South Africa’s Shale Gas Resources – Chance or Challenge?

South Africa faces the triple challenge of (a) fueling its economic development by meeting the rapidly growing energy demand; (b) increasing the reliability of its power system; and (c) letting domestic greenhouse gas emissions peak between 2020 and 2025 in line with its pledge to the UNFCCC under the Paris agreement. Recently discovered domestic shale gas reserves are currently under evaluation as a potential new energy source, to provide clean, reliable and cheap electricity while mitigating greenhouse gas emissions. But, the impact of shale gas on greenhouse gas emissions is far from settled. In order to evaluate if shale gas can play a viable role in solving South Africa’s energy dilemma, we apply a country-level version of the integrated assessment model MESSAGE to analyze and quantify the interdependence between shale gas extraction and climate change mitigation e_ort regarding the South African energy pathways and its domestic greenhouse gas emissions. Our results illustrate, that low cost shale gas can lower the overall energy system costs compared to the no-shale-gas counterfactual. At the same time, a system with abundant low cost natural gas from shale sources requires a stronger carbon price signal compared to the no-shale-gas scenarios in order to achieve the same desired mitigation goals. Therefore, reaching the mitigation goals might be more economically achievable utilizing low cost shale gas in combination with a more stringent climate policy measure compared to a no-shale-gas scenario.