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Lithium iron phosphate batteries are the solution to securing mobile reception during loadshedding

MTN’s corporate affairs executive Jacqui O’ Sullivan was recently quoted that while mobile operators have battery backup systems at their towers, loadshedding at higher stages meant the batteries didn’t have enough time to recharge, meaning there needed to be a backup for the backup in the form of generators.

By Lance Dickerson, MD, and Felix von Bormann, CTO, at REVOV

This is both sobering and unfortunate, and the economic implications are huge. However, there is good news for telecom companies and anyone else in the country who – like us, believe batteries are the environmentally superior option for power backup. If the correct types of batteries in the correct configuration are used at the tower sites, they absolutely will have sufficient time to recharge, even during stage 6 loadshedding. This can fundamentally change the risk and cost threats currently being endured. We’ll discuss how we know this to be true, and how it can be proven, but first, let’s look at the context.

Within a week of MTN observing insufficient time to recharge its batteries – O’Sullivan said that their batteries give them six to 12 hours of capacity depending on the site and need between 12 and 18 hours between bouts of loadshedding to recharge – Vodacom announced that it was piloting a project where it will source all its electricity from independent power producers in a bid to secure power supply and provide a template for corporate South Africa to follow suit.

Vodacom should be applauded for taking the step, even though we understand that “wheeling”, or transferring power between sites will need to be managed by Eskom, whose transmission infrastructure will – just like generation – require a serious upgrade and overall, over the next decade. This very localised transmission infrastructure is important in the maintenance of sufficient battery backups, such as those mentioned by MTN, and we will discuss how this may hamper battery backup, and how it can be overcome with a hybrid backup approach.

Back to the batteries at the telecom tower sites. It is easy for an outsider to make a noise and make claims, without understanding every aspect of powering and backing up a remote tower site. After all, it is the telecom itself, who is in the trenches, trying to keep the towers up during debilitating load shedding, that knows what’s happening to its fleet of towers every day.

The two founders of REVOV, which was only launched in 2016, spent more than a decade in the international telecoms industry precisely doing that – designing, planning, implementing, and testing various ways to keep the towers running in various regions of Africa. The challenges were many, but the premise remained: how do we keep towers running when generators aren’t an option and there’s no electricity? This is where our foundational understanding of the power of batteries and their application in telecoms specifically, and power backup generally, was developed.

At this point, it is vital to reintroduce the topic of chemistry. Batteries work through chemistry, and many of the painful lessons we learnt in the Americas and West Africa were down to the limitations of lead acid technology, a lesson no doubt still being learnt by many telecoms operators on this continent.

Lithium batteries are without any shadow of a doubt the superior batteries. Many reading this will have used a volatile type of lithium battery called nickel manganese cobalt (NMC) more than they realise in their smartphones or laptops. These batteries are known to ignite at higher temperatures. A newer, superior chemistry called lithium iron phosphate has emerged as the safest, most stable and longest lasting of storage battery chemistries. Beyond this, lithium iron phosphate 2nd LiFe batteries, which are built from the repurposed but fully functional cells of electric vehicle (EV) batteries, come with the added benefit of engineering built for harsh operating conditions – think of the heat and charge-discharge ratio in the usage of an EV. LiFe, in the name 2nd LiFe, is a word constructed from the periodic table symbols of lithium (Li) and iron (Fe).

So, as a base understanding, we land on 2nd LiFe batteries as prime candidates for backup storage, either for renewable energy installations or uninterrupted power supply systems. In this case, 2nd LiFe is perfect for telecom tower battery backup. China Telecoms, the largest telecom operator in the world, uses 2nd LiFe batteries exclusively in all its new sites and are swapping out old sites to 2nd LiFe as required. Based on various estimates, it is likely that there are between 500 000 to 1 000 000 sites using somewhere between four to eight-million 2nd LiFe batteries.

In a properly set up and configured 2nd LiFe lithium iron phosphate battery backup system, the time to recharge is identical to the time of discharge. In other words, the 1:1 ratio means that if the battery has been used for four hours, it needs four hours to recharge to full. If it has been used for six hours, it requires six hours to be recharged to full. Beyond this, the discharge curve is stable, and unlike lead acid doesn’t plummet after a critical point in time. This makes them fundamentally different to lead acid batteries, not just in performance, but reliability and lifespan.

This provides a compelling answer to batteries being rapidly recharged in the gaps between bouts of load shedding in the higher stages. However, as mentioned, the transmission infrastructure of some areas leaves a lot to be desired, and in some instances there quite literally is not enough capacity.  Beyond this, some areas do not return after load shedding because of various technical faults meaning areas are in the dark for far longer than anticipated. Another factor is the protective AC breaker size used at each site, which will determine the performance of the system during recharge periods.

While these are technical discussions, an analogy for a layman’s understanding is: presuming the sites already have remote generators that are 10KVA, for example, the following could easily be done. We must understand that a generator cannot be run under capacity for extended periods of time, as much as it cannot be overworked for extended periods, lest the life of the machine is severely compromised. And so, running a 10KVA generator could split 7KVA to charge batteries while 3KVA powers the tower. As a stop-gap measure this prepares the site for the next power outage, remembering that the superior lithium iron phosphate performance enables a 1:1 discharge to charge ratio.

