Coal power could cost South Africa over R1.6 trillion — and it’s not because of load-shedding
A new EU policy imposing a cross-border carbon tax on imports from countries that rely heavily on coal power could cost the South African economy R1.63 trillion over the next 15 years.
This is according to estimates from analysts at S&P Global Ratings and refers to the EU’s carbon border adjustment mechanism, which had its final framework approved in May.
City Press reported that the approval of this framework follows “record-high temperatures and heatwaves in parts of Spain, Greece, Italy and Albania, which researchers attribute to climate change.”
The vision for this new tax is that it would reduce Europe’s greenhouse gas emissions by at least 55% by 2030.
The report further notes that the South African government has submitted its objection to the European Commission, arguing that it would place “the burden of climate change” unfairly on South Africa’s economy.
As of now, the plan is for the carbon tax to be implemented in 2026. It would initially affect South Africa’s iron, steel, and aluminium sectors.
Moving forward, industries focusing on plastics and fertiliser will also likely be impacted.
Gwede Mantashe, South African minister for mineral resources and energy
South Africa’s reliance on coal
South Africa’s reliance on coal power is well documented, with mineral resources and energy minister Gwede Mantashe recently claiming that a “part of the load-shedding we are experiencing is due to an effort to move away from coal quicker than we could”.
Mantashe has strongly condemned pressures from developed nations like those in Europe to reduce the country’s reliance on coal.
“South Africans must never allow ourselves to be encircled by the developed nations who fund lobbyists to pit our country’s developmental needs against their own self-serving protection of the environment,” he said.
“Our country deserves an opportunity to transition at pace and scale determined by its citizens.”
Former Eskom CEO Jacob Maroga
Furthermore, former Eskom CEO Jacob Maroga recently told eNCA that Eskom’s best chance of solving load-shedding is focusing on its existing coal infrastructure, rather than prioritising independent power producers — who often provide renewable energy alternatives.
“The most important lever to end load-shedding is to have an improved and consistent performance of the coal fleet,” Maroga said.
However, with the EU’s new policy threatening to have a substantial impact on the South African economy, this adds yet another consideration to South Africa’s energy crisis.
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