Decarbonisation is a suitable path for South Africa

18 February 2020 Consultancy.co.za

Speaking at the Mining Indaba 2020 in Cape Town, Deloitte Africa’s Leader for Energy Resources and Industrials Andrew Lane has recommended that South Africa take the decarbonisation route, irrespective of the international scenario. Lane offered his comments and analysis to Fin24.

According to Lane, despite South Africa’s significant reliance on coal for its mining and energy sectors, moving to sustainable energy sources has its own economic benefits in the long term. Sustainability has long been touted as a significant opportunity for South Africa, as it looks to rebuild economic momentum at a time when most economies across the globe are investing in sustainable projects.

For the coal sector however, decarbonisation is potentially threatening, although disaster can be averted if the sector shows agility and intent. Two weeks ago, Senior Coal Analyst at XMP Consulting Xavier Prévost stressed that investment in clean coal technology could ensure the coal industry’s survival going forth.

Andrew Lane of Deloitte concedes this point. “Backing clean coal is probably a good compromise. We live in a world of technological developments. If people can create self-driving cars, then surely clean coal might be possible. I believe the minister is genuine in asking people to invest,” he said.

Decarbonisation is a suitable path for South Africa

In the mean time, however, the country must accelerate its decarbonisation efforts, and there are promising signs of movement in this direction, according to Lane. A number of big banks in South Africa recently announced that they would withdraw funding for metallurgical coal projects, a move that Lane perceives as pivotal. 

“It was huge. Investors are becoming much more vocal. Many financial institutions have said they won’t fund coal anymore. We need to think of the value of decarbonisation and not just the cost,” he said. Experts at fellow Big Four firm EY also stressed the importance of sustainability ahead of the Mining Indaba last week.

These claims come despite the fact the poor example being set by developed economies, a significant portion of which are gravitating away from decarbonisation. According to Lane, this scenario poses a considerable challenge to policy makers in South Africa.

“The minister is in a very tough situation. Getting rid of coal will be a process, especially in light of what is happening in the space globally. But the fact that larger, more developed nations may be walking away from decarbonisation doesn't justify us doing the same,” he said.


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