The point is that we are all in the throes of a devastating crisis that threatens our very economy. Working together, bringing expertise from various sectors, South Africans are famous for devising compelling solutions to the crisis. In the absence of this, and certainly in the absence of any largescale understanding of battery chemistry, the status quo will no doubt continue as we wait for the grid crisis to be resolved. This won’t be tomorrow, next month or next year.

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COP27: Which countries will push to end fossil fuel production? And which won’t?

Fossil fuels have provided a crucial source of energy over the past 200 years. But they also account for 75 per cent of global greenhouse gas emissions, enable massive environmental destruction and support many brutal regimes.

The United Nations climate change conference, known as the Conference of the Parties (COP27), began Sunday in Sharm el-Sheikh, Egypt, offering countries and organisations yet another chance to push for a phasing out of fossil fuel production. Russia’s invasion of Ukraine and the resulting sanctions have made this move both urgent and challenging.

As researchers working on climate change and resource governance, we believe that new initiatives like the Beyond Oil and Gas Alliance (BOGA) and rising support for a Fossil Fuel Non-Proliferation Treaty — which aims at addressing the threat posed by fossil fuel production — can help build momentum towards phasing out fossil fuels.

A managed fossil fuel phaseout offers a chance for producers — including governments, corporations and unions — to negotiate the terms of a ‘just transition’ to renewable energy that includes retraining workers, addressing lost income, securing new forms of energy and diversifying fossil fuel dependence economies.

COP26 opened the doors for a phaseout

The Glasgow Climate Pact, that emerged out of COP26 last year, called upon parties to “accelerate efforts towards the phase-down of unabated coal power and inefficient fossil fuel subsidies, recognizing the need for support towards a just transition. ”The COP26 held in Glasgow last year opened the doors for the phasing out of fossil fuel production globally.

The COP26 also saw the launch of the BOGA through which governments like Costa Rica, Denmark, France, Greenland, Ireland, Québec, Sweden and Wales can pledge to either phase out the production of fossil fuels, commit to a production phaseout with a legislated end date for existing production, or make looser commitments.

So far, no government with significant fossil fuel production has joined BOGA or endorsed the Fossil Fuel Non-Proliferation Treaty initiative, a fast growing civil society initiative calling for an end to new exploration and production, a fair phaseout of existing production and a just transition for fossil fuel workers, communities and producing countries.

Having tracked through the Fossil Fuel Cuts Database which countries had previously adopted initiatives to curtail fossil fuel production, including moratoria, divestments, carbon taxes or subsidy phaseouts, we tried to determine which of them might join an international coalition for a managed phasing out of fossil fuel production.

Who may join the phaseout coalition?

Using the Fossil Fuel Cuts Database, we tested economic, political and climate vulnerability factors against initiatives already taken between 2006 and 2019 by 124 governments with fossil fuel reserves. We found that dependence on fossil fuel rents reduces the likelihood of constraint measures, but not the size of fossil fuel reserves or production. Richer countries are also more likely to use constraints.

Based on our findings, we sketched seven main categories of countries for building up a global phaseout coalition.

The first and most likely members of such coalitions are middle and high-income countries with democratic regimes, active domestic climate movements and fossil fuel reserves of little significance to their economy. This has been the case of most of BOGA’s members.

The second category includes small countries that have no fossil fuel industry and are highly vulnerable to climate change impacts, such as the republic of Vanuatu in Oceania, the first state to officially support the Fossil Fuel Non-Proliferation Treaty.

The third category comprises countries with little prospect of fossil fuel production compared to major stakes in a green transition, such as Chile, a leading copper and lithium producer.

A fourth category includes high-income democratic countries with significant fossil fuel production but a diversified economy, such as the Netherlands, which shut down some of its natural gas fields.

A fifth category comprises countries where fossil fuel production is almost exclusively serving domestic energy markets that are slowly decarbonizing. China, India and the U.S. — the three biggest coal burners — have considered phasing down their coal production, but are yet to sign the Powering Past Coal Alliance — a coalition of national and sub-national governments, businesses and organisations working to advance the transition from unabated coal power generation to clean energy.

A sixth category includes countries that are highly dependent on fossil fuel revenues but still interested in accelerating their economic diversification, such as Saudi Arabia, the world’s largest exporter of crude oil, which embarked on an ambitious economic diversification plan. But, like with many other fossil fuel rich countries, this plan largely relies on fossil fuel revenues to finance diversification and a green transition, thus sustaining the paradox of increased production to pay for a planned phaseout.

A seventh category comprises low to middle-income countries with a high level of dependence on foreign aid, foreign direct investment and fossil fuel revenues. These countries face challenges when translating fossil fuel wealth into inclusive forms of development and often become even more indebted. Compensating them for leaving their fossil fuel reserves has proven challenging. However, some countries like Colombia may at some point decide to join a coalition following initial pledges to keep fossil fuels in the ground.

The right incentives can mobilise institutions

An agreement over a managed fossil fuel phaseout will not only help reduce emissions, but also help producers move away from the harmful effects of fossil fuel revenue dependence.

With the right kind of economic and political incentives, including support for economic diversification and energy security guarantees, a phaseout agreement could attract producing countries and mobilise key organisations, including the International Energy Agency, the Organization of the Petroleum Exporting Countries, the UN Framework Convention on Climate Change and the World Trade Organization.

