Publications
- Gas will play a critical role in South Africa's strategy to achieve net-zero emissions, according to a study.
- However, South Africa's major supplier of gas, Pande-Temane, will face constraints from 2025 due to declining reserves.
- This threatens the country's decarbonisation strategy if no alternative gas supplies can be sourced.
While gas is set to play a major role in South Africa's path to net-zero emissions, a study shows that a lack of supply threatens the country's decarbonisation strategy.
The National Business Initiative, Business Unity South Africa and the Boston Consulting Group's research paper, The role of gas in South Africa's path to net-zero, was released this week. It unpacks the impact of including gas in the country's plans to reduce emissions from carbon-heavy sectors such as electricity, transport and industrial.
"… [G]as can, if affordably sourced, play a critical role as a transition energy source in South Africa's net-zero journey," the report read. It is envisioned that natural gas replaces coal and diesel fuel sources which are more emissions-intensive. Eventually, gas would be phased out by 2050 and replaced by greener alternatives like green hydrogen once the latter is developed and becomes more affordable.
The country's current gas consumption comes to 180 petajoules (180 trillion kilojoules) per annum. The majority of gas is used in the synfuels sector, followed by the industrial sector. The gas value chain subsequently creates about 46 000 to 56 000 jobs and contributes between 1% and 2% of the country's GDP.
Most of the country's gas is sourced from the Pande-Temane gas fields in Mozambique, via the Republic of Mozambique Pipeline Company. It supplies ~160 petajoules to Gauteng, KwaZulu-Natal and Mpumalanga. Energy and chemicals company Sasol provides about 20 petajoules of gas to KwaZulu-Natal via the Lilly pipeline, according to the report.
Pande-Temane's supply also has a cost advantage. Downstream industrial users pay ~R30 to R90 for a gigajoule. "This is almost half of what LNG could cost on a long-term contract basis and less than five to 10 times the average spot market prices in October 2021," the report read.
However, the Pande-Temane reserves are declining and will be constrained from 2025. "This poses a risk to the decarbonisation ambitions of key sectors in the South African economy, which will rely on gas as a transition fuel or low carbon feedstock," the report read.
The study warned that without additional gas, there would be more emissions in the long run because the synfuels, power and industrial sectors would rely on carbon-intensive fuels like coal and diesel for longer. It illustrates this in the report by outlining different gas supply and demand scenarios.
For example, in a scenario where no additional gas is supplied, but demand for gas remains high - cumulative emissions would come to ~400 megatons higher over 30 years than if additional gas was made available to meet demand. Gas would have displaced the "higher emitting alternatives" like coal and diesel, the report emphasised.
Across its scenarios, the study indicated that the emissions from gas are "relatively low." Cumulative emissions are around 250 to 690 megatons or 3% to 9% of an 8 gigaton carbon budget for South Africa.
The report, however, highlighted other potential sources of South Africa's gas supply over the short, medium and long term.
In the short term (2021 to 2024), the country can supplement the Pande-Temane reserves by relying on liquified natural gas (LNG). LNG mainly would be supplied from floating storage regasification units or gas-carrying ships stationed at ports like Matola in Mozambique and South African ports such as Richards Bay, Coega and Saldanha.
In the medium term (2024-2030), the supply from Pande-Temane could be maximised through "technical work" on the reserves. For example, this is possible through regional cooperation between South Africa and Mozambique to achieve a "win-win" for both parties. The report however noted that the additional gas available from Pande-Temane is not fixed and depends on contractual and other technical uncertainties.
In the long term, beyond 2030, other supply options include LNG and piped gas from Rovuma and other gas fields from Mozambique. Gas can also be sourced from South Africa's exploration activities like Brulpadda and Luiperd gas fields. However, these are offshore projects and have technical challenges.
The study warned against unconstrained gas demand - as the goal is to ultimately move away from using the fuel in favour of green alternatives. The report encourages research into repurposing gas infrastructure for green synfuels and green hydrogen.
