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Ill-considered, Rushed and Presumptuous? Delving into South Africa’s National Integrated Resource Plan

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The closing date for registering to participate in one of the biggest energy-related policy processes in South Africa, the national Integrated Resource Plan (IRP) 2, was last Monday 3 May 2010.

 

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The process is to set the electricity planning agenda for 25 years; determining the role for renewable energy, nuclear energy, coal-fired power, the independent power producers and thus the role of Eskom, imports, and the country's carbon reduction commitments. The policy will also likely hold implications for the region, in which South African energy interests are invested and Eskom's tentacles gripped. But there are several aspects to the formation of the IRP2 that already look problematic. Some of these issues stand aside from it following a highly flawed IRP1 process; government having already approved the controversial new infrastructure build programme - initially pegged at R343 million - and publicly announced intentions to expand nuclear; and the electricity regulator having approved two tariff hikes.

 

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There is no doubt that South Africa needs to extricate itself from dependence on cheap, dirty electricity on which it claims to have achieved global competitiveness for decades. Almost 80% of South Africa's greenhouse gas emissions are generated by the energy sector and the country is ranked amongst the top twenty energy-related emitters in the world. Government, or at very least the lead department for climate change, the Department of Water and Environmental Affairs (DWE), that is drafting a policy later this year, acknowledges this. In particular, they emphasise that the country must diversify its energy mix, establish energy efficiency measures, invest in the development of new and clean technologies and industries, and begin the journey to a low carbon economy. They also consider the need for carbon constraints and for substantial emission reductions in the energy sector to be central to the energy policy processes, of which the IRP2 is key.

 

But thus far the process has been contentious. The timetable being pursued is extremely ambitious with just five months until the IRP2 policy is gazetted. This will include a very involved drafting and stakeholder consultation around the parameters, modeling of scenarios and producing the draft IRP2. The Department of Energy (DoE) has thus far provided vague dates for these to happen, although they indicate that a ‘stakeholder pack' will be sent to all those who have registered to be involved. This notwithstanding the poor advertising for the process, which was announced in only a small selection of newspapers.

 

Then there is the matter of the special task team that has been appointed by the Department to run the entire process. Representatives from big industrial companies including Xstrata, Anglo American, and BHP Billiton have been appointed to the team. BHP Billiton is one of the 138 corporations who have benefited from special pricing agreements with Eskom, having received power at 12c per kwh which is below even the cost of production. The role of the team is opaque, as they have been asked to sign confidentiality agreements in which they are not allowed to speak directly to the public or the media. It is telling that the favourable treatment industry already received from government is echoed in the running of the process. More to the point, the process reflects a serious conflict of interest that pits elite lobbying interests against national public interests, in a situation where the majority of people suffer the brunt of punishing electricity price hikes and live in energy poverty. These issues are particularly stark when considering that community and civil society representation is glaring by its absence.

 

The draft parameters of the IRP2 list a set of assumptions with serious gaps in it. As far as the supply side goes, the in-built assumptions appear to include an unquestioning acceptance of a continued reliance upon coal and nuclear. Kusile, the coal-fired power station that is next in line in the new build programme after Medupi, is considered a done deal. This despite the fact that there is no money for such a massive project; Eskom declared a funding gap of R110 billion in the next three years and R190 billion in the next seven years, in a presentation on its funding model to the Portfolio Committee on Public Enterprises on Tuesday. There will also be no savings on carbon emissions. In fact, Kusile (like Medupi) will emit 24 megatons of carbon, equivalent to Norway's (or a small Western European country's) entire emissions.

 

Eskom's presentation also contained veiled threats about security of supply, with a firm message that the new build options must continue and "cannot be deferred" to prevent "negative consequences for the economy". In fact, many, if not most of the parameters are about security of supply to the exclusion of environmental considerations. Nuclear and renewables (listed as one unit) are the only carbon-related parameters. If one reads the Eskom presentation and the DoE presentation together there is a certain harmony of thinking that ought not to be there if the IRP2 policy is a forward-looking document. Perhaps Eskom's funding model, which places its own survival next to security of supply, should be a critical departure (or fault line) for the DoE. Locking in these assumptions, or accepting the conventional wisdom, will ultimately mean that genuinely exploring renewable options to meet carbon emission targets, and diversifying power supply options including considering independent power producers, will be effectively taken out of the mix.

 

The variables should also seriously consider demand side management. This should not only relate to energy efficiency measures but to changing (or rather reducing) demand. Considering that up to 75% of electricity is used by industry, the effort should be on transforming industry itself, changing prices to make electricity a more valuable resource for them, which is also an equity issue, and diversifying to smaller industries. These should be considered amongst other issues that directly challenge some of the myths around demand that may be created in order to justify untenable new build projects.

 

Clarity and consensus on the concepts is also vitally important if just and effective outcomes are to be achieved. The concept of ‘clean' is also varied and should be clarified. One of the parameters implies that nuclear power would address climate change concerns and should thus considered ‘clean', but this is highly contested. Clean coal is another fractious issue.

Government has recently boasted that Medupi will be using supercritical coal technology (‘clean coal'), which emits fewer greenhouse gases, and will thus be applying for carbon credits. As the difficult days lie ahead, careful attention must be paid to drafting a final policy whose process has integrity. The consolidation of a democracy is dependent on it.


Trusha Reddy, Senior Researcher: Climate Change Project, Corruption & Governance Programme, ISS Cape Town

 

 

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