Kearney partner Prashaen Reddy emphasized the significance of gas in South Africa’s energy transition journey, amidst the invitation for public feedback on a draft Gas Master Plan, issued in late April.
Reddy highlighted that recent gas discoveries in Mozambique, South Africa, and Namibia within the Southern Africa region offer opportunities to harness indigenous resources for advancing industrialization, social progress, and economic expansion.
The industry currently supports a workforce of at least 70,000 individuals and contributes significantly to South Africa’s GDP, ranging between R300 billion and R500 billion annually, thanks to the existing indigenous gas supply.
Furthermore, Reddy warned that without a viable gas solution in the years ahead, there are limited substitutes available for gas in energy-intensive industries, which could lead to a decline in industrialization.
He emphasized that gas to power serves as another crucial element in stabilizing South Africa’s power sector as the country strives to diversify its energy mix away from coal, as outlined in the recent draft Integrated Resource Plan 2023.
“Our research on balancing energy security with sustainability delves into the pivotal role of natural gas in the global energy transition. To facilitate the shift to a cleaner energy mix, there’s a necessity for intermittent reliance on cleaner hydrocarbons, like natural gas, to ensure energy security. This reliance will persist until renewable/nuclear capacity or other baseload technologies can be sufficiently developed and deployed,” he explains.
Reddy asserted that natural gas stands out as the cleanest and most emission-friendly fossil fuel, making it ideal for peak generation shaving and baseload provision. Moreover, it serves as a valuable partner for more variable renewable energy sources due to its superior operational flexibility and lower capital costs.
Nevertheless, natural gas continues to emit greenhouse gases (GHGs) and faces limitations due to inadequate gas infrastructure.
Reddy emphasized the necessity of reducing GHG emissions associated with natural gas production and usage. This goal can be accomplished through carbon capture, use, and storage initiatives.
To tackle the deficiency in vital gas infrastructure, substantial international and regional financial investments are necessary
Reddy anticipated financiers facing challenges in decisively defunding hydrocarbon projects due to their ongoing commercial viability, market demand, and returns in the medium term.
The global energy landscape cannot abruptly abandon hydrocarbons, which currently comprise over 80% of the world’s energy mix.
“Gas will serve as a crucial transitional hydrocarbon, providing both security and a diminished environmental footprint until renewable and nuclear capacity can be expanded,” affirmed by Reddy.