Part 4: Cross-Cutting Issues

Integrated energy planning is a process which entails the following technical functions:

• interpreting the requirements of national economic, social and environmental policies for the energy sector;
• analysing energy needs in terms of how their fulfilment will contribute towards attaining national economic and social goals;
• analysing the potential of energy supply systems and demand side management to meet current and potential future energy needs. This would include analyses of individual supply sub-sectors and the linkages between sub-sectors;
• analysing energy sector linkages to the macro-economy;
• analysing the potential effects on the energy sector of global and technological developments;
• evaluating the effects of legislative, institutional and industry structure arrangements on energy supply and demand; and
• specifying, sourcing and presenting data on energy supply and demand, energy sector institutions, and linkages with economic and social factors in order to provide a statistical description of the energy sector’s historic evolution and current impact on economic and social development.

Clearly, the implementation of IEP requires sufficient capacity to carry out these technical functions and to engage with energy policy processes. Such capacity does not currently exist within South Africa and consequently there is an insufficient level of the information required to inform policy development on the South African energy sector. Key policy challenges are thus to:

• establish appropriate structures and systems to carry out IEP functions;
• establish and maintain the necessary resources to operate these structures and systems;
• link IEP technical functions into policy-making processes;
• facilitate the development of a least-cost energy system, including environmental costs;
• ensure an appropriate balance between demand and supply side actions and the use of primary energy resources.

Government will facilitate the provision of the necessary resources to establish IEP structures and systems to facilitate energy policy development.

By virtue of its size and economic importance, the energy sector periodically requires considerable investments in new supply capacity, which impacts on the economy. Historically, such decisions were primarily driven by concerns with maintaining supply security, without giving full consideration to the economic, environmental and social impacts of all alternatives. As a consequence, the tendency has been towards the construction of large-scale capital-intensive supply facilities, and the neglect of alternatives which might have been more cost effective in the long term, and had greater employment benefits and more favourable environmