Business Day

Cross-border en­ergy deals ig­nore cli­mate-change goals

- Climate Change · Clean Tech · Ecology · Transportation · Industries · United States Department of Energy · Eskom · Botswana · Zimbabwe · Swaziland · Mozambique · Edna Molewa · Paris Agreement · Paris · Public Investment Corporation · Government Gazette · Tina Joemat-Pettersson

NOT much has been said about the min­is­te­rial de­ter­mi­na­tion printed in the Govern­ment Gazette on April 20 2016 that 3,750MW of coal-fired elec­tric­ity sup­ply ca­pac­ity will be through cross­bor­der power pro­cure­ment. It re­quires that this ca­pac­ity be se­cured from in­de­pen­dent power pro­duc­ers (IPPs), and the pro­curer will be the Depart­ment of En­ergy.

This is the lat­est de­ter­mi­na­tion in terms of the long out­dated In­te­grated Re­source Plan — IRP 2010 — for elec­tric­ity sup­ply. This is clearly be­ing re­tained as the of­fi­cial plan un­til var­i­ous de­sired pro­cure­ments are so ad­vanced as to be un­af­fected by a new plan. The depart­ment com­mit­ted to a twoyear plan­ning cy­cle, but has pro­duced noth­ing since a draft IRP Up­date Re­port was tabled in 2013 and later with­drawn.

The no­tice ex­plains that the 3,750MW “rep­re­sents the ca­pac­ity al­lo­cated to ‘Coal Pul­verised Fuel (PF), Flu­idised Bed Com­bus­tion (FBC), Im­ports … for the years 2025 to 2030…” in the IRP 2010.

Thus the ca­pac­ity al­lo­cated to var­i­ous kinds of coal-fired gen­er­a­tion over the last five years of the plan­ning pe­riod has now been al­lo­cated to im­ports. The de­ter­mi­na­tion stip­u­lates that tim­ing “may dif­fer from the timetable set out in Table 3 of the IRP”, and that “the pro­cure­ment pro­grammes shall tar­get con­nec­tion to the Grid for the new gen­er­a­tion ca­pac­ity as soon as rea­son­ably pos­si­ble …”.

This means pro­cure­ment is al­ready in the works for the en­tire al­lo­ca­tion to coal­fired power un­der IRP 2010-30 (a to­tal ca­pac­ity of 6,250MW, in ad­di­tion to Medupi and Kusile at about 4,800MW each), backed by min­is­te­rial de­ter­mi­na­tions re­quir­ing Eskom to pur­chase the out­put.

A re­cent depart­ment pre­sen­ta­tion to Par­lia­ment noted that a “re­quest for in­for­ma­tion” re­gard­ing coal-fired power projects in June 2014 drew in­ter­est “shown by 80 IPPs in­clud­ing projects in Botswana, Zim­babwe, Swazi­land and Mozam­bique”.

This cross-border pro­cure­ment could be worth about R32bn per an­num, as­sum­ing a price of R1.20 per kWh, which is widely con­sid­ered a cred­i­ble bench­mark for new coal-fired elec­tric­ity sup­ply. This as­sumes pol­lu­tion-con­trol equip­ment as re­quired in SA, in­clud­ing flue-gas desul­phuri­sa­tion (FGD). It also as­sumes the power pur­chase agree­ments cover 80% avail­abil­ity of the to­tal ca­pac­ity. Per­haps IPPs across the border will of­fer some­thing cheaper (about R26bn per an­num at R1/kWh), as wa­ter may not be avail­able for FGD.

One facet of such a power sup­ply ini­tia­tive is the prospect of Trea­sury un­der­writ­ing Eskom power pur­chase agree­ments that seek to se­cure in­fra­struc­ture in­vest­ments in re­gional rather than do­mes­tic projects. While re­gional co-op­er­a­tion on elec­tric­ity sup­ply is an es­tab­lished pol­icy and plan­ning ob­jec­tive, it is not usu­ally as­so­ci­ated with agree­ments that will fur­ther en­trench our heavy de­pen­dence on coal.

Eskom CEO Brian Molefe has re­cently shown dis­dain for govern­ment com­mit­ments to power pur­chase agree­ments with re­new­able en­ergy IPPs, prompt­ing the govern­ment to protest that it is not for Eskom to make pol­icy. Eskom must be aware of the obli­ga­tions to cross-border coal-fired power pro­cure­ment con­tained in the min­is­te­rial de­ter­mi­na­tion. Will the CEO’s ar­gu­ments against pro­cure­ment of re­new­able en­ergy be ap­plied to coal-fired IPP agree­ments?

