Partnerships are key to decarbonizing the South African economy.
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. We believe that the world’s leading energy companies meaningfully want to achieve all three priorities.
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 1.2⁰C hotter than in the second half of the 19th century.
South Africa’s action plans
Clearly, an urgent action is needed, and South Africa like all others, need to execute on its commitments and responsibilities. According to Worldpopulationreview.com, this country was the thirteenth-largest emitter of CO₂ emissions in 2020, at 435.13 Mt.
It was a positive indicator in November 2022 when President Cyril Ramaphosa laid out South Africa’s five-year decarbonization roadmap, the Just Energy Transition Investment Plan, to transition the country away from its dependence on fossil fuels and towards greener energy solutions.
This plan should help the country to meet its Nationally Determined Contributions target range of 350-420 Mt of CO₂ equivalent by 2030. South Africa plans to decarbonize 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 industrialized countries and key oil producing nations topping the charts.” This would be equally applicable to South Africa if a higher economic growth rate achieved, as it may translate into a general improvement in the standard of living, lead into increased carbon emissions.
Contributions by the business sector
South Africa’s JET-IP plan will need strong support from the business sector. bp as a global group, like many of its competitors, has a clear decarbonization 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, EV 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’s 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 roll-out. Firstly, it will ensure that 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 LNG.
Globally, bp has made substantial investments in bio-energy and is looking to scale this business up 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 finalized.
We are excited that TNPA 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 decarbonization efforts will require partnerships, not only within the energy industry but between industry and government. It is critical for 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. 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 realize South Africa’s growth and decarbonization potential.
A functional partnership with government and all other interested parties will contribute towards 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 recognize 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 to 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.
Image: Bongani Khumalo, GM: Business Development & Integration, bp Southern Africa