- The report evaluates five potential pathways, including having no additional gas supply.
- South Africa’s potential future gas demand will be driven by four key sectors: electricity, synthetic fuels production, industry, and transportation.
- Gas-to-power (GTP) plants will displace diesel and enable a high penetration of renewable energy in the power system.
A new report on ‘The role of gas in South Africa’s path to net-zero energy’ argues in favour of a pathway based on the importation of liquefied natural gas (LNG), which it describes as “optimal” because it reduces the risk of stranded assets and gas infrastructure lock-in after 2040. The report, released by the National Business Initiative, Business Unity South Africa, and the Boston Consulting Group, is part of a larger research and consultative process on the decarbonization of key sectors of the South African economy.
The report evaluates five potential pathways, including having no additional gas supply at all – a scenario that is not recommended based on an analysis that shows cumulative emissions would be 400Mt to 600Mt higher than in methods with additional gas supply. The report contends that the LNG pathway carries relatively low infrastructure and technology lock-in risks once demand begins to decline after 2040, noting that gas must be phased out entirely by 2050 and replaced with greener alternatives for South Africa to meet its net-zero-by-2050 target.
Furthermore, the capital expenditure required to install floating storage regasification unit (FSRU) infrastructure (R20-billion to R50-billion) and an inland pipeline (R25-billion to R50-billion) would be significantly less than the R200-billion required for a pathway based on an importation pipeline and domestic deposit development. According to the report, the negative impact on the trade balance associated with the LNG pathway would need to be offset by new green export industries, such as a South African e-fuels industry. South Africa’s potential future gas demand will be driven by four key sectors: electricity, synthetic fuels production, industry, and transportation. Gas-to-power (GTP) plants will displace diesel and enable a high penetration of renewable energy in the power system by providing the flexible capacity to manage long-duration intermittency that battery storage cannot currently address.
The report recommends that South Africa leverage policy and specific stakeholder engagement platforms to promote investment drive public-private partnerships and bilateral relations with Mozambique. Investment in research and development for solutions to address methane leakage and gas infrastructure repurposing is also needed. The report acknowledges that, if affordable, gas can serve as a “transition fuel”, replacing more emissions-intensive fossil fuels like coal and diesel.