SOUTH AFRICA

The world needs Africa in order to stop climate change, EU Commission President Ursula von der Leyen emphasised during the EU-Africa summit in early 2022. South Africa, the continent’s most developed economy, is pursuing ambitious goals in this field, similar to what is being debated in Germany. Examples include the reduction of CO2 emissions and minimizing the enormous dependence on coal. The role that the various players in South African politics who could veto these efforts will play is hard to assess, however.

Restructuring the energy supply in Africa, whose population is growing rapidly, is seen as one of the major challenges in the global fight against climate change. South Africa is one of the 15 largest CO2 emitters in the world and produces the highest emissions per capita in Africa. However, South Africa has set itself ambitious goals as stipulated in the Integrated Resource Plan (IRP), which came into force in October 2019. The share of renewable energies is to be increased from 3 to 25 percent by 2030, and 35 gigawatts of the current 42 gigawatts of coal-based electricity is to be redistributed to other energy sources by 2050. The latter target, however, has the potential for causing quite some turmoil for the ruling African National Congress (ANC) in domestic politics. The plan‘s implementation, therefore, needs to be evaluated critically, irrespective of the consequences of Covid for South Africa, which will probably have a negative impact on these ambitious projects. Since July 2019, a carbon tax has been in effect, which was raised to the equivalent of 9 US dollars per ton of CO2 in February 2022, the first such increase. Further increases are planned for the next few years. However, there are still various exemptions, limiting the effectiveness of the tax.

South Africa is also one of the most important exporters of metals and minerals and is the world’s number one producer of platinum and chromium. . As these natural resources are increasingly needed for e-mobility, the entire region of southern Africa will gain geopolitical relevance in the coming years. Water insecurity, on the other hand, is an issue that has not received much political attention, but must not be forgotten.

South Africa has demonstrated a high level of willingness to cooperate with Germany. Numerous cooperation projects in the fields of renewable energy, energy transition and climate policy have been initiated. In addition, political relations between both countries have been good since the end of apartheid and the subsequent adoption of one of the most modern and liberal constitutions in the world. South Africa’s current political commitment to expand the use of renewable energies presents an opportunity for Germany and the German economy to intensify cooperation.

At a time when multilateral organisations and rules are questioned, South Africa can be regarded as a reliable partner for Germany in certain core areas – even if this is occasionally undermined by an ideologically driven loyalty to old alliance partners who supported the ANC liberation struggle. Since the Zuma era ended and Ramaphosa took over the presidency, South Africa has increasingly pursued a foreign policy that is oriented towards partnership with the West, without neglecting a partnership with China that is also growing stronger. South Africa is a member of the German Foreign Office´s Alliance for Multilateralism initiated in late 2019.

The African continent offers huge opportunities for investments in renewable energies. Cooperation between Germany and South Africa is already quite close in this area and is supported mainly by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the German Chamber of Commerce Abroad (AHK) and the Kreditanstalt für Wiederaufbau (KfW). A project funded by the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) supports South Africa´s climate policy, focusing on the development of a national climate policy and the strengthening of South Africa’s role in international climate negotiations, which also promotes Germany’s strategic international interests and is thus very welcome. A project funded by the Federal Ministry of Economic Cooperation and Development (BMZ) also promotes renewable energies and energy efficiency. The Federal Ministry for Economic Affairs and Climate Action (BMWK) has also been active in the German-South African Energy Partnership since 2013. In late 2021, South Africa concluded an ambitious and long-term partnership for an equitable energy transition with Germany and other partners. The goal of this agreement is to accelerate the de-carbonisation of the South African economy and, at the same time, to support an inclusive transition of the South African coal-mining sector. In addition, cooperation between Germany and South Africa on developing hydrogen and fuel technologies has gained importance recently. South Africa could play a key role in the production of green hydrogen thanks to its enormous renewable energy resources and its good research and technology infrastructure, compared to other African countries.

It remains to be seen, however, how South Africa will implement its ambitious strategies in practical terms. In the past, many progressive legislative initiatives were either implemented very slowly by the ANC government or not at all. In this context, the dwindling influence of the reform-oriented forces in the ANC must be continuously re-assessed and analysed against the backdrop of the country’s numerous veto players. Even after President Ramaphosa has taken office, the progressive forces in the ANC still do not have a secure power base.

A similar uncertainty revolves around the medium to long-term impact of the Covid-19 crisis on the plans for restructuring the energy supply in South Africa, which have been initiated. Shortly after the outbreak of the pandemic and the drastically reduced energy demand that followed, private providers of renewable energies were barred from selling their previously guaranteed power volumes. The national public power supplier, Eskom, justifies this by invoking force majeure, and yet continues to source energy from its own coal-fired power plants. Although energy demand will rise again in the short term, this situation has led to a loss of confidence among private utilities which could have a negative impact on the future investment climate.

There is potential on both sides for a further strengthening of the partnership. Due to South Africa‘s economic relevance not only for the southern African region, but also as an important trading partner for Germany, the energy transition offers great potential for German companies: Germany is South Africa’s third most important trading partner after China and the US. German companies hold a leading position in the field of renewable energy: more than 20 already have branch offices in South Africa, hoping for a progressive liberalisation and decentralisation of the electricity market. As a matter of fact, South Africa is among a handful of countries on the continent that organise tenders for renewable energy projects in a competitive and transparent procedure. The Renewable Energy Independent Power Producer Procurement (REIPP) is an important tool for expanding the share of renewable energies in the country.

It will be interesting to see if there is also potential for German-South African cooperation in promoting renewable energies beyond South Africa. In economic terms, South Africa is the gateway to Africa. Many South African entrepreneurs are active across the continent and possess the knowledge that is necessary for achieving business success in Africa. Being the only African nation within the G20, South Africa can act as a channel for private-sector climate investments in Africa. The predicted doubling of Africa’s population by 2050 and the urbanisation fueled by it create great potential for new sales markets. Cooperation with Africa is mentioned as part of the European Commission’s European Green Deal, which offers additional opportunities to focus on South Africa.

Based on the positive partnership, Germany should make sure to engage in an honest and constructive dialogue with South Africa and insist on addressing the lack of transparency and corruption in the energy sector. Providing financial and technical support for the energy transition should not be the only engagement. It should be combined with demanding appropriate political reforms that are not just adopted but also implemented.

New energy models are becoming increasingly competitive and, due to weaknesses in the public sector, market economy-based concepts from the private sector are gaining relevance. Germany can support South Africa politically and technically, based on its expertise in energy matters, in order to trigger similar developments in the region. Economic access to Chinese capital, expertise and investment plays a role in South Africa, but is not as relevant as in other countries on the African continent. Against this background, Germany should step up its efforts to convince South Africa of the advantages of new alliances and partnerships, ideally based on shared values.

Anja Berretta heads the KAS Regional Programme for Energy Security and Climate Change in Sub-Saharan Africa.
Tilmann Feltes, PhD heads the KAS Office in Tanzania and was policy advisor for Southern Africa in the Department of Sub-Saharan Africa.

Last update: 16 May 2022