The next two COP meetings taking place in Egypt and in the United Arab Emirates will play a crucial role in increasing pressure to phase out fossil fuels, expanding the number of BOGA members and starting substantive discussions on processes and principles for an international fossil fuel phaseout agreement.

Article courtesy The Conversation

By Philippe Le Billon, Professor, Geography Department and School of Public Policy & Global Affairs, University of British Columbia

Nicolas Gaulin, Msc Student in Environmental Sciences, Wageningen University

Päivi Lujala, Professor, Geography, University of Oulu

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Minister Enoch Godongwana: 9th Southern Africa/Europe CEO dialogue

10 Nov 2022

It is my privilege to welcome all of you to the 9th Southern Africa/Europe CEO Dialogue. In February this year, leaders from Africa and Europe met in Brussels for the 6th European Union – African Union Summit.

A key outcome of that Summit was the adoption of a joint vision for a renewed partnership between Africa and Europe. This, we said, will be a partnership based on solidarity and shared values towards a prosperous, sustainable and shared future. We committed to work together to build more diversified and inclusive economies. We also agreed on strengthening investment, supporting industrialisation and the development of sustainable and resilient value and supply chains.

Ladies and Gentlemen, it is in this context that this 9th Southern Africa/Europe CEO Dialogue is taking place. We are also meeting against a backdrop of two major global crises: the lingering Covid-19 pandemic and the Russia-Ukraine conflict.

This Dialogue, therefore, is not only a platform to advance the vision we articulated in Brussels, but also to respond to the challenges of our time. It is also a platform to strengthen trade and economic relations between Europe and South Africa.

Economic outlook

Due to a significant slowdown in the world’s largest economies including the Euro Area, the IMF projects global growth of 3.2 percent, from a forecast of 4.4 percent in 2022. The 2023 outlook has also been revised downward to 2.7 percent.

Global headline inflation is projected at 8.8 percent in 2022, before slowing to 6.5 percent in 2023 and 4.1 percent in 2024. In the short-term, global monetary policy will continue to tighten as central banks intensify the fight against inflation.

Global trade volumes will slow significantly from 10.1 percent in 2021 to 4.3 percent in 2022, and 2.5 percent in 2023. Disruptions to global trade, supply and value chains have tilted the balance of risks to Africa’s economic growth outlook to the downside.

Africa’s real GDP growth is now projected at 4.1 percent in 2022; significantly lower than the near 7 percent recorded in 2021. Growth is likely to come in at around 4 percent in 2023. In South Africa, real GDP contracted by 0.7% quarter on quarter in the second quarter of 2022, compared to a downwardly revised expansion of 1.7 percent quarter on quarter in the first quarter.

We expect domestic monetary policy to tighten further in the near term. Persistently high inflation, rising interest rates, slowing global growth, increased volatility and uncertainty all point to a challenging outlook in the near to medium term for South Africa’s economy. Domestic GDP growth for 2022 has been revised downward to 1.9 percent from a projected 2.1 percent, and to 1.4 percent in 2023 from 1.6 percent.

Our response to the challenging economic environment

In response to the challenges of the moment, our focus has been on the implementation of structural reforms to improve competitiveness, industrial policy to boost manufacturing and measures to strengthen the capacity of the state. We are doing this within a clear and stable macroeconomic framework, including a stable and flexible exchange rate, low and stable inflation, and sustainable fiscal policy.

On structural reforms, we are creating a competitive energy market, dealing with inefficiencies in our ports and rail network, addressing our visa regime to attract skills and investments and are reforming our water and telecommunications sectors. Work continues to build a capable and developmental state which is a necessary precondition for inclusive growth.

We are also intervening to reverse the decline in fixed investment, including through ensuring policy certainty and addressing the cost and ease of doing business. The capacity of our state-owned enterprises to invest in the economy, to unlock growth and job creation is being enhanced.

Infrastructure budgets across government are being increased while capacity for project planning, preparation and execution is being enhanced. Spending on capital assets is the fastest growing expenditure item on our budget. Action is being taken to modernise procurement and improve contract management.

Our investment in fighting crime and corruption is being strengthened as part of removing impediments to investment and growth. The African continent is devastated the most by the worsening effects of climate change, which poses an existential threat to humanity. We are committed to the goal of a just transition.

Our approach envisions accelerating investment in new generation capacity, while preserving the livelihoods of communities adversely affected by the transition from coal and other fossil fuels.

We reiterate President Ramaphosa’s call at COP 27 that Africa needs to build adaptive capacity, foster resilience and address the loss and damage due to climate change. For this to happen, our continent needs a predictable, appropriate and at-scale funding stream and technological support.

This places a responsibility on developed nations to honour their commitments to those countries with the greatest need and that confront the greatest environmental, social and economic effects of climate change.

Conclusion

Programme Director, in the words of Andrew Steer, the CEO of the Bezos Earth Fund, this is a sobering moment not only for Africa, but also for the world. It is a time of a slowing growth globally, geopolitical tensions, and the lingering impact of Covid-19. It is also a time of the perfect storm of rising food prices, rising energy prices, rising interest rates, as well as increases in the impact of climate change and vulnerability.

All of this is happening when the fiscal space has narrowed considerably in many countries and access to global capital even more constrained.

Faced with this stark reality, the need for ongoing dialogue among key decision makers has never been greater.

We need a deeper conversation on accelerating sustainable and inclusive growth on our continents.

