South Africa, one of the world’s biggest coal producers, is slowly starting to shift from being a fossil fuel-based economy to a low-carbon one. The challenges are many, not least of which is the need to weigh livelihoods against a rapid transition to a green economy.
At the 2023 Trialogue Business in Society Conference, speakers and panellists debated how to effect the Just Energy Transition, safeguarding workers and communities who are affected by moving away from fossil fuels while developing a green industrial policy, supporting sustainable agriculture and investing in renewable energy.
The theme, rolled out in partnership with Sasol, examines what roles can be played by government, business and non-profit organisations in easing the transition. This article features summaries of the talks at the conference, as well as links to watch the videos.
Framing the just energy transition: Keynote speech
Business and civil society should avoid falling into the trap of positioning coal in opposition to renewable energy in the just energy transition discussion. This was the caution from thought leader, strategist and economist Dr Miriam Altman at the 2023 Trialogue Business in Society Conference.
Addressing delegates on the second day of the event, she explained how entrenched interests tend to pit coal against renewable energy, slowing the necessary energy transition, particularly the adoption of new power sources.
Coal production not the same as coal-fired power
South Africa’s reliance on coal places it among the top 15 greenhouse gas emitters globally. In the face of climate change mitigation, the shift from fossil fuels to clean energy sources is an area of advantage and potential opportunity for the country. The transition will require just assistance for those companies, investors, workers and communities who stand to lose from the move away from fossil fuel technologies.
However, contrary to the narrative of vested interests, the introduction of renewable energy is not driving coal out of business. Altman explained that while coal is required for coal-fired power and synfuels, it has other outlets, making it important to distinguish between coal production and coal-fired power. Even in the energy transition, coal-fired power, though diminishing, will remain important for many years, as will coal exports, meaning that coal mines will still be needed.
Job losses in the coal-for-export market are the result of stagnating local exports, largely attributable to logistical issues. The global demand for coal continues to grow, though at a muted rate. Should South Africa wish to take advantage of this demand, there will have to be a stronger ecosystem to support the industry.
Meanwhile, South Africa’s Integrated Energy Plan projections indicate that coal will still have a role to play, albeit reduced, in the decades to come. A realistic assessment of the likely coal job losses from the energy transition is about 28 000 by 2050. These jobs, mainly in Mpumalanga, are associated with low education levels of workers and it will be hard to find equivalent opportunities.
Jobs needed across the economy
Altman told delegates that, rather than discouraging an energy transition, this reality should cast a spotlight on the general need for social plan capabilities and focus efforts on promoting economic dynamism that creates more jobs.
While coal industry jobs might not transition directly into these, there are wider benefits to building industries where there is high unemployment. She pointed out that such strategies are necessary regardless of just energy transition commitments.
Whatever the pace of progress towards the energy transition, the ‘just’ element demands clear decision making and timeous action, especially considering the socio-economic damage that has resulted from the forces holding back the transition. Poor performance in public infrastructure investment diminished the GDP by 1.8% annually between 2010-17, forgoing a possible one million new jobs.
Meanwhile, loadshedding has reduced GDP by 2%, forgoing the creation of 180 000 jobs in 2023 alone. Numbers far higher than the potential coal job losses.
Altman concluded that the just energy transition calls for less focus on the voices of organised labour and elements of business that stand to lose out and are not adapting to the potential opportunity, and more focus on the weaker voices of those communities who will be most affected by climate change and suffer the effects of an economy with low climate resilience.
Keynote speaker: Dr Miriam Altman
Dr Miriam Altman, is a recognised thought leader, strategist and economist. Dr Altman has deep experience in economic policy research, and, unusually, also at the coal face of major transformation initiatives.
She is Professor of 4IR Practice in the Dept of Economics, University of Johannesburg. Miriam has economics degrees from McGill University, the University of Cambridge and the University of Manchester.
Watch the video: Framing the Just Energy Transition
Leveraging opportunities for inclusive growth in socio-economic transitions: panel discussion
Socio-economic transitions have the potential to exacerbate existing inequalities. Without deliberate efforts to ensure inclusivity, marginalised groups and vulnerable communities may bear a disproportionate burden, facing economic hardships and social disadvantages.
