Is carbon capture and storage still a feasible option for South Africa?

Climate change is one of the greatest challenges that society is and will be dealing with in the future. Global carbon emissions have reached an all-time high and if not urgently addressed to reduce these emissions the world will continue to witness an increase in global temperatures.

The 2018 Special Report by the Intergovernmental Panel on Climate Change (IPCC) emphasised the need for collective global action to reduce carbon emissions to ensure that global temperatures do not exceed the safe zone of 1.5°C. Worst-case scenario, if temperatures do exceed this limit, is that continuous irrevocable impacts will continue to occur and this time we may not be so lucky in being proactive to prevent the impacts.

According to the World Economic Forum, if the 1.5°C goal is to be met, substantial investments in low-carbon technologies will be necessary. One of the key technologies that have been implemented as a strategy in some countries, and is projected to be a real game-changer in the future, is carbon capture and storage (CCS). The Global Institute of CCS is one of the leading authorities to ensure the adoption and deployment of this technology.

Simply put, CCS is a technology that captures carbon emissions from large-point sources such as power stations where it is transported and deposited in underground geological formations. The International Energy Agency (IEA) expects CCS to contribute about 20% of total emissions reduction by 2040, along with other sources of renewable energy and clean technologies.

South Africa is one of the few developing countries in the Global South and on the continent that has embarked on the potential deployment of CCS. Plans of CCS began way back in 2004 when the then-department of minerals and energy commissioned the CSIR to look into the potential of the country to embark on CCS. The report that followed was very promising as it was found that 60% of the country’s annual carbon emissions was sequestrable. This essentially meant that the number of emissions from point sources could be captured and stored underground.

Following this, in 2009, the Carbon Geological Storage Atlas was compiled by the Council for Geoscience. This Atlas identified potential geological storage sites for the deployment of CCS. The two sites that emerged as the best were the Algoa Basin in the Eastern Cape and the Zululand Basin in KwaZulu-Natal.

The developments that occurred over the years paved the way for the South African Centre for Carbon Capture and Storage (SACCCS) to be established within the South African National Energy Development Institute (Sanedi). The importance of SACCCS was to develop and build capacity – both human and technical. In 2012, the South African CCS Road Map was endorsed by Cabinet which aimed to guide the development of CCS activities over the years.

It is important to note that within this road map, two of the goals have already been met – the investigation of CCS as well as the Atlas. The goal for 2017 was to commence the test-injection project which has not been achieved yet and this has hindered the implementation of other plans such as the commencement of a CCS demonstration plant, which was expected to commence in 2020.

Despite the delay in the implementation of some of the intended goals, SACCCS must be commended on its various and extensive stakeholder engagement activities to ensure that awareness and knowledge are increased around new technologies such as CCS.

In a country that is as diverse as South Africa, but also plagued with various socio-economic issues, it is imperative that at sites where CCS is intended to be deployed, that surrounding communities are consulted and afforded an opportunity to be involved. There have been several instances globally in developed countries such as the Netherlands and Norway where local communities have protested against CCS deployment because of the lack of engagement and lack of knowledge.

This, unfortunately, resulted in massive CCS projects being stalled or completely abandoned. In a country that is as volatile as ours where protests happen frequently, it is not certain that this will not occur where CCS is intended to be implemented, but SACCCS is making great strides to ensure that there is a smooth transition.

It seems like we are on an impressive track with regards to the technical and human expertise around CCS in the country. But the big question lies in whether CCS is a feasible option.

A 2017 technical report by Promethium Carbon highlights that the economic feasibility of the CCS business case is directly related to the high carbon emissions of the country.

South Africa is one of the biggest emitters of carbon emissions due to our intensive coal-based economy. This can be an advantage to argue for the feasibility of this technology as CCS would enable the country to continue to exploit its abundant coal reserves while meeting its climate commitments.

CCS can be that much-needed technology which makes the necessary transition towards a low-carbon society and economy. However, since February 2019 the Carbon Tax Bill came into effect which clearly states that any company or listed entity which releases emissions of greenhouse gases above a certain threshold will have to pay a carbon tax.

Interestingly, even though some companies or entities will think about changing their strategies and operations so that they do not pay another tax, this does not mean that they will stop releasing emissions. In this case, CCS again presents itself as a feasible option.

It is important, though, to reflect on how the feasibility of CCS is not only related to environmental factors, such as the amount of carbon emissions released. Economic feasibility is just as important because even if a business case exists, who exactly is going to invest in CCS projects? The Norwegian government, as well as the World Bank, have committed to investing millions of rands for CCS projects. The funding, though, has been allocated to give the country a boost and millions will not be injected into the country on a permanent basis. Eventually, CCS will need to target investors both locally and internationally to ensure that funds are secured, especially if CCS projects will operate on a commercial scale in the future.

In any economic context, investors want a secure and regulatory environment to invest their money and ensure that profits will eventually be made. There are a number of obstacles that should be noted that could decrease investor appetite for CCS.

First, South Africa does not currently have a legal and regulatory framework dedicated to CCS and it seems like this has been placed on hold for a number of years. The lack of legislation could signal to investors that the country is not ready for such large-scale projects.

Second, a number of projected goals for CCS have not been reached and this can create reluctance from investors.

Third, there has not been any explicit political mandate on CCS. This is a notable obstacle because political leaders can influence and give much-needed confidence to investors, but their lack of communication can produce the opposite outcome.

With carbon capture and storage, it is vital that the pros and cons of implementing this technology be analysed from all angles. Carbon capture and storage can be feasible given the right political, legal and financial mandate which can be effectively implemented. It is also important to understand that carbon capture and storage is a technology that will complement our climate policies and will be used in conjunction with renewable energy and other clean technologies. There is no one solution to tackle climate change, it is important that different forms and alternatives are incorporated to help us transition towards a low-carbon society.

Yes, there will be glitches in implementing such new technology in a developing country like ours. But we must also be reminded that we do not have another 10 or so years to decide on the fate of carbon capture and storage. This technology is also about the skills development, expertise and value chains that can emerge in the country in the future while attaining our climate goals.

We cannot afford to miss out on such an opportunity. DM

Nomhle Ngwenya is a PhD candidate at the University of the Witwatersrand. Her research looks at the role of institutional frameworks in promoting green bonds to finance carbon capture and storage. The South African Centre of Carbon Capture and Storage (SACCCS) funded her Honours research which looked at stakeholder engagement of carbon capture and storage.