South Africa’s Coal Question

The Struggle for Power and Electricity

By Hügo Krüger and Dr. Lars Schernikau

Full article can be found at independent online.

“With coal almost any feat is possible or easy; without it we are thrown back into the laborious poverty of early times.” (The Coal Question William Stanley Jevons, 1865). 

Is this quote still valid, almost 160 years later?

Coal is globally, and certainly for South Africa, the most important source of power. The commodity is required for almost every product and structure that we see around us and use every single day, either directly or indirectly. There is virtually no machine, cement, steel, aluminum, building, car, computer, iPhone, or even a solar panel or windmill that can be created without coal.

In South Africa, the warnings of many engineers, economists and other experts within the energy sector that South Africa won’t easily walk away from coal has already played itself out in the political scene in 2023 when the Minister of Mineral Resources and Energy, Gwede Mantashe, a former coal miner, called the just energy transition that advocated for a rapid transition towards “renewable” energy only, “a foreign concept”. In response, the ANC led government, presumably under the pressure of international investors and the media, created a new portfolio titled Minister of Electricity. The new Minister Ramakgopa initially recommitted to the “green” transition, but shortly after the closure of the Komati Coal Power Station, he also started speaking out against “the end of coal”. The blowback was felt throughout the corridors of power to the extent that even the Presidential Climate Commission admitted that “little attempt had been made to consult with workers”.

The Democratic Alliance, the official opposition who is South Africa’s de facto green party, did not fare better. Despite having an official position “against coal”, the DA mayor of Pretoria, Mr. Cilliers Brink’s spokesperson, Sipho Stuurman, recently announced that the city intends on bringing back the 300 MW Rooiwal Coal Power Station for at least 10 years. Brink’s revelation came only a few months after the announcement of his 2050 Net Zero Strategy that presumably foresees “the end of coal”. 

Even though critics have accused the ANC leadership of “fake news”, and exaggerating the situation, it’s worth reflecting why it is so difficult for South Africa to simply “walk away from coal”. Interestingly, as South Africa’s electrical utility Eskom faces challenges to keep the lights on, a pragmatic energy realism has emerged that does not fall on traditional political party lines.

Supporting coal is often viewed as a heretical form of “denial” of climatic changes and an “ignorance” of the “toxic” poisons spewing from coal plants. However, the reality is that (a) modern coal is not what it used to be (b) coal releases FEWER greenhouse gas emissions than LNG imports, over the entire supply chain and (c) economic trade-offs and not ideological purism should be what drives the decision making in developing nations such as South Africa. 

In a global context, coal holds significant value. This fuel, derived from plants that have existed for millions of years, continues to maintain its status as the foremost source of electricity and the second most crucial source of primary energy, accounting for approximately 36% and 25%, respectively, in the year 2023. As the graph below shows, its absolute volumes continue to set new records almost every year, despite a slight reduction in the global share of coal. 

South Africa, being the country most globally dependent on coal, derives up to 80% of its primary energy and electricity from the commodity, a trend largely unchanged over the past two decades. The nation produces over 200 million tons per annum, with less than 70 million tons being exported in 2023, constituting less than 7% of global seaborne coal supplies. 

In addition to electricity use, almost one third of all petrol in South Africa is derived from coal through SASOL’s Fischer-Tropes process and, although in decline, up to 12% of all coal imports to the European Union in 2022 came from South Africa. South African coal is of a unique quality that the fly-ash was exported to locations like China, Saint Helena, Namibia, Egypt and the UAE - where notably the byproduct was used as a cement extender in the construction of the Burj Khalifa, the world’s tallest building. Coal also plays an important role as a source of the critical minerals that include aluminum, cobalt, copper, iron, lead, silver, nickel, and zinc.

The Department of Minerals and Energy (DMRE) has, in the IRP2023, contemplated extending the lifespan of the existing coal fleet, but they remain silent about the numerous abandoned coal power stations, constituting approximately 2,500 MW of power capacity. Even though its own data shows that restoring Eskom’s energy availability factor through more investment in coal might be the least cost option for the next 5 years, DMRE appears to not consider this pathway. Why? 

Neglected coal facilities, including Duvha 3, Hendrina, Grootvlei, Rooiwal, Pretoria West, and Kelvin Power Station, demand attention. Bringing them back online could be done in 18 to 36 months if a competent and empowered engineering team is dispatched. It remains the quickest and lowest-cost way to alleviate load shedding. All alternatives lack reliability, affordability, and/or have longer lead times. 

We argue that South Africa should consider not only bringing back abandoned coal power stations, but that the leadership should unapologetically make a commitment in law to continue the investment in coal, at least for two decades. 

The authors’ reasons include but are not limited to:

1. coal being most cost-effective and abundant utilizing proven combustion technology, 

2. coal being the most important source of power in SA and globally, 

3. coal demonstrates geopolitical stability, 

4. coal does not depend on weather,

5. coal is able to ramp up and down quickly with little efficiency loss, 

6. coal has “less climate impact” than LNG, and 

7. the newest coal power technology can reduce substantially the environmental impact.

The potential overhaul of South Africa’s entire coal fleet has incredible benefits for traditional social democratic development. As a general rule, up to 2 Rand is returned in the economy for every 1 Rand invested in megaprojects. In contrast, by demonizing coal, South Africa is likely to be the country that is going to incur the most self-harm and deprive future generations of the highest opportunity cost, because the coal supply chains are already so integrated into the industrial economy.

South Africa should rather consider adopting an energy path similar to India, China and Japan. The latter country being the only G7 nation whose leadership has committed in law to not phasing out coal but rather to continue expanding it. Drawing inspiration from Japan's elite, who, mindful of the Meiji Restoration's historical significance, recognize that their country's prosperity, much like South Africa’s, is built on the coal mining industry. 

South Africa should rather embrace good old King Coal as part of its energy future by supporting investments to improve environmental and economic efficiencies.

Hügo Krüger is a YouTube podcaster, writer, and civil nuclear engineer with experience spanning the energy sector, including the design and construction of infrastructure for nuclear power, offshore wind, fly ash technology, and liquefied natural gas. He holds a BEng in Civil Engineering and an MSc in Nuclear Civil Engineering.

Dr. Lars Schernikau: Lars is an energy economics, commodity trader, entrepreneur, and author. He has worked in energy commodities globally and in Africa for over 20 years and has written several books and articles on commodities, coal, and energy markets. His most recent book “The Unpopular Truth about Electricity and the Future of Coal” is available in several languages globally.