During my last stint in South Africa, my reporting focused nearly entirely on the gold industry. Gold is shiny, it's worth a lot of money and it makes for a catchy story. I will continue producing work on gold, but on this go round, I'm shifting a large chunk of my focus to a new industry: coal.
Coal is so deeply imbedded in South Africa's psyche (and wallet), that the country's researchers created a phrase specifically for it. The "Minerals Energy Complex" refers to the inexorably connected nature of coal and energy production in South Africa. Below, I include statistics to give some background on the massive extent of the country's coal reliance and production. It becomes clear that this story is at the same time hugely important yet mired in often boring, long-term policy discussions. But while gold has zama zamas, coal has the future of the country's energy production and its impact on climate change.
Further, with new coal mines and power stations continually coming online in this country, why would I focus on it when my work is abandoned mines? Experts agree the only way to meet international emissions standards and other environmental goals is by severely reducing dependence on fossil fuels, especially coal. Therefore, new coal projects will likely have a short lifespan. The term "stranded investment" is coming into play more and more, meaning money put into coal infrastructure that is meant to last for decades could be abandoned because of climate change goals and falling renewables prices. Just like gold, this could stick communities with the bill for social, economic and environmental rehabilitation.
~According to Eskom -- the parastatal utility company providing nearly all South Africa's electricity -- 77 percent of the country's electricity needs are fueled by coal. According to Eskom: "This is unlikely to change significantly in the next decade, due to the relative lack of suitable alternatives to coal as an energy source." Of course, nearly all objective analysis argues against this stance. In a 2015 report, the country's Department of Energy wrote: "South Africa is fortunate in that, over and above its rich coal resources, it is also well endowed with non- depletable RE sources, notably solar and wind. The country has an average of more than 2,500 hours of sunshine per year and average direct solar radiation levels range between 4.5 and 6.5kWh/m2 per day, placing it in the top-3 in the world."
~According to the U.S. Energy Information Agency, coal is quickly becoming a comparatively expensive form of energy generation, as the price of renewables drop. Removing country-specific tax incentives, coal plants coming online in 2022 in the U.S. will cost less than offshore wind and thermal solar coming online in the same year. However, coal plants will cost 1.64 times more than photovoltaic solar, 2.16 times more than onshore wind and 3.1 times more than geothermal.
~According to StatsSA -- South Africa's governmental statistics body -- the coal industry accounted for R51 billion (~$3.65 billion) of the country's economy in 2013. This means that the coal segment of the mineral extraction industry is growing while other sectors such as gold are contracting.
~According to the Chamber of Mines -- which represents about 90 percent of South Africa's mineral extraction industry -- South Africa exports the sixth most coal of any nation. In 2014, the country produced an estimated 252.3Mt of coal. More than 27 percent of this was exported, and exported coal was sold at a price more than twice as high as that sold internally.
But with the environmental impacts of coal, the higher job potential in renewables and the lower cost of new renewables, why the continued investment in coal projects like this one?
That's where my work over the next few months will come into play. Without trying to prove any particular side of the energy production argument, I am looking for the facts: does the entire economy benefit from the coal industry, how much job creation exists and who stands to gain from new coal? More to come.