I was wondering about this after listening to a presentation from Dr Crispian Olver at the Banking Associations conference on Sustainable Financing this week.

He is the executive director of the PCC, a multi-stakeholder body established to advise on the country’s climate change response and pathways to a low-carbon climate-resilient economy and society. Olver was unequivocal: a renewable energy dominant electricity system is cheaper than any of the feasible alternatives. It’s even cheaper when the costs of a just transition are factored in. All of which we all suspected, and some of us knew. But now we know the government knows this too. And so does Gwede Mantashe, minister of minerals, resources and energy, because he sits on the PCC. It was the PCC that recommended that SA increase its NDC (nationally determined contribution). This was SA’s public statement of intent on the trajectory of greenhouse gas reductions to 2030, presented at COP26.

The PCC went further than this, suggesting that additional measures to lower emissions should be undertaken, such as decommissioning coal-fired power stations at the end of their commercial life, increasing renewable energy investment and rolling out green transport initiatives.

It was increasingly evident, Olver said, that setting more ambitious emissions targets would lower the transition risk, improve energy security and attract additional international finance. Clinging stubbornly to a delayed phase-out of coal increases our social and economic risks. For instance if SA’s trajectory to net zero lags a rapidly decarbonising global economy, our trading partners will begin to impose trade barriers and excessive taxes on emissions-intensive exports. The PCC has also recommended that SA’s Integrated Resource Plan (IRP) of 2019 be updated for a more rapid phasing out of coal and should remove the plans for new coal builds.

Yet the Department of Mineral Resources and Energy is moving ahead with plans for the construction of 1,500 megawatts of coal-fired generation capacity, provided for in the IRP. It is so set on achieving this outcome that three civil society organisations – Vukani Environmental Justice Movement in Action, Groundwork, and the youth-led African Climate Alliance – launched a court bid last week to halt the proposed plan, arguing that government’s energy policy is incompatible with SA’s Constitution. Mantashe practically dared the non-profits to take the department to court, and the outcome, I suspect, will not be in his favour.

Olver noted that one of the barriers to ramping up our net zero ambitions are the gaps and inconsistencies in SA’s policy and regulatory environment. “Not the least of which is government ministers talking across each other,” he said. This is evident in almost every sphere of government. As Anton Eberhard noted drily the other day, while Deputy President David Mabuza talks about finding a strategic equity partner for Eskom, Finance Minister Enoch Godongwana talks about selling Eskom power stations, Ramaphosa dismisses any ideas of privatising Eskom, and Luthuli House accuses Eskom of sabotaging the municipal elections.

Investors can be forgiven for wondering what is going on.

Meanwhile, investment in the renewable energy space quietly continues. The awarding of the contracts for bid window five of the Renewable Energy IPP programme will unlock R50-billion worth of investment within the next 12 months. Members of the Minerals Council of SA indicate they are ready to roll with 3,900MW of renewable energy projects worth an estimated R60-billion, which, if built, would relieve pressure on Eskom and help meet the mining sector’s commitment to net zero carbon emissions by 2050.

And elsewhere in these pages we reported that Earth & Wire, an independent player in the renewable energy space, has plans to build 17GW of renewable power over the next decade. In case that number doesn’t mean much to you (it didn’t to me), consider that 1GW is equivalent to 364 wind turbines or 3 million solar panels, and could power 300,000 homes. We are talking an investment of billions. And some of this is in our deeply vulnerable coal belt.

Mantashe and his coal lobby insist that a slow extraction from the carbon economy is essential if a just transition is to be achieved, but I think that increasingly science and economics say otherwise. Of course our ability to finance this transition, while supporting vulnerable communities, will also affect the speed at which we can effect it.

At COP26, the US, Germany, France, the UK and the EU said they would mobilise $8.5-billion over the next three to five years to help us quit coal, including by replacing coal plants with renewable energy and finding new livelihoods for mining communities.

Again, the PCC has done extensive modelling in this regard. Olver estimates that to meet our climate targets we need an annual investment of R86-billion. Of that, R30-billion will come from international finance, R35-billion will be domestic private sector investment and R2-billion will be government finance, leaving a R19-billion funding gap.

Solutions need to be found, but I can’t think of a better kicker to economic growth. What else will drive annual investment of R86-billion? Government knows it cannot ignore the advice of its own advisers on the PCC, and soon Mr Mantashe will too. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.