We need to find ways of strengthening trade among ourselves in this new environment.

Together we must navigate through the global crises and disruptions shaping our national and regional economies.

We must strive for prosperity and sustainability for our people and continents.

I have no doubt that this will be the platform where all of these issues will be thoroughly deliberated upon.

I wish you a successful Summit.

Thank you!

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Agriculture, Land Reform and Rural Development gives climate advisory for 2022/23 summer

The majority of the country is currently reporting poor to reasonable veld and livestock conditions. Summer rainfall areas began receiving some rain, mostly later in October and farmers are preparing land for planting. Parts of the Western Cape, extreme western areas of the Northern Cape and the Sarah Baartman District of the Eastern Cape continue to experience dry conditions. The average level of major dams remains high in most provinces.

According to the Seasonal Climate Watch issued by the South African Weather Service, dated 1 November 2022, above-normal rainfall is expected for most parts of the country for the summer season. Minimum temperatures are expected to be above-normal countrywide, however, maximum temperatures are expected to be below-normal over large parts of the country during the entire summer.

The October Famine Early Warning Systems Network (FEWS NET) reported that Crisis (IPC Phase 3) outcomes are expected to become more widespread in areas of southern Madagascar, Malawi and Mozambique, as well as areas of Angola and much of Zimbabwe due to compounding impacts of poor 2021/22 rainfall, tropical cyclones, and domestic economic declines that started in October.

Food security outcomes are expected to be most severe in southwestern Madagascar, where Emergency (IPC Phase 4) outcomes also started in October. The population in need is likely to steadily increase through early 2023. Conflict in the Democratic Republic of the Congo (DRC) and northern Mozambique remains the primary driver of acute food insecurity with the disruption to livelihood activities. In Mozambique, the Cabo Delgado and Nampula provinces experienced an escalation of militia attacks in September.

According to the International Organization for Migration, more than 15 400 people were displaced between late August and late September. In the DRC, the security situation in the eastern provinces continues to deteriorate, especially in Ituri. Households in conflict-affected areas continue experiencing Crisis (IPC Phase 3) outcomes and face difficulty engaging in the upcoming agricultural season.

FEWS NET further reported that across the region, poor households are engaging in off-season income-earning activities. While opportunities are currently limited, they were expected to improve to near-normal levels in October as land preparation started in most areas. November through December will likely see further improvements in agricultural activities, including planting. Predicted La Niña conditions are typically associated with average to above-average rainfall in Southern Africa. They will likely improve the availability of agricultural labour opportunities in most of the region.

However, in areas like southern Madagascar, income from agricultural labour opportunities will remain lower than normal as better-off households have lower liquidity following consecutive droughts. Food prices are increasing as more households rely on markets for food, especially in areas where production deficits were observed in 2022.

This year, price increases have been accelerated by high fuel prices linked to high global prices, according to FEWS NET. Prices of maize grain are 70% to 180% above the five-year average in Malawi and up to 42% higher than the average in Mozambique. In the DRC and Zimbabwe, food prices are expected to remain above the five-year average throughout the lean season.

In Madagascar’s southern drought-affected areas, dried cassava prices are 67% higher than average. In most countries, inflation has also been increasing, likely triggering more price increases for food. Poor households in the most deficit areas will continue struggling to access food commodities on the market due to weak purchasing power.

[The IPC is a set of standardised tools that aims at providing a “common currency” for classifying the severity and magnitude of food insecurity.]

With the current conditions in mind, as well as the seasonal forecast, dryland farmers are advised to wait for sufficient moisture before planting and remain within the planting window. Farmers in areas that have been constantly experiencing dry conditions should prioritise drought-tolerant cultivars. In regions that are in reasonable condition, farmers are advised to prepare in line with the expected conditions, i.e., in line with the seasonal forecast.

However, they should not expand planting land unnecessarily. In addition, farmers should note that rainfall distribution remains a challenge, therefore not all areas might receive the anticipated above-normal rainfall that is well distributed.

Farmers are also advised to put measures in place for pests and diseases associated with wet and hot conditions as above-normal rainfall is anticipated. Moreover, it is important for farmers to follow the weather forecast regularly so as to make informed decisions. Farmers using irrigation should comply with water restrictions in their areas. Farmers must continually conserve resources in accordance with the Conservation of Agricultural Resources Act, 1983 (Act No. 43 of 1983).

Farmers are advised to keep livestock in balance with carrying capacity of the veld, and provide additional feed such as relevant licks. Livestock should be provided with enough water points on the farm as well as shelter during bad weather conditions. Winter rainfall areas are becoming drier, increasing favourable conditions for veld fires. Therefore, the creation and maintenance of fire belts through mechanical means should be prioritised along with adherence to veld fire warnings.

Episodes of flooding resulting from rain bearing weather systems have occurred and will continue; precautionary measures should be in place. Heat waves have been reported and will occur during summer and therefore measures to combat these should be prepared. Farmers are encouraged to implement strategies provided in the early warning information issued.

The department will partner with all relevant stakeholders to continue raising awareness in the sector and capacitation of farmers on understanding, interpretation and utilisation of early-warning information for disaster risk mitigation and response.

