected to be completed by mid-2018 after further consultation.