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South African Energy Policy Discussion Document |
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South African Energy Policy Discussion Document |
VOLUME I
1. INTRODUCTION
3. DESCRIPTION OF THE ENERGY SECTOR
4. GOVERNANCE OF THE ENERGY SECTOR
Governance
Demand subsectors
Energy supply subsectors
Cross-cutting themes
References
Index to Policy Issues and Options
VOLUME II : Background on the South African energy sector
By the Minister of Mineral and Energy Affairs, Mr R F Botha
Ever since Prometheus (his name means forethought) went up to heaven and lit a torch with fire from the sun to provide an energy source for our ancestors, humanity has realised that energy is life. Any movement involves energy, and who can imagine life without movement? If South Africa is to give its citizens the opportunity to improve their lives, she will have to provide the energy necessary for human endeavour.
This is particularly so at this time of major transition. South Africans have a new political dispensation and are setting off on new journeys to new destinations. It is not only appropriate but essential that we reconsider our energy position and our energy policies. New tasks and new situations require that we maximise our resources for the challenges that lie before us.
That is why we are taking a long and hard look at our energy picture. That is why we have launched an initiative to draw up a new energy policy for South Africa with the maximum input from all interested parties.
What are we required to do to optimise the energy sources available to us? How do we want to apply our available energy so as to benefit as many as possible to the greatest extent? Which kinds of energy should we use? In what mix? These and many others are the questions we are asking ourselves. In particular we need to have specific energy policies in order to achieve the following three priorities:
It is not always easy to balance these priorities. Only if we embark on an open and participative process which ensures that all stakeholders have the opportunity to table their facts and express their views, will we be able to do so appropriately. That is why the Parliamentary Portfolio Committee on Mineral and Energy Affairs has been invited to assist in accommodating and encouraging public participation in the formulation of the Government's new energy policies.
As the first step in the process, the Department of Mineral and Energy Affairs has drawn up this Energy Policy Discussion Document. The Document is both a basis for discussion and a source of information about our energy sector, its needs and re- courses. It describes, analyses, and provides data on energy in South Africa.
The Document is based on research and on discussions which have already taken place in a number of forums dealing with energy. It does not contain Government's pre-conceived policy conclusions. Instead, it is intended to lay the major issues, and all the possible policy options in response to those issues, before all who will be involved in the search for a definitive energy policy. It is designed to promote informed and meaningful debate.
Naturally, there could well be issues and policy options beyond those covered by the Document. We are looking for these as well. That is why we are following a procedure which will enable us eventually to prepare the best possible White Paper on South African Energy Policy.
In-depth debate and discussion on the liquid fuels sector has been taking place for some time now in the Liquid Fuels Industry Task Force previously under the National Economic Forum and now Nedlac. The Task Force will hopefully soon come forward with comprehensive and effective proposals to Government on liquid fuels policy. The process we are following in this Document in order to reach a general energy policy is not intended to duplicate the work already done in the liquid fuels field.
Nevertheless, liquid fuels issues and policy options are included in the Document. Liquid fuels policy is an integral part of overall energy policy. Since facts, issues and policy options relating to the liquid fuels sector often impinge on other energy policy considerations, it is important to have a complete and comprehensive overview of the entire energy sector. Likewise, liquid fuels policy will be dealt with in the draft White Paper on Energy Policy.
A description of the detailed process of consultation to develop the draft White Paper follows this Introduction. I will be taking a keen personal interest in the whole procedure. It will be an interesting, constructive and learning experience for all of us.
This is our chance to develop the government policies required to make South Africa a competitive contender in world markets because they provide energy efficiently. This is our chance to become more attractive to overseas investors because of the availability of inexpensive, effective and reliable energy.
The liberating power of effective energy supply and use should not be underestimated. The Industrial Revolution in Westem Europe and North America was made possible by the unleashing of new forms of energy - electricity, petroleum, coal. The first practical electric light bulbs were developed during the 1870s by Joseph Swan in Britain and Thomas Edison in the United States. By 1900 electricity was in use all over the world. Since 1920 electrically-driven modern appliances have transformed daily life for millions.
It is time to similarly broaden the energy resources available in our society, to so constitute our energy affairs that those who live under South African skies are spurred on to greater achievements by greater access to appropriate energy
Now is our chance to bring the energy of the Industrial Revolution to the humblest squatter, the mother urging her children to do their homework, the tired father who seeks to enjoy some television, the baby who may otherwise shiver through the winter, the office clerk studying into the night to become a lawyer.
Join me in this great opportunity.
R F (Pik) Botha
Pretoria
24July 1995
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The inclusive and transparent process of consultation to develop a Draft White Paper on Energy Policy consists of the following steps:
Contributions from all the various discussions mentioned will be considered by a Drafting Committee of senior Departmental officials and outside experts which will be responsible for formulating the first draft of the White Paper on National Energy Policy. The Draft White Paper will then be subject to the normal comment, discussion and decision procedures followed when developing government policy positions.