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Treasury on loan agreement with France and Germany

10 Nov 2022

Bilateral loan agreements AFD and KFW

South Africa, France and Germany have signed loan agreements for the two European nations to each extend €300-million in concessional financing to South Africa to support the country’s just energy transition. The loans are provided by the French and German public development banks, Agence Française de Développement (AFD) and Kreditanstalt für Wiederaufbau (KFW), directly to the National Treasury.

Both loans are sovereign loans that take the form of non-earmarked budget financing that is transferred directly into the National Revenue Fund of South Africa. These loans are in support of the policy and institutional reforms undertaken by the government of South Africa in support of its just energy transition.

The loans are highly concessional as their terms are substantially more generous than what the Government of South Africa would be able to raise in capital markets. These loans are already reflected in South Africa’s gross borrowing requirement (in Table 3.7 of the Medium Term Budget Policy Statement) and well within South Africa’s risk benchmark of foreign debt as percentage of total debt (in Table 7.1 of the Budget Review) The financial terms of the two loans are shown in Table 1.

Table 1. Financial terms of the AFD and KFW loans

The estimated cost for the Government of South Africa to raise an equivalent loan today in the market would be around 8.9%. This estimate is based on a fair value estimation of South Africa’s foreign currency bonds relative to the risk free rate, secondary market activity and historical issue spreads.

Due to South Africa’s high stock of debt and the currently high interest rate environment, replacing market lending with much cheaper concessional loans, allows South Africa to reduce its cost of funding and overall debt burden. By lowering debt service costs, the Government of South Africa creates more fiscal space for critical social and other priorities.

A just energy transition can attract investment, create new industries and jobs, and help South Africa to achieve energy security and climate resilience. South Africa requires more support for its just energy transition given the large scale of the required transition in the context of the current socio-economic challenges and will therefore continue discussions with various multilateral lenders in pursuit of this objective.

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SA’s new Just Energy Transition Investment Plan

Joint Statement

The International Partners Group, chaired by the UK and comprised of France, Germany, the UK, the US and the EU, jointly welcome and endorse South Africa’s Just Energy Transition (JET) Investment Plan.

At COP 26 in November 2021, the governments of South Africa, France, Germany, the United Kingdom and the United States of America, along with the European Union, issued a Political Declaration announcing a new ambitious, long-term Just Energy Transition Partnership (JETP). The Partnership aims to accelerate the decarbonisation of South Africa’s economy to help it achieve the ambitious goals set out in South Africa’s updated Nationally Determined Contribution emissions goals.

During the World Leaders Summit at COP27 on 7 November, President Cyril Ramaphosa of the Republic of South Africa launched the new JET Investment Plan prepared by the South African government as envisaged in the Political Declaration. The Plan covers three priority sectors – the energy sector as well as, electric vehicles and green hydrogen – for finance.

A ‘Just’ approach underpins the Plan, aiming to ensure that those most directly affected by a transition from coal – workers and communities including women and girls – are not left behind. It identifies $98-billion in financial requirements over five years to begin South Africa’s 20 year energy transition.  Investment will be required from both public and private sectors.

The IPG is mobilising an initial $8.5-billion to catalyse the first phase of the programme.

The funding package will be disbursed through various mechanisms over the five year period including grants, concessional loans and investments and risk sharing instruments. The IPG’s funding will align to the Investment Plan and be geared towards: coal plant de-commissioning; funding alternative employment in coal mining areas; investments which will facilitate accelerated deployment of renewable energy and investments in new sectors of the green economy.

The Chair of the International Partners Group, the United Kingdom’s Prime Minister Rishi Sunak, said: “I congratulate President Ramaphosa for the great progress that has been made on the South Africa Just Energy Transition Partnership. In one year since COP, South Africa, along with the UK and our friends in the International Partners Group, have shown how serious we are about making the changes we need to halt climate change. South Africa’s JET Investment Plan paves the way for a sustainable and fair transition away from coal and towards cleaner forms of energy, building the foundations for a strong green economy.”

The President of the United States of America, Joseph R. Biden, said:  “The United States is proud to partner with the Government of South Africa and the members of the International Partners Group to support South Africa’s just transition to a cleaner energy future. We welcome the comprehensive JET Investment Plan, and fully support South Africa’s economy-wide energy transformation. Our support for South Africa’s clean energy and infrastructure priorities, which include efforts to provide coalminers and affected communities the assistance that they need in this transition, will help South Africa’s clean energy economy thrive.”

The President of the Republic of France, Emmanuel Macron, said: “France is proud to work with South Africa on the implementation of this Just Energy Transition Partnership, which will help to strengthen the country’s energy security, green its electricity mix and set a benchmark for other countries around the world, while keeping at its core the just element of this transition in order to leave no one behind. I welcome the ambitious Just Energy Transition Investment Plan presented by South Africa and I am happy to confirm that France has just unlocked a concessional policy support of 300 M€ to South Africa, as a first step towards the fulfilment of our $1-billion commitment to support South Africa’s decarbonisation”

The Chancellor of the Federal Republic of Germany, Olaf Scholz, said: “Climate protection and economic prospects must go hand in hand. The adoption of the investment plan is a milestone on the path to a climate-neutral and – at the same time – socially just economy in South Africa. Germany is contributing 1 billion USD, including a substantial part through grants, to a support package from the international donor community worth 8.5-billion USD. This is an ambitious start. More needs to follow, particularly in collaboration with the private sector.”

