Reports on the decarbonisation pathways for South Africa’s Mining as well as Petrochemicals and Chemicals sector were recently released.
This work by the National Business Initiative (NBI), Business Unity South Africa (BUSA) and the Boston Consulting Group (BCG) shows that it is possible to decarbonise key economic sectors. It will also unlock opportunities for the country in the mining, green fuels and chemicals space.
Decarbonising the mining sector
South Africa’s mining sector is a key socio-economic contributor.To remain competitive globally, it will need to decarbonise, respond to shifting value pools, and adapt to local climate change impacts – while ensuring a Just Transition. This is the central finding of the “Decarbonising South Africa’s Mining Sector – towards a Green Technology-driven Mining Ecosystem” report. The report shows that South Africa can decarbonise its mining sector and promote socio-economic development via enabling cross-sector green-tech opportunities.
The biggest mining sector decarbonisation lever is a cleaner electricity supply, eliminating ~75% of Scope 1 and 2 emissions, while electrification of mobility and stationery machinery would eliminate ~15% of Scope 1 and 2 emissions. A coal phase out would remove the majority of fugitive emissions, gases and vapours.
Meeting the Department of Mineral Resources and Energy (DMRE) target of 4-5% of global exploration expenditure (~ZAR8 billion per annum) by 2026 is key as it would drive the exploration of green tech commodities in South Africa. In addition, establishing the policy environment and infrastructure to enable increased local beneficiation is key.
Overcoming structural issues, establishing an enabling policy environment, and setting a clear path towards decarbonised operations and production of clean tech commodities would allow South Africa’s mining sector to be a prime destination for global long-term investments in the context of a Just Transition to net-zero in South Africa.
Decarbonising the petrochemicals & chemicals sector
The Decarbonising South Africa’s Petrochemicals and Chemicals Sector report confirms the petrochemicals and chemicals sector as a key contributor to South Africa’s energy security, and as a significant role-player in a decarbonised economy in the long-term.
The sector currently drives 13% of the country’s gross emissions and will experience key challenges in a net-zero emissions scenario. In the long-term, demand for conventional liquid fuels will decrease through decarbonisation, particularly in the transport sector. In the mid-term, South Africa will be challenged by a decline in local refining capacity and an increasing need for fuel imports. If, however, South Africa can unlock disruptive technology, specifically green H2 and sustainable sources of carbon, it can decarbonise its petrochemicals and chemicals sector, and unlock the opportunity of becoming a producer of green fuels and chemicals for local demand and export.
This is based on a competitive advantage in the cost-competitive production of green H2 and expertise in the production of synthetic fuels. South Africa has some of the best solar and wind resources on the planet, sufficient land and access to seawater for desalination. The country also has unique Fischer-Tropsch technology for the beneficiation of H2 into hydrocarbons, such as e-methanol and Sustainable Aviation Fuel (SAF).
Why decarbonising key sectors in line with a just transition is important
While the decarbonisation of these sectors enables local industrialisation and realisation of new export opportunities, helping improve South Africa’s balance of payments, it will be critical to manage socio-economic risks in the mid-term and particularly the displacement of workers in the coal, refinery and related value chains incorporating ~ 140,000 jobs today. In addition, increased reliance on liquid fuel imports is also a risk for energy security. To mitigate these risks will require accelerating decarbonisation across sectors from 2030 onwards.
Given its vulnerability to the impacts of climate change, South Africa understands the need to transition its economy and to decarbonise its coal intensive sectors, as well as to build resilience to the impacts of climate change.
The case for change is also driven by trade risk as key trading partners implement low-carbon commitments, with some, like the European Union planning to introduce carbon border tax adjustments. This will create mounting pressure for South Africa, especially in key economic export sectors like mining, manufacturing and agriculture.
Navigating the transition will be complex and will require a high degree of collaboration across industries and amongst government, private sector, civil society and the public.
The NBI, in partnership with BUSA and BCG, have worked with leaders in business, government, civil society, and academia to identify decarbonisation pathways for key economic sectors aligned to achieving net-zero emissions by 2050. These reports also consider how to achieve a just transition that is economically and environmentally sustainable and which leaves no one behind.
Both these reports form part of the broader NBI Just Transition and Climate Pathways project. This series ultimately aims to develop zero carbon pathways for all the sectors of the South African economy, as well as understand what the socio-economic implications will be in order to mitigate the negative impacts and address inequality, poverty and employment.