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Individuals or organisations wanting to make submissions concerning the White Paper on energy policy should please do so according to the format given below. This will help with the processing of submissions.
Comment on Issue 47: Specialised services for the electricity supply industry
I wish to support the importance of this issue ...Option 103.3 Intelligent geyser thermostats
This option should be scrapped, because ....
Remember to use separate sheets for each Issue or Option to facilitate the processing of your submission.
New issue: Support for the development of perpetual motion machines
I propose that the Department consider the issue of support for the development of perpetual motion machines. I believe that this issue is important for the following reasons: ...
Issue: Support for the development of perpetual motion machines
New policy option: Establishment of an Institute tor the Development of Perpetual Motion Machines
Time frame: From 1996 onwards
Consequences:
South Africa will be assured of an inexhaustible supply of free energy for all time.Implementation:
(a) The Department should establish the institute.
(b) I should be appointed as Director for life.
Energy Policy Discussion Document
Department of Mineral and Energy Affairs
Private Bag X 59
Pretoria, 0001
Fax: (012) 322-0810
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This document is divided into separate sections. Most readers will be interested in one or two specific sections and do not have to read the balance of the document. The main sections are:
Chapter 3:
A brief DESCRIPTION of the energy sector (especially Figures 5 and 6 provide a quick view and analysis).
Chapter 4:
The present GOVERNANCE of the energy sector.
Chapter 5:
This is the main part of this document as it identifies KEY POLICY ISSUES per topic and describes OPTIONS and IMPLICATIONS for each of the options. It is divided into four main sections:
References:
This lists the main sources of INFORMATION used in the development of this document (page 198).
Index to Issues and Options:
A detailed LISTING of all the issues and topics, in number sequence per area and topic as described in the document (page 203). As is indicated on the contents page, a 50-page Volume II to the document is available that to a great extent expands Chapter 3 of this document. It provides an overall description of the energy sector and background information to specific sections of the document, and will most probably only be used by those persons who require detailed information on the energy sector or parts of it. Copies can be provided on request by writing to Energy Policy Discussion Document, Department of Mineral and Energy Affairs, Private Bag X59, Pretoria 0001; fax: (012) 322 0810.
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This document is the result of an initiative of the Department of Mineral and Energy Affairs, and follows a series of sectoral energy policy synthesis studies completed in 1994.
Core project team:
Charles Anderson
Johann Basson
Anton Eberhard
Mark Pickering
Robert Scott
Hilton Trollip
Sarah Ward
Supported by specialists from the Department of Mineral and Energy Affairs, the Energy for Development Research Centre at the University of Cape Town, and the Minerals and Energy Policy Centre, including the following persons:
DMEA
Hein Baak, Theunis Burger, Tony Golding, Izak Kotzé, Hannes Opperman, Pieter Rossouw, Tony Surridge
Independent consultants:
Thomas Auf der Heyde, Mark Borchers, Bill Cowan, David Freeman, Derek Hurlin, Glynn Morris, Wrenelle Ruiters, Grové Steyn, Anthony Williams, Clive van Horen, Klaas van Zyl
Editor: Anton Eberhard
Project manager: Hilton Trollip
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The South African Government of National Unity is undertaking a fundamental review of its energy policy. To facilitate this process it has commissioned this Energy Policy Discussion Document, in effect a green paper', which will lead to an Energy White Paper outlining the government's intended policy for the sector. The Energy Policy Discussion Document presents a brief overview of the energy sector and its current governance. Key policy areas, topics and issues are then identified. For each of these policy issues various policy options are identified, as well as the time frame, consequences and steps for implementing these policies. The intention is that this Energy Policy Discussion Document will provide a coherent and systematic framework for government, energy suppliers, users and other stakeholders to begin a dialogue on a desired future energy policy for the country. Policy choices will have to be made from these and other options identified by stakeholders in the energy sector. The government envisages a consultative process which includes an invitation for submissions from interested partes and the holding of a number of policy workshops. Particular attention is being paid to the effective engagement of those stakeholders who have historically had no voice in the formulation of policy. The Government of National Unity will seek to collate and balance the policy choices which best support national social and economic policy and for which there is the greatest consensus. Where consensus cannot be reached, Parliamentary hearings could be held to clarify preferred options. The policy choices will be synthesised in an Energy White Paper and will form the basis of South Africa's new energy policy. This process is described in the diagram below.