Another facet of the de­ci­sion is an ex­ter­nal­i­sa­tion of the na­tional car­bon foot­print of elec­tric­ity sup­ply, as the emis­sions will also be cross-border. Us­ing the as­sump­tions above, emis­sions from such gen­er­a­tion will be in the re­gion of 20Mt per an­num, about 3.6% of SA’s to­tal emis­sions.

Our Na­tional De­vel­op­ment Plan ex­plic­itly recog­nises that shift­ing emis­sions over the border is not a le­git­i­mate cli­mate change mit­i­ga­tion strat­egy. In 2035, 20Mt would be at least 15% of what our to­tal an­nual emis­sions need to come down to, to have at least half a chance of achiev­ing the global mit­i­ga­tion goal.

It re­mains to be seen whether the lon­gawaited In­te­grated En­ergy Plan might adopt, or will at least in­ves­ti­gate, an emis­sions re­duc­tion ob­jec­tive con­sis­tent with the global goal. This ques­tion, tabled when the con­sul­ta­tive process was launched in May 2012, con­tin­ues to be ig­nored.

The de­ci­sion to im­port coal-fired power puts into per­spec­tive the com­plaint to the pub­lic pro­tec­tor lodged by the Al­ter­na­tive In­for­ma­tion and De­vel­op­ment Cen­tre (AIDC), joined by a dozen other or­gan­i­sa­tions. The com­plaint quotes the re­quire­ment of the Na­tional Cli­mate Change Re­sponse White Pa­per, adopted in 2011, to set medium- and long-term De­sired Emis­sions Re­duc­tion Out­comes (DEROs) — to 2030 and 2050 re­spec­tively.

Their com­plaint tar­gets the in­ter­min­is­te­rial com­mit­tee on cli­mate change, chaired by En­vi­ron­men­tal Af­fairs Min­is­ter Edna Molewa. In May, the AIDC pub­lished an open let­ter to the com­mit­tee mo­ti­vat­ing ur­gent, multi-stake­holder de­lib­er­a­tion of na­tional cli­mate change mit­i­ga­tion ob­jec­tives and, most par­tic­u­larly, sec­toral emis­sions re­duc­tion out­comes for 2030.

It also urged the iden­ti­fi­ca­tion of a na­tional green­house gas emis­sions path­way to 2050 that is con­sis­tent with the “well be­low two de­grees” ob­jec­tive of the Paris Agree­ment, signed by Molewa in April. The min­is­ter did not re­spond to the let­ter.

The pub­lic pro­tec­tor com­plaint al­leges mal­ad­min­is­tra­tion for al­low­ing the elab­o­ra­tion of mit­i­ga­tion pol­icy to be un­duly de­layed, to the detri­ment of re­spon­si­ble pub­lic in­vest­ment plan­ning.

It also charges mal­ad­min­is­tra­tion for al­low­ing the process on DEROs to be held hostage to the depart­ment’s avoid­ance of timely en­ergy plan­ning, and for ef­fec­tively al­low­ing the depart­ment to con­strain fu­ture op­tions for cli­mate change re­sponse.

It fur­ther ar­gues that the com­mit­tee should not be al­low­ing mas­sive en­ergy in­fra­struc­ture com­mit­ments to be made in the ab­sence of clear emis­sions ob­jec­tives and a low-car­bon en­ergy strat­egy.

The sig­nif­i­cance of En­ergy Min­is­ter Tina Joe­mat-Pet­ters­son’s de­ter­mi­na­tions for elec­tric­ity sup­ply can­not be mean­ing­fully as­sessed against the very broad na­tional emis­sions range de­scribed in the 2011 pol­icy. That al­lows for an­nual emis­sions any­where be­tween 398Mt and 614Mt up to 2035, and an equally wide range for de­cline there­after. This ap­par­ently doesn’t bother the depart­ment, but what of other sec­tors and ac­tiv­i­ties for which emis­sions re­duc­tion is more chal­leng­ing or costly than the op­por­tu­ni­ties read­ily avail­able in elec­tric­ity sup­ply?

Other stake­hold­ers and govern­ment en­ti­ties, such as the Pub­lic In­vest­ment Cor­po­ra­tion, should be de­mand­ing clar­i­fi­ca­tion of cli­mate change pol­icy with­out wait­ing for the pub­lic pro­tec­tor to in­ves­ti­gate. The coal lobby is try­ing to se­cure as much busi­ness as it can be­fore peo­ple get to grips with what the global goal re­ally means. Avoid­ing the is­sue will only make it worse.

This cross-border pro­cure­ment could be worth about R32bn per an­num, as­sum­ing a price of R1.20 per kWh

Wor­thing­ton is a Democ­racy Works Foun­da­tion as­so­ciate, free­lance re­searcher and ac­tivist who has worked on en­ergy and cli­mate change is­sues in the South African NGO sec­tor since 1995.

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