The Energy Transition in South Africa

Like many countries across the globe, the challenge for South Africa is how to simultaneously provide for higher energy demand and expand energy access while lowering greenhouse gas emissions to protect the planet. As the global energy transition gains pace, how will South Africa's transition to a low carbon economy impact the country's power; liquid fuels and mining sectors?

This report from FTI Consulting attempts to answer this question by examining the following:

The shape and pace of South Africa’s energy transition: South Africa has relatively low GDP compared to its CO2 emissions as a result of its abundance of coal as a primary energy source. However, it also has a competitive advantage for the development of renewable energy due to climatic and geographic factors. At this inflection point, the country must decide whether it grows into an established CO2 emitter or is able to evolve into a climate change champion.

Power generation: South Africa’s beleaguered state utility, Eskom, is currently the monopoly power provider in the country. Persistent load shedding continues to present the single biggest threat to Africa's most developed economy, but what will the future hold?

Liquid fuels: A wholesale demand shift will lead to winners and losers in the fuels sector, with an acute impact on coal-to-liquid and gas-to-liquid players, or less efficient petrochemical operations. In the aviation sector, there may be a sub-shift from fossil fuel to biofuel solutions. Similarly, shipping engines will gradually shift from Heavy Fuel Oil (HFO) to Liquified Natural Gas based solutions to reduce emissions and promote cost competitiveness, albeit at a slow pace given the scale of the global industry and vessel lifespans.

Mining: As a key contributor to South Africa’s GDP, the mining sector will need to reposition itself to changing demand patterns driven by the energy transition and get ready for a cleaner and greener future.