According to climate watch as cited in Ritchie, (2020), indicates that the world emits around 50 Billion tonnes of greenhouse gases each year measured in carbon dioxide equivalents (CO2eq). A global overview of the greenhouse gas emissions in 2018 by percentage contributing to the acceleration of climate change, reveals carbon dioxide as the largest emitted greenhouse gas as shown in figure 1.
Figure 1:Greenhouse gas emissions in 2018(EPA, nd)
A breakdown of the global greenhouse gas emissions by sector in 2016 published by climate watch and the World Resources Institute as cited by Ritchie, (2020) indicates that the energy sector is the largest contributor accounting for nearly three-quarters of emissions followed by Agriculture, forestry, and land use as shown in figure 2.
Figure 2:Greenhouse gas emissions by sector in 2016 (Ritchie, 2020)
The energy (electricity, heat, and transport) sector due to its large contribution towards the global greenhouse gas emissions serves as the focal point of the article. This is because any efforts to effectively reduce emissions in accordance with the Paris Agreement, a legally binding international United Nations (UN) treaty on climate change with the objective of limiting global warming to well below 2 degrees Celsius(°c), by 2050 will have to involve the transitioning of energy. Thus, the re-structuring of nation’s economies to align with the Paris agreement’s objective on climate change, presents greater opportunities that South Africa cannot afford to miss out on.
Central to the energy transition is the steady ongoing transformation of electricity generation from fossil-based (e.g., coal, crude oil, and natural gas) to renewable energy sources with relative lower CO2eq footprint. According to IRENA, (nd) the steady integration of variable renewable energy sources (VRE) namely, solar, wind, and hydro among others fitted with battery storage systems, on power grids serves as part of the transition of electricity generation to net zero carbon. Figure 3 shows the system of conveyance of electricity from generation stage by VRE sources to the end user through power grids transmission and distribution networks.
Figure 3:Model of renewable electricity conveyance
The energy storage batteries termed, in-front of the meter (FTM) and Behind the meter (BTM) by the Energy Storage Association as cited by IRENA, (nd) have emerged to be solutions to increase the system flexibility due to their unique capability to quickly absorb, hold and then reinject electricity. FTM batteries are used for connections between stages 1 and 3 that is from generation stage to distribution stage of the system with BTM connections established at the end user stage i.e., commercial, industrial, or residential customers. Thus, both are expected to play a crucial role in the sustainable and efficient storage and conveyance of electricity on a larger scale to meet rising demand.
The path to net zero carbon in the transportation sector has been led by the electrification of cars. According to Woodward, et al., (2020), the sales of battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV) breached over the two million vehicle mark in 2019 with vast majority being light duty vehicles. The figure represents around 2,5 per cent (%) of all new car sales in that year and as much as 74% of global sales were of BEV. Despite the dominance of BEV in the automotive industry, fuel cells (FCEV) are tipped to hold a significant share of the heavy-duty truck and long-distance bus market due to power requirements to pull heavy loads and the vast distances that these vehicles can cover. In addition, the relatively shorter re-fueling time of FCEV over BEV offsets the downtime costs incurred while the truck remains out of action for hours during charging (Howden, nd).
Transport modes other than cars are also electrifying. These include electric scooters, electric-assist bicycles and electric mopeds which have an estimated stock of 350 million electric two/three-wheelers which is in circulation worldwide.
BATTERY INDUSTRY VALUE CHAIN
With battery technologies serving a focal point in the energy transition through electricity generation and the transportation sector, it is essential for South Africa to position itself to capitalize on the increasing demand year on year. Dowling, (2021) citing Statista, forecasts that global demand for EV batteries experienced in 2020 of 110 gigawatt hours (GWh) is set to increase to 6530 gigawatt hours by 2050, which is about 600 times the current value. On the other hand, the total battery capacity in stationary applications is forecasted to increase from a current of 11 GWh to between 100 GWh and 167 GWh by as earliest as 2030 (IRENA, nd).Thus meaning, a great number of batteries with varying sizes and capabilities need to be manufactured to keep up with demand trends. The manufacturing of these batteries relies heavily on critical mineral resources which undergo downstream processing and manufacturing to the final product as shown by the value chain in figure 4.
Figure 4:Battery industry value chain
- Vanadium, Manganese, Nickel, Copper, Lithium, graphite and cobalt all play a vital role in the battery technologies.
- Of the listed raw materials, South Africa holds the comparative advantage as the largest Manganese producer, third largest Vanadium producer and 12th largest producer of Nickel as of 2019.
- From an African perspective, Democratic Republic of Congo (DRC) ranks as the largest and fourth largest producer of cobalt and copper, Madagascar ranks as the largest graphite producer and Zambia ranks as the sixth largest producer in copper production.
- Outside of the battery industry, the potential of FCEV in heavy duty and long-distance buses presents greater opportunities for South Africa as the largest Platinum group’s metal producer (PGM).
It looks almost evident that South Africa and Africa at large will play a huge role in the energy transition through the supply of essential raw materials. However, the question the country should be asking itself should move beyond mineral supply but to capturing the value chain, that is “how can we position ourselves to capture as much value of the battery industry value chain as possible by leveraging off the comparative advantage due to mineral endowment”?
The point of departure to seeking to answer the question should be the understanding of the key enabling factors held by the country and listed below are some;
South Africa hosts well established highly capital-intensive primary processing facilities and base metal refineries;
- Three of the world’s four Vanadium primary processing facilities,
- Four of the six largest PGM majors with vertically integrated operations and own downstream processing.
Fortune Mojapelo, CEO of Bushveld Minerals cited by Creamer, (2021) indicates that the cost of primary processing infrastructure requiring hundreds of millions if not a few billions in US dollars is often a bottleneck and a barrier to entry and thus serves as a key advantage for the country. He further adds that the downstream processing of raw materials to battery ready metals has relatively low initial capital cost with notable example being Thakadu battery materials requiring $20 Million. This represents a significant decrease in the capital intensity of infrastructure required from primary processing to downstream processing for battery ready industry metals. A move to leverage off the current infrastructure should be prioritized.
SA hosts the largest electrolyte manufacturing plant outside of China for Vanadium redox flow batteries.
Bushveld’s electrolyte manufacturing plant for Vanadium redox flow batteries with planned annual capacity of 1 100tonnes(t) of Vanadium is set to serve as the largest outside of China when it is commissioned, and it required capital investment of only $25 Million. These is further evidence in the relatively low capital intensity of the downstream processing facilities required for the battery industry. A key area that the country is heavily underrepresented in the battery industry value chain.
The current electricity challenges faced by the country also presents a significant market to address and, in the process, build prominent renewable electricity generation networks on a larger scale. This in turn bodes well for the country by building on the infrastructure and experience that can be relied upon to approach the global energy transition from as many angles and with as many solutions as possible.
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[Accessed 26 March 2021].
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Woodward, M., Walton, D. B. & Hamilton, D. J., 2020. Electric vehicles, setting a course for 2030. 28 July.