Advancing Africa’s Just Energy Transition: The role of Research and the Private sector – a case study of South Africa
South Africa, like many other countries in Africa has been grappling with energy crisis. A significant portion of the African population lacks access to electricity, underscoring the continent’s substantial demand for power and attainment of energy security. The Afro-Sino Centre of International Relations in partnership with Simubone Water Energy, hosted a webinar on ‘Advancing South Africa’s Just Energy Transition: the role of research and the private sector’. The aim was to explore how the private sector and research, can contribute to and promote South Africa’s Just Energy Transition, and broadly that of the continent’s.
There were presentations from Dr Alex Benkenstein, Head of Climate and Natural Resources Programme at the South African Institute of International Affairs (SAIIA), Mr Saveshen Pillay, CEO of Credit Ratings Analytics and Dr Nebiyeleul Gessese, a Consultant at the United Nations Economic Commission for Africa.
Whose Just Transition? South Africa, BRICS+ and the Global South in the just transition discourse
During his presentation, Dr Benkenstein widened his scope beyond South Africa, to include the expanded BRICS and the Global South in the Just transition dialogue. He emphasised that the notion of Just transition is a topic of debate, with questions arising such as whether such a transition is required and what justice entails. Explaining the justice element of energy transition, he described it as the principle of ensuring no one is left behind. He further pointed out that South Africa’s just transition framework provide insights on different dimensions of justice, comprising distributive justice, restorative justice and procedural justice.
Discussing the broader Global South and BRICS+ community, Dr Benkenstein asserted that there are core principles of Just Transition agreed by global community but its implementation and operationalisation needs to be worked through at national and granular levels. He emphasised that Just Energy Transition will vary, depending on different national settings, national level specifics and characteristics. According to him, some challenges to tackle include inequalities, unemployment and skills.
He also talked about South Africa’s Just Energy Transition partnership, which involves significant foreign funding committed to the transition process. This partnership has resulted in the development of the Just Transition Framework and the Just Energy Partnership Investment Plan. According to Dr Benkenstein, the external funds through the investment plan have increased South African sensitivities, raising questions about whether the transition process is owned by South Africans, or if it is a foreign agenda imposed on the country. He however argued that the Investment plan prioritises specific sectors and provides structure and process to advance the Just Energy Transition, laying a foundation for the ownership required.
The role of the private sector in the Just Transition
During Dr Benkenstein’s presentation, he highlighted the different dimensions of justice in energy transition. He touched on procedural justice, which involves empowering workers and local communities and ensuring their involvement throughout the transition process. Mr Pillay in his presentation, highlighted measures that private sector-led financing and investments in the energy transition could pursue to promote procedural justice. He mentioned several measures including community benefit agreements such as skills development, infrastructure development and revenue sharing, local procurement and supply chain policies, monitoring and evaluation of renewable energy projects in local communities to identify gaps and ensure benefits are equitably distributed among others. Specifically for South Africa, Mr Pillay identified ‘wheeling’ as a means for the government to share the benefits of energy from renewable sources, nationwide.
Mr Pillay highlighted the importance of providing funding to Small and Medium Enterprises (SMEs) delivering green energy solutions, as well as to households wanting to finance energy purchases. He illustrated ways the private sector in South Africa has leveraged on the Renewable Independent Power Producer Programme (REIPPP) to drive Just Transition. A fixed-term supply contracts between Eskom and independent power producers was an example used. He further emphasised that the private sector credit rating industry, play a critical role in driving Just Energy Transition in South Africa. Capitalising on the REIPPP, the industry provides project-based ratings for energy projects requiring funding. This is demonstrated as an example of private sector support for the Just Energy Transition process in South Africa.
In addressing challenges faced by the private sector in South Africa, Mr Pillay mentioned issues such as inadequate infrastructure, skills shortages and capacity constraints, lack of transparency and collaboration, policy uncertainty and regulatory challenges as some of the hurdles. Furthermore, he briefly discussed some policy interventions to mitigate the challenges.
Dynamics of Just Energy Transition to Hydrogen and Renewable Energy in Africa
Dr Gessese’s presentation focused on the technical aspects of creating green hydrogen, and from a continental perspective. He discussed the process of electrolysis involved in producing green hydrogen through electrolysis, and argued it to be the energy for the future. This is supported by his evidenced based projection that by 2050, there would be an 80% reduction in the cost of green hydrogen, making it more competitive than hydrogen derived from fossil energy sources. He stressed on the importance for Africa to capitalise on the opportunity to develop their renewable energy and green hydrogen industries. He asserted that the development of renewable energy and production of green hydrogen in Africa, will result in Africa being a net exporter of finished products such as electricity, green hydrogen and derivatives of green hydrogen.
Involving the private sector into the production of green hydrogen, Dr Gessese talked about developing local Small, Medium and Micro Enterprises (SMMEs), engaged in the manufacturing of parts and components of machinery and equipment, for the production and application of green hydrogen systems along the value chain. He pointed out that the conversion of renewable energy along the value chain, together with the infrastructural development supporting the green hydrogen energy system are sources of job opportunities, knowledge, technology, and technology, skills transfer for the development of human capacity and building institutional capabilities within the continent.
However, obstacles affecting the continent’s Just Energy Transition are similarly faced by actors involved in the transition process, such as the private sector and at the national levels, as observed in South Africa. They include limited access to finance, inadequate infrastructure and need for capacity building and technology transfer.
In line with Dr. Benkenstein’s observations regarding concerns raised in South Africa regarding ownership of the transition process, and whether it is driven by internal or external agendas, similar questions arise at the continental level. With a strong push for African solutions to African problems, it becomes crucial to determine the extent to which challenges and processes within the energy transition can be managed and controlled internally, versus relying on assistance from foreign or external partners.
Situating China and BRICS+ in Africa’s Just Energy Transition Discourse
In situating China and the BRICS+ in this discourse, Mr. Pillay advanced in his presentation, strategies the private sector could leverage the BRICS+ group and China’s advancements in the renewable energy, for a Just Energy Transition. These include technology transfer and capacity-building, investment and financing, partnerships and collaborations between the private sector and Chinese companies, leading in renewable energy technology and innovation, among others.
Dr Benkenstein in addressing whether South Africa can leverage on its BRICS+ membership to drive Just Energy Transition, acknowledged the potential for it. He pointed out that there are structures in place within BRICS+ bloc to support energy, research and collaboration. He further highlighted structures such as the business and research track, fora for youth collaboration, amongst others within the BRICS+ framework. He contended that through these diverse channels there are opportunities to advance the BRICS+ vision of Just Transition.
Research and Private Sector Nexus in Advancing Just Energy Transition
Mr Pillay highlighted on the importance of an interaction between research and the private sector in driving Africa’s Just Energy Transition. An advantage of this collaboration, according to him, provides more opportunities to get work done. This is due to the interaction combining practicality from the private sector, with intellectual capacity of academic institutions, resulting in innovative solutions.
Dr Benkenstein, echoed Mr Pillay’s view on the importance of dialogue between research and private sector. He stressed the need for research to address and respond to the needs of the private sector and the policy community. Dr. Benkenstein accentuated the necessity of fostering a diverse research ecosystem to incorporate multiple perspectives rather than relying solely on one voice to guide the energy transition process. On the need to secure societal buy-in of the transition process, which hinges on trust, he highlighted some pertinent questions that need addressing in this domain. These questions include identifying who is representing whom, as well as who funds the research and how it impacts its credibility. Addressing these questions is vital for establishing societal trust in the transition process.