July 16, 2024

AMENDED: Partnerships are key to decarbonising the South African economy

5 min read

The ‘energy trilemma’ of delivering lower-carbon energy that is affordable and secure is an issue facing all businesses and policymakers in the energy space. bp believes the world’s leading energy companies meaningfully want to achieve all three priorities, according Bongani Khumalo, general manager: Business Development & Integration at bp Southern Africa.

In January 2023, The New York Times reported that 2022 was the fifth-hottest year on record and, even more important, the last eight years have been the warmest ever. The world is already 1.2ºC hotter than in the second half of the 19th century.

South Africa’s action plans

Clearly, urgent action is needed – and South Africa, like all others, needs to execute on its commitments and responsibilities. According to Worldpopulationreview.com, this country was the 13-largest emitter of CO2 emissions in 2020, at 435.13Mt.

It was a positive indicator in November 2022 when President Cyril Ramaphosa laid out South Africa’s five-year decarbonisation roadmap, the Just Energy Transition Investment Plan (JET-IP), to transition the country away from its dependence on fossil fuels and toward greener energy solutions.

This plan should help the country meet its nationally determined contributions target range of 350–420Mt of CO2 equivalent by 2030. South Africa plans to decarbonise the energy sector by decommissioning older coal-fired power plants, expanding and strengthening transmission and distribution infrastructure, and growing the number of renewable energy projects. The plan also envisages introducing new energy vehicles and developing green hydrogen for export.

According to Populationconnection.org, “there is a clear relationship between income and per capita CO2 emissions, with average emissions for people living in industrialised countries and key oil-producing nations topping the charts.” This would be equally applicable to South Africa if a higher economic growth rate were achieved, as it may translate into a general improvement in the standard of living, leading into increased carbon emissions.

Contributions by the business sector

South Africa’s JET-IP will need strong support from the business sector. bp, as a global group, like many of its competitors, has a clear decarbonisation plan to contribute to tackling climate change. Its goal is to achieve net zero in carbon emissions across its operations, production and sales by 2050, or sooner. It has committed between US$55 and $65 billion between 2023 and 2030 to its transition growth engines: bioenergy, convenience, electric vehicle charging, hydrogen and renewables, and power.

This is not only ‘the right thing to do’, but it also makes business sense. bpSA believes that, by offering a low-carbon supply chain in this country, it can significantly boost its operational performance by 2030.

Here are some specific examples of projects that are under way, or in the concept phase:

One of our most exciting projects is solar installation to our retail network. There are about 500 bpSA service station sites around the country, and over the next 12 months we will have added solar to over a third of them, significantly reducing reliance on the national grid.

There are several advantages to this rollout. Firstly, it will ensure our site operators have a secure source of electricity, ensuring business continuity during loadshedding. Secondly, it will make their electricity supply more affordable, helping to enhance their profitability. Thirdly, it will reduce their offtake of electricity from Eskom, which itself is still heavily reliant on fossil fuels for generation.

Our strategic thinking on alternative energy offerings to meet industry needs is integrated with that of our B2B partner Masana Energy Solutions, which we supply with fuel and lubricants. Masana’s customers are spread across several industries including mining, commercial road transport and agriculture. Some of Masana’s customers are looking for an alternative energy offering, and we are considering how we can supply cleaner fuels, including bio-energy and liquefied natural gas (LNG).

Globally, bp has made substantial investments in bio-energy and is looking to scale up this business significantly in the next decade. It is looking at biofuels from a number of sources, ranging from used cooking oil to sugar or gas captured from landfill sites. Biofuels can be used alongside fossil fuels e.g. to make a lower carbon blend. There could also be an opportunity for South Africa to earn revenue from all these initiatives, particularly when its regulatory framework on biofuels has been finalised.

We are excited that Transnet National Ports Authority has issued a tender invitation to build an LNG terminal at the Richards Bay Port, which would be the first of its kind. South Africa already has a well-established supplier of natural gas to industry, but we believe there will be an opportunity to accelerate the scale of this supply by participating in the infrastructure.

Just transition and partnerships are key

South Africa’s decarbonisation efforts will require partnerships, not only within the energy industry but between industry and the government. It is critical for the government to drive policy and regulations that will accelerate the ramp-up of alternative energy solutions in line with the JET-IP. We have already seen progress in this area e.g. the government’s lifting of the cap on self-generation of electricity and tax incentives for home solar installations. These have been well received, with rapid take-up by businesses and individuals. We would welcome more moves in this direction in the short term to realise South Africa’s growth and decarbonisation potential.

A functional partnership with the government and all other interested parties will contribute toward a just transition, which is critical to getting bp and the world to net zero. Put simply, the energy transition will only be successful if it is ‘just’.

One of our Global Aims focuses on supporting a just energy transition that delivers decent work, quality jobs and supports the livelihoods of local communities. We are focused on our workforce and communities where we operate. We recognise that respect for human rights and strong environmental and social performance underpin a just transition – and many of our existing workforce, environmental and social requirements and processes help us support a just transition in practice.

We believe that actions taken to advance a just transition are most effective when based on a shared agenda, developed through dialogue with workers, communities, governments, unions, employers and other relevant parties, Khumalo concludes.

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