The Consequences Of South Africa's Coal Addiction
Stuff Magazine|October/November 2021
The carbon-based material’s time in SA isn’t done but it’s only a matter of time before we’re forced to turn away from it as a power source

South Africa’s coal addiction is becoming costlier and increasingly risky as the world shuns the dirtiest fossil fuel.

The product of plant matter compressed for millions of years, coal has played a central role in South Africa’s economy since it was first commercially mined in 1870. And thanks to the construction of two massive new coal-fired power plants – Medupi and Kusile – as well as plans to add more, this energy source looks set to power our homes and industries for decades to come.

But for the first time, its role in South Africa’s electricity mix poses serious legal and economic risks – over and above the environmental and health risks we have known about for decades.

For one, fossil fuel-dependent nations are set to become increasingly marginalised in the global trade arena.

The European Union, a key export market for South Africa, plans to start imposing taxes on imports of carbon-intensive goods.

This will translate into an annual tax burden of €300 million on South African exports to the trading bloc, according to estimates by Peter Attard Montalto, head of capital markets research at consulting company Intellidex.

About two-thirds of that will be heaped on steel exports, Montalto says. He adds that all industries will be affected by the EU’s carbon border tax because of South Africa’s overall carbon intensity.

Meanwhile, South Africa’s dependence on coal could see it missing out on global capital flows.

Pension fund managers and other institutional investors are increasingly prioritising ‘green’ investments and ditching those linked to global warming. Moreover, developed economies have committed to mobilising at least US$100 billion a year to help poorer nations in the fight against climate change. Those emerging markets with the most ambitious decarbonisation plans will be best placed to attract cheap funding for their economies.

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