When it comes to empty promises, COP always delivers, but when it comes to rich nations actually handing over real money to developing nations, the rhetoric hardens. Perhaps this is why the South African decarbonisation finance deal is being heralded as the biggest news from COP26 – a new model for progress for the rest of the world.
And yet, now that the headline has been secured, the actual work must now begin. Even if the money was handed over tomorrow, it will take several years for renewables to reach enough capacity (including storage) to replace Eskom’s decrepit coal fleet.
Until then, the country must limp on, with an Energy Minister clearly wanting to make “the future of coal jobs” an internal African National Congress election issue.
South Africa’s Finance Minister Enoch Godongwana has also joined in, suggesting that Eskom sell some coal plants, before taking on further debt. This is probably the most enlightened suggestion of all so far, and could help to speed up the transition to a more robust, deregulated market.
Meanwhile, India has proposed a “phasing down” of coal, and not phasing it out entirely, although the country substantially reduced its coal imports in 2021, cutting it fine in terms of coal plant stock availability.
China has also upped its domestic production considerably, meaning that even in a harsh winter the country is far more prepared with at least 21 days of coal stocks on hand. An interesting ratio to watch going forward will be coal stock days versus battery storage days.
European power and gas markets are generally weaker as Russia continues to open the gas taps, with coal generally tracking prices lower over the past week. However, it’s more than likely that crude and natural gas markets will start to rally again soon.