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South Africa risks being an outlier by constructing new coal-fired plants

A new report shows that South Africa is one of 13 countries in sub-Saharan Africa still considering coal, and one of only two countries currently constructing new coal-fired plants.

Released by E3G, No New Coal by 2021: The Collapse of the Global Coal Pipeline assesses the global pipeline of new coal projects. The report finds that there has been a 76% reduction in proposed coal power since the Paris Agreement was signed in 2015. This brings the end of new coal construction into sight. Against this backdrop, South Africa risks becoming an outlier in the global community if it pushes ahead with plans to develop new coal-fired power plants.

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In addition to plants under construction at Medupi and Kusile, the country is considering the development of a 1,320MW facility in the Musina-Makhado Special Economic Zone, while the 2019 Integrated Resource Plan makes provision for another 1,500MW of coal power.

Economists warn that if South Africa maintains its reliance on fossil fuels, its exports will be at risk as other markets impose carbon border taxes. Furthermore, coal plants risk becoming stranded assets amid the shift to a carbon-neutral global economy.

According to the report, by independent climate change think tank E3G, Sub-Saharan Africa’s pipeline of new coal projects has reduced by 47% since 2015, to 15GW (5% of the global total). Over this period, seven countries on the continent have fully scrapped their pipelines. Just 13 countries in the region are still considering coal, and only South Africa and Zimbabwe are currently constructing new plants.

Declining numbers of countries with a coal pipeline within and outside the OECD & EU since 2015

The report also finds that Africa’s pipeline of coal projects is being largely funded by China, which is the last remaining major provider of public finance for overseas coal projects, following Japan and South Korea’s recent commitments to end coal finance.

Chinese financial institutions are involved in 13 projects in eight countries, totalling 11.4GW of planned capacity (or 76% of the total pipeline in the region).

More countries shun coal-fired plants

Since 2015, 44 world governments have committed to no new coal-fired plants, while a further 40 have no projects in the pre-construction pipeline, meaning they are also in a position to commit to ‘no new coal’.

The report finds that action by just six countries could remove 82% of the remaining global pipeline. China alone accounts for 55% of the global total, followed by India, Vietnam, Indonesia, Turkey, and Bangladesh. The remaining pipeline is thinly spread across a further 31 countries, 16 of which are only one project away from embracing a future without coal. These countries could follow global momentum and regional peers in ending their pursuit of new coal-fired power generation.

If China follows East Asian neighbours Japan and South Korea in ending overseas coal finance, it would facilitate the cancellation of over 40GW of pipeline projects across 20 countries.

COP26, earmarked by COP President Designate Alok Sharma as “the COP that consigns coal to history”, will be a key moment for demonstrating momentum away from new coal, and for richer countries to provide support to countries in pivoting towards a coal-free future.

Coal is the single largest contributor to climate change. According to a recent UN report (IPCC SR1.5), the use of coal needs to fall 79% by 2030 on 2019 levels to meet the pledges countries signed up to in the Paris Agreement. These pledges are aimed at limiting global warming to 1.5 degrees Celsius to avert the worst impacts of climate change.

The E3G report is released ahead of UN General Assembly and the High-Level Dialogue on Energy, where countries will advance their individual and collective commitments to action.