A just transition approach aims to mitigate this risk by prioritising equity, fairness, and the protection of livelihoods. This was the subject of a panel discussion held during the 2023 Trialogue Business in Society Conference.
Panellists included Charlotte Mokoena from Sasol, Steve Nicholls from the Presidential Climate Commission, and Wendy Poulton from Strategic Mindsets.
Steve Nicholls began by providing an overview of the Presidential Climate Commission (PCC). The PCC is a group of commissioners appointed by the Presidency. These commissioners represent various social partners such as business, labour, civil society, government, youth and faith movements.
“The role of the PCC is to inform cabinet on issues of socio-economic transformation in relation to climate change and, in particular, on achieving the just transition,” said Nicholls. He went on to explain that the PCC has released guidance known as the “just transition framework,” which outlines its perspective on what a just transition for South Africa entails.
This framework has been adopted by cabinet and is intended to inform planning systems within the government. Additionally, the framework aims to influence the actions of other social partners as they work towards addressing climate change and ensuring fairness in the transition process.
Investing in skills development and workforce transition
The panel discussion emphasised the importance of a skilled workforce in driving a just socio-economic transition. Poulton touched on the need to retrain and upskill workers to meet the demands of a low-carbon economy.
Additionally, Poulton called for collaborative partnerships between educational institutions, industry, and government bodies to bridge the skills gap and ensure a smooth workforce transition, thereby maximising the potential for inclusive growth.
This was echoed by Mokoena, who highlighted the importance of clear and consistent policies and regulations to facilitate a smooth transition to a low-carbon economy. Mokoena also spoke about the need for government to provide a stable framework that encourages long-term planning and investment, thereby enabling businesses and investors to actively participate in the just transition.
Understanding the social impact of climate change
Nicholls argued that there are two significant aspects to consider when framing the changes related to climate change and the just transition. Firstly, addressing climate change impacts is crucial as it poses a significant exogenous risk. South Africa’s economy heavily relies on industries such as platinum group metals, gold, iron, steel, and the internal combustion engine.
However, the global shift in demand and changing trade dynamics in response to climate change will have a substantial impact on the country’s economy, including trade balance, debt management, and the cost of capital. This situation highlights the need for opportunities in transitioning to a competitive and climate-neutral economy.
Secondly, addressing social ownership impacts is essential to tackle inequality in South Africa. Access to capital and ownership of capital play a vital role in driving inequality. Wealth transfer to the poor is a necessary step in solving this problem. The just transition provides an opportunity to not only address climate change but also reduce inequality by ensuring that the private sector stimulates various sectors of the economy.
Barriers to just transition
As they wrapped up their discussion, the three panellists drew attention to the barriers hindering the just socio-economic transition. Nicholls stressed the urgency of addressing limited access to affordable capital and high upfront costs, particularly for small and medium-sized enterprises.
He called for innovative financing mechanisms, such as public-private partnerships and risk-sharing initiatives, to mobilise the necessary investments and accelerate the widespread adoption of clean technologies.
Similarly, Poulton acknowledged the technological barriers that need to be overcome to achieve a successful energy transition. She highlighted the importance of research and development, innovation, and collaborative efforts to address reliability and stability concerns associated with integrating intermittent renewable energy into existing grids.
Panellists concluded by emphasising the importance of effective action and meaningful impact. They noted the crucial role of organisations like the National Business Initiative and similar entities driving collaboration and practical investment strategies.
The key insights shared by the panellists were:
- Policy and regulatory challenges: Clear and consistent policies and regulations are crucial for a smooth transition to a low-carbon economy, enabling long-term planning and investment.
- Skills and workforce transition: Retraining and upskilling workers are vital to meet the demands of a just socio-economic transitions. Collaborative partnerships between educational institutions, industry, and government bodies can bridge the skills gap and ensure a smooth workforce transition.
- Social and equity considerations: Protecting workers, supporting impacted communities, and promoting inclusive growth are crucial. Proactive engagement with affected communities and prioritising their voices in decision-making processes are necessary for social equity and justice.
- Financial barriers: Limited access to affordable capital and high upfront costs hinder the adoption of just socio-economic transition energy projects. Innovative financing mechanisms, like public-private partnerships and risk-sharing initiatives, are needed to mobilise investments.