South Africa needs coal as a major employer as well as an indispensable source of baseload, while Kenya’s leadership seems committed to installing 1.05GW at Lamu, and other projects are being developed from Morocco to Madagascar. Coal remains a key element in many countries’ energy mix, while generating levels of controversy only exceeded by nuclear as the world transitions to an eventual post-carbon economy. Thus probably the feistiest session at this year’s Africa Energy Forum debated the future of coal. Participants led by Norton Rose Fulbright lawyer Simon Currie and South African IPP Office head Karén Breytenbach – architect of the renewable energy independent power producer procurement (REIPPP) programme – complained that the critical subject was relegated to the last day on 22 June. Critics at the Mauritius meeting questioned whether coal should feature at all. Breytenbach countered that “more honesty is needed” in discussions.
Deprived of finance by most western institutions, coal projects face layers of difficulty. Technology advances mean cleaner projects, and coal schemes tend to have impacts along a full value chain – from mining the feedstock to using residue to make fertiliser – but financiers are under pressure, Standard Bank head of power, corporate and investment banking Rentia van Tonder said. Many credit committees reject coal projects out of hand, but a more nuanced approach could allow viable schemes to be implemented. “We need to challenge each other to see how we can unpack these issues,” she said.
According to US Trade and Development Agency regional director Lida Fitts, one third of responses answering a call in February for initial proposals on cleaner coal infrastructure came from southern Africa, where there is also interest in coal-to-gas projects. Most striking are data showing US coal exports to Europe rising sharply, as Germany and others introduce clean coal technologies to complement renewables.
According to a representative of Lemur Resources’ 60MW Imaloto project in Madagascar (AE 370/8), the African Development Bank declined to finance a coal-fired plant, but China will offer 85% Sinosure cover. South Korea and the Development Bank of Southern Africa may also consider projects. Coal-related transmission schemes may be easier to finance.
Giving substance to clean coal arguments, technology providers argue that recent innovations have tackled key issues including emissions. Projects that import coal – including Morocco’s delayed Safi plant and Kenya’s controversial Lamu scheme (AE 370/4) – may make less sense than those that exploit indigenous reserves. And megaprojects may have had their day. “We are never going to do the Medupis and Kusiles again,” Breytenbach said. But smaller, distributed coal-fired projects have a future, and indigenous producers can’t ignore other economic factors. Breytenbach noted that South African coal projects were denominated in rand, while gas was priced in dollars.
From mining to associated industries, coal jobs may be dirty but they mean people can eat. And the industry can clean up. “We have to find ways to make these things palatable… In South Africa we have seen technologies people said cannot work and we give them room to test and see if they work,” Breytenbach concluded. Renewable energy and coal need not be competitors. And if the woman whose REIPPP helped revolutionise the wider African industry is keeping an open mind about coal, her arguments should at least get a fair hearing.
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