The Contradictory Tide: Weighing South Africa's Energy Investments Amid a Renewables Wave

The allure of energy independence and economic vitality through offshore gas exploration has piqued South Africa's interest, as illustrated by TotalEnergies Exploration & Production SA's ambitions. The company's plan to drill off the coast near Plettenberg Bay signifies a step toward ensuring the nation's energy security—a move seemingly imperative given the estimated R77bn toll on tax revenue due to load-shedding in 2023.

The proposal, gleaming with prospects of heightened GDP, employment, and household income, positions itself as an antidote to South Africa's energy woes. Nevertheless, an in-depth examination reveals a more intricate and precarious reality. The contentious project has stirred considerable debate, not least from The Green Connection, whose assessment starkly contrasts the purported economic boom.

The critical evaluation points to a common overestimation of oil and gas revenue—with Africa averaging 63% below initial projections—in part due to the inherent commercial variability of such commodities. The situation potentially worsens considering that 45% of the company is foreign-owned, raising questions about the actual economic benefit to the local economy.

The glaring omission of a detailed economic impact on the robust tourism sector of the Garden Route adds to the concerns. Accounting for a substantial 15.6% of provincial GDP in 2020, any threat to this industry strikes at the heart of regional prosperity. The current hazy cost-benefit projection demands clarity—anything less could result in an irreversible misstep for the local economy.

South Africa's medium-term economic planning emphasizes prudent investment, especially in the face of a global shift towards decarbonization—a stark contrast to the 25-year lifespan of the proposed gas venture. With the imminent introduction of the EU's carbon border adjustment mechanism, carbon-intensive industries sit on the precipice of major market shifts, further questioning the wisdom of a gas-centric approach.

The specter of stranded assets looms as the global market stabilizes post-conflict and hastens towards cleaner energy solutions. Such risks cast a long shadow over the proposed gas infrastructure and call for intense scrutiny and long-term strategizing.

Pitted against these uncertainties are South Africa's abundant solar and wind resources, poised for exploitation with technical prowess at the country's disposal. It throws into sharp relief the stark choice between transient gas fortunes and sustainable energy alternatives.

The Green Connection's formal objections to TotalEnergies' gas project underline a steadfast advocacy for renewables, urging presidential leadership focused on long-term prosperity. South Africa's crossroads moment beckons a decision—will it seize the renewable momentum or be swept away by the risky currents of offshore gas investment?