Understandably, SA’s touted move to renewable energy, seemingly at the expense of coal, is creating angstThere is something arresting about the sound and vibrations of a big, oncoming train. Your best bet to experience the sensation is in Mpumalanga. Its railways see consistent locomotive freight traffic. Their load? Mostly the pitch-black coal consumed by our power plants.
A 2019 estimate put the number of people employed by the SA coal industry at 200,000, equivalent to 1% of the formal workforce. If each of them supports three dependents, shuttering coal mines today would push nearly 1-million people into hardship, an unacceptable outcome. The idea of a “just transition”, which SA has pioneered, is essentially a road map to mitigate those risks while protecting the people who depend on the coal industry for their livelihoods.
Any money the government can save on the development of renewable energy infrastructure can be spent on upskilling coal-facing employees for the clean energy economy., with more in services, transport and logistics. Still, given the gargantuan magnitude of the required renewable energy builds to come, the transition could and should be a catalyst for higher employment.Further deterioration on those fronts would lead to instability that deters investment and stymies growth, leading to more unemployment and eventually civil unrest. Such an outcome would diminish the long-term return potential of the financial and real assets domiciled.
The black and white approach — where companies are excluded outright from your investment universe because of their negative effect on the environment — is fraught with problems in our shallow market. For one thing it can cause risky portfolio concentration. For another, it cuts the lines of dialogue.