European Commission President, Ursula von der Leyen, said: “For the EU, the climate transition needs to be just. This partnership, with new investments, is how we help ensure that nobody is left behind. Therefore I welcome the endorsement of this Investment Plan. It will now kick-start the Just Energy Transition Partnership with South Africa, a first of its kind global initiative for accelerating a just energy transition in countries that commit to phase out coal. It is a flagship of EU-supported multilateral cooperation to limit global warming to 1.5°C.”  

A joint 12-month update to leaders by South Africa and the IPG summarises key technical progress that has contributed to the development of the JETP Investment Plan. It, and the preceding six-month update to leaders, also outline measures undertaken by the government of South Africa to strengthen the enabling environment for South Africa’s long-term energy transition.

The IPG’s initial $8.5-billion funding package includes[1]:

  • $2.6-billion through the Climate Investment Funds Accelerating Coal Transition Investment Plan[2] (CIF ACT)
  • $1-billion from France[3]
  • $1-billion from Germany[4]
  • $1.8-billion from the UK[5]
  • $1-billion from the US[6]
  • $1-billion from the EU[7]

Some of this funding is already programmed while other parts of it have still to be finalised and programmed in line with the final Investment Plan. Work to programme the full $8.5-billion will continue in coming months.

In addition to the $8.5-billion, the World Bank Board has recently approved the Eskom Just Energy Transition project which is providing $0.5-billion of financing in support of South Africa’s Just Energy Transition.

INTERNATIONAL PARTNERS GROUP FINANCIAL SUPPORT

The IPG has supported South Africa’s Just Energy Transition in a variety of ways both directly and indirectly.  A fuller description of support is provided below.

Early progress in deploying the $8.5-billion support of Investment Plan

The Climate Investment Fund Accelerating Coal Transition (CIF ACT) Investment plan will provide $2.6-billion in total including $500-million of highly concessional Accelerating Coal Transition funding provided by the CIF. IPG members (Germany, the UK and the US) provide approximately 65% of funding for the overall CIF ACT programme. The CIF ACT Investment Plan will support the decommissioning and repurposing of three coal power stations, community development and energy efficiency projects in Mpumalanga. The World Bank’s Eskom Just Energy Transition project will provide finance for decommissioning and repurposing a further coal power station.

France and Germany are providing $600-million ($300-million each) for a concessional policy loan to South Africa to support the JETP.  The loan will be formally signed during COP27.

A number of IPG grant funded activities contributed to the development of the Investment Plan and will contribute to ongoing analytical and policy work as South Africa moves towards implementation.  These include:

  • The UK has funded work with municipalities and affected communities in the two most coal-dependant municipalities in Mpumalanga (eMalahleni & Steve Tshwete Local Municipality) to co-develop a coherent and inclusive just transition plan for each municipality.
  • Germany has funded the integration of renewable energy (particularly solar energy) into the existing energy grid. Measures to increase energy efficiency are being developed in cooperation with local authorities.
  • The US Trade and Development Agency funded a Clean Energy and Climate Infrastructure Event Series to promote cooperation on clean energy topics between the public and private sectors in the United States and South Africa.  The series inaugurated with a two-day workshop on green hydrogen, held last week [October 31 – November 1] in Cape Town.  USTDA also intends to support preparation of projects to strengthen South Africa’s grid and accelerate deployment of renewable energy.
  • The EU has awarded grants to increase the participation of South Africa’s civil society in reducing emissions and adapting to climate change, while enhancing gender equality and the participation of the youth by strengthening skills.
  • France has funded work for the development of a climate finance mapping and tracking tool, the execution of a study related to the localization potential for solar PV and storage value chains in South Africa as well as support to Eskom for the refinement of its JET strategy and implementation plan.

Elements of the $8.5-billion still to be programmed

A further $2.2-billion of sovereign loans will be programmed by France’s AfD, Germany’s KfW and the EU’s European Investment Bank in support of the Investment Plan.  The details of these loans will be announced as they are finalised.

$1.5-billion of Development Finance Institution support for private sector investment is available from the US and the UK. This will take the form of patient investments which will either seek to crowd in private sector investment to new and riskier areas or provide investment where the private sector is currently unwilling or unable to invest.  Details of these investments will be announced as they are finalised.

The UK is providing $1.3-billion of guarantees to enable enhanced AfDB lending in support of activities set out in the Investment Plan.  Details of the related loans will be announced once they have been agreed between the AfDB and the South Africa Government.

Additional IPG resources beyond the $8.5-billion

Further details of the $8.5-billion package are set out in the Investment Plan. In addition, the following additional resources are being made available by IPG members:

  • The US is making $45-million in highly concessional funding available through Power Africa
  • The European Investment Bank is making a €200-million loan to a South African bank for on-lending to eligible onshore wind and solar photovoltaic projects in South Africa.  Germany is providing €30-million to help South Africa develop Sustainable Aviation Fuel and €5-million to work on a Green LFG value chain.
  • In the second half of 2022, Germany offered 395 Million Euro to support the JET IP implementation, including 125-million grants.

[1] Some IPG contributions will be made in the provider’s domestic currency, which may be impacted by fluctuations in conversion against the dollar which means that the numbers may not total exactly $8.5-billion.  As of the date of finalising the Investment Plan they totalled $8.455 billion.  The country numbers in the press release have been rounded to the nearest $0.1-billion.