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The policy options in this policy discussion document indicate the potential to move boldly from the status quo to a new, clear vision and policy framework for the energy sector in South Africa. Gone are the exclusive concerns of fuel security and self-sufficiency held by an apartheid government beleaguered with international sanctions. The advent of democratic government and the re-acceptance of South Africa by the international community offers the opportunity for a radical shift in energy policy. Energy policy will align itself with the new social and economic policies of the Government of National Unity aimed at reconstruction and development. In addition it will take cogniscance of important international trends which are placing greater emphasis on competitiveness, efficiency and environmental sustainability. In summary, a new energy policy will specifically aim to:
The picture which emerges from this document is the pervasive hand at present of the state in nearly all aspects of the energy economy. The challenge is to develop a coherent and clear framework of energy governance which frees the energy sector to fulfil the above goals. A common refrain throughout the document is the need to equip government and relevant stakeholders to fulfil this role professionally and effectively. In addition, many energy subsectors could potentially be restructured and sensible, practicable policies put in place to re-direct efforts towards these new goals.
Households need widened access to affordable and clean fuels of choice. The productive sectors - industry, mining, commerce and agriculture - need assured, low-cost, clean and high-quality energy supplies which promote efficiency and competitiveness. The regulatory system governing the liquid fuels sector may need to be reformed. The electricity sector may need restructuring and re-orienting to achieve ambitious electrification targets while incorporating increased competition, integrated resource planning, demand-side management and stricter environmental controls. The appropriation of rent in the dominant low-cost coal sector needs to be looked at. The nuclear sector is undergoing a fundamental overhaul and its dependence on the fiscus will be reduced. Renewable energies could be more vigorously promoted, especially biomass and solar systems. Energy efficiency could be improved. And research and human resource capacities need to be enhanced. The energy sector is a large employer and potential exists for redistribution of income and opportunity.
These are just some of the issues raised in this document, which seeks to provide a coherent framework of key issues and a menu of options which will not only guide and stimulate discussion, but will result in improved policies and more effective implementation.
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Nearly every aspect of South African social and economic policy is being re-examined, reformed and created anew. As the Government of National Unity sets out on a path of growth with redistribution, many economic sectors require new, bold and imaginative thinking. More than most, the energy sector represents the challenges of transforming an industry and a system of governance to meet new policy goals. This document is the first step in constructing a new energy policy for South Africa. It is a resource document which aims to provide a comprehensive, yet clear framework for identifying key energy policy issues and the range of policy options available for resolving these issues. The document firstly provides an overview of the energy sector in Chapter 3 and a description of its governance in Chapter 4 which enables the reader to understand the main features of South Africa's energy system, and how energy policy is made and implemented. This provides a context for the policy proposals which follow.
The bulk of the document is found in Chapter 5, which is a structured list of energy policy issues and options. This chapter explains why each issue should be considered as significant and then lists a number of options for dealing with the issue. It is important to recognise that the options which are presented are precisely that: options. They have been included either because they represent the opinion of an important stakeholder or because, in the light of international experience in dealing with the same policy issue, the option must be considered as a possibility for South Africa. Each option is presented with a timeframe for implementation, the possible consequences that could result from implementation and a set of concrete implementation steps including who would be responsible for their execution. This enforces a realism on the consideration of the option and avoids the adoption of a wish list' as policy. It also informs the debate in evaluation and comparison of the various options.
The new government is committed to active programmes aimed at achieving specified goals and the options framed in the discussion document are meant to be concrete proposals that can be measured against the actual achievement of these goals. The discussion document will have succeeded if it resources a high quality debate around each issue which leads to the choice of policy options which will form the basis of a new White Paper on energy policy.
Because of the size and diversity of the energy sector (there are at least six major fuel types and many more categories of consumers and energy industry institutions), there are a large number of issues that are dealt with in the document. These have been grouped in four categories.
First, issues around governance are considered. These largely concern the nature of relations between government and the energy sector. This sets the stage for the following groups of issues.
The second group contains issues that are important to energy consumers. This categorisation recognises that the reason for the existence of the energy sector should be the satisfaction of various consumers' needs for energy services and thus these issues should take precedence in government policy. However, a viable, sustainable energy industry is necessary if consumers' needs are to be satisfied and so the third group considers issues important to the energy supply industry: those issues which, if resolved, will result in effective energy service for consumers, in line with government's overall policy objectives.
The final category contains those issues that either do not fit into the previous categories or affect all of them in an overarching way. In the energy area the most important of these are environmental and energy efficiency considerations, energy research and development and human resource issues.
For easy reference, a list of policy issues and options is included at the end of the document.
Finally, the energy policy discussion document has been conceived as an integral part of a larger process. It is meant to resource an effective consultative process in which new policy is formulated in an open manner. This does not mean that stakeholders are only to look on while government makes the policy. What is meant is active participation. While the established energy industry can be relied on to look after their particular interests the new policy needs to balance these interests and to effectively facilitate the engagement of those stakeholders who have not had a voice in the formulation of policy.
The quality of the new policy will be judged not only on the effective delivery of energy policy that facilitates achievement of the new government's economic and social policy goals but also on the development of a participative process in which all affected parties effectively represent their interests and in so doing increase their understanding of what is possible and what is not possible for South Africa's energy sector. It is hoped that this discussion document provides a firm foundation for the achievement of these objectives.
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