[2] The CIFs ACT Investment Plan is calculated on the basis that $500-million in ACT funding will leverage an additional $2.1-billion in finance including World Bank and African Development Bank loans as set out in the CIF ACT Investment Plan.

[3] $1.0025-billion

[4] $0.968-billion

[5] $1.824-billion

[6] $1.0215-billion, not including the additional $45-million of highly concessional funding (mentioned below)

[7] €1.03-billion via the European Investment Bank (EIB) and the Global Europe Programme. The European Investment Bank is planning to provide concessional loans up to 1-billion euros to decarbonise the South African Economy and promote the development of green hydrogen and the EU will further provide 35-million euros in support of Just Transition.

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Legarda leads the “Campaign for nature” high-ambition coalition

At no other time in the history of this country have we seen the confluence of high-level reactions to the dual threats of climate change and biodiversity collapse.

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World Bank approves $497-million financing to lower South Africa’s emissions

World Bank approves $497-million in financing to lower South Africa’s greenhouse gas emissions and support a just transition. The decommissioning and repurposing of the Komati coal-fired plant is a demonstration project that can serve as a reference on how to transition fossil-fuel assets for future projects in South Africa and around the world. The project will provide learning experiences through a cycle of piloting, monitoring, assessing, documenting, and information sharing.

“Reducing greenhouse gas emissions is a difficult challenge worldwide, and particularly in South Africa given the high carbon intensity of the energy sector,” said World Bank Group President David Malpass. “Closing the Komati plant this week is a good first step toward low carbon development. We are cognizant of the social challenges of the transition, and we are partnering with the government, civil society, and unions to create economic opportunities for affected workers and communities.”

The decommissioning of the Komati coal-fired plant will result in reduced carbon emissions and improvement of ambient air quality in the vicinity of the plant. The power sector is a major contributor to greenhouse gas emissions in South Africa, accounting for 41 percent of its CO2 emissions. This is due mainly to Eskom’s fleet composition. Its 15 coal-fired power plants, with an average age of 41 years, provide 38.7 GW of the country’s 52.5 GW installed capacity.

“This project is critical to our understanding of the sustainability of decommissioning, repurposing, and mitigating the socio-economic impacts for workers and communities before we scale up the move of the power sector into a low-carbon path,” said South Africa Minister of Public Enterprises, Pravin Gordhan. “It is part of implementing the country’s Integrated Resource Plan 2019 to gradually retire 12 GW of our old and inefficient coal-fired power fleet by 2030 and to scale up private sector-led renewables of 18 GW during the same period.”

The repurposing of the plant will enhance energy security in South Africa with the installation of a combination of 220 MW renewable energy solutions (including 150 MW solar PV solar and 70 MW wind) and 150 MW batteries, which together will help to improve the quality of electricity supply and grid stability.

Under the Komati project, the workers will be supported through a comprehensive transition plan, elaborated jointly with inputs from staff and unions. Options for the affected workers will include transfers to other Eskom facilities, re-skilling, and upskilling for deployment to the renewable energy plants.

A portion of project financing will be devoted to creating economic opportunities for local communities, which is expected to benefit approximately 15,000 people. Community-driven projects, skills training, incubation support, and business development services for new and existing micro, small, and medium enterprises are expected to create jobs in agriculture, local manufacturing, and digital technology. Activities will be carried out in coordination with local government, civil society organizations, and the private sector. 

The Komati Just Energy Transition Project is financed jointly through a $439.5 million World Bank loan, a $47.5 million concessional loan from the Canadian Clean Energy and Forest Climate Facility (CCEFCF), and a $10 million grant from the Energy Sector Management Assistance Program (ESMAP).

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The impact of droughts on the energy mix

As global warming intensifies, extreme weather events such as droughts have become more frequent and their economic damage more significant.

By Irene Lauro , Environmental Economist at Schroders

When thinking about the impact of droughts on economic activity, the agricultural sector is the first that comes to mind. This sector is highly sensitive to weather variability, with the fall in crop production being the first direct damage of water shortage. But agricultural activity is not the only area that is impacted: the energy and transport sectors are also affected by droughts, and these are the sectors that we focus our analysis on in this paper.

In South Africa, parts of Johannesburg were facing water shortages last month because of increased demand and a decaying infrastructure, encompassing water storage, supply and treatment. These issues were further exacerbated after power outages curbed supplies by the main distributor, in the midst of a heat wave. This has led to the region’s authority, Rand Water, imposing 30% water restrictions. As a result, South Africa’s economic hub is now facing a water crisis – in addition to its ongoing electricity woes.

Looking abroad, in northern Italy higher temperatures have triggered the worst drought in 70 years. The Po, Italy’s longest river, has hit record low water levels after months without heavy rainfall and little snow in the mountains. The river is a vital source of water for drinking, agriculture and energy production in northern Italy, and the ongoing water crisis is heavily impacting the energy storage of its hydropower system.

More than 85% of the 4,000 hydroelectric power plants in Italy are located in the northern regions. Hydro is the oldest source of renewable energy, accounting for around 35% of the total green energy production, and usually meets over 15% of Italy’s energy demand. The ongoing water shortage is exacerbating the energy crisis as the drought is hitting the economy at a time in which gas supply is being squeezed by the Russia-Ukraine war.

Spanish hydropower generation, which accounts for more than 11% of total energy produced in the country, is also running at very low levels. This summer, hydro was more than 30% below its past 7-year average.

Other countries are also being hit

Droughts are causing significant disruptions in hydropower generation in China. In particular, Sichuan, a province that gets more than 80% of its energy from hydropower, is witnessing its worst drought in more than 50 years. Restrictions on power supply have been implemented due to low water levels, with some key automakers, like Toyota reporting that they have been forced to halt production for several days at their factories in the region.

The western states of the US have also been hit by droughts. The United Nations Environment Programme (UNEP) has recently highlighted that, due to more than 10 years of dry weather, the two largest hydroelectric reservoirs in the US are currently at their lowest levels ever. Lake Mead and Lake Powell provide water and electricity to tens of millions of people in the states of Nevada, Arizona, California, Wyoming, Colorado, New Mexico, and in Mexico. The UNEP has also warned that if drought conditions persist then these reservoirs could eventually reach “dead pool status”. This occurs when the water level in the dams falls so low it can no longer flow downstream and power the hydroelectric power stations.

Natural gas generators are being used to offset the reduction in low-cost hydroelectric power. The US Energy Information Agency (EIA) has analysed the effects of drought in California. The analysis forecasts wholesale electricity prices in the state would increase by 5-7% relative to the median case in a drought scenario. The median case is defined as median water supply between 1980 and 2020.

The EIA analysis highlights how physical climate risks can add pressures on prices, at a time in which many economies are battling with already elevated inflation. Switching to gas to replace the loss of hydroelectric output also threatens to worsen the climate crisis as it leads to higher carbon emissions, with the EIA expecting CO2 emissions in California to be 6% higher than in the median case.

In order to avoid this rise in carbon emissions, countries could turn to other zero-carbon sources of energy. France, for example, meets 70% of its electricity needs with nuclear power. However, France too is struggling as nuclear power production is also being restricted by droughts.

French nuclear reactors rely on rivers for cooling, and output must be reduced when river temperatures reach certain thresholds. This is to ensure the water used to cool the plants will not harm the environment when put back into the waterways. This is happening at a time in which EDF, the French energy supplier, is already reducing output as some of its nuclear reactors are under maintenance for corrosion issues. So far this year, 15% of the 56 nuclear units in France have been forced to curb output due to environmental issues, according to the filings reported by EDF.

Further curbs to nuclear power production have been implemented during the summer, leading to a reduction of more than 5% of total nuclear capacity in some days in July. This has added further pressure to Europe’s energy crunch.

Droughts impact shipping too

Transport is another sector of the economy that can be impacted by droughts, in particular inland waterways. Low water levels can reduce the navigability of vessels, as ships must be operated at limited capacity with restrictions to the cargo they transport.

Inland waterways play a critical role in freight transportation in many countries around the world, but this has become an acute issue in Germany in recent years. According to the Federal Ministry of Transport, approximately 240 million tonnes of bulk goods are transported per year via the German Federal waterways, which equals almost 75% of the goods transported by railway in the country. Almost 70% of transport of industrial goods such as coal, crude oil, coke oven products, and chemical products takes place on the Rhine, one of the longest rivers in Europe.

It is also important to highlight that reduced freight transportation also impacts the energy sector, as the Rhine is used to transport hard-coal from the ports of Amsterdam, Rotterdam and Antwerp by barges. The Rhine is drying up due to higher temperatures and low rainfall, and its critically low water levels are causing difficulties for coal to be delivered to German coal-fired plants. Some German power producers have recently warned that they will be able to generate less electricity at their coal-fired power plants due to reduced fuel supplies.

Wind and solar can come to the rescue

Physical risks are already having a significant impact on the global economy, but their importance is likely to increase. As global warming intensifies, we are likely to see more frequent droughts over the next decade. These droughts are limiting activity in the energy sector, highlighting the need for diversification in power supply.

Speaking to delegates at the 2022 Windaba in Cape Town earlier this month, South Africa’s Mineral Resources and Energy Minister said the country should shift to an energy mix of “renewables coupled with nuclear” until wind and solar can provide affordable energy at scale.

According to a report by the National Business Initiative (NBI), as much as 150GW of solar and wind capacity must be installed by 2050, and at least 30GW of battery storage in order for South Africa’s ideal power system to achieve net-zero emissions by 2050.

Wind and solar are not only the winners from the energy transition, but they can also improve energy security, insulating economies from geopolitical risks by reducing their reliance on imported fossil fuels. In addition, an increased use of zero-carbon power sources like wind and solar will help limit global warming and therefore the impact of physical risks on economic activity in the long term. They will also be able to provide an infinite source of energy once the necessary technology has been developed, unlike fossil fuel energy. However, they present some limitations due to their variable output, with the ability of meeting electricity demands with wind and solar energy generation relying on factors such as location and weather. This highlights the importance of a well-diversified energy mix: multi-technology solutions, with different sources of energy that tend to be uncorrelated, can help guarantee the stability of the system.

In addition, enhancing flexibility in the grid and investing in energy storage technologies also need to be part of the solution. In particular, storage mechanisms and back-up power stations are likely to play a critical role in periods of prolonged low wind speeds and low sun exposure. These can address the seasonality problem of renewables. Finally, demand-side management mechanisms are also important, reducing energy consumption via investments to improve energy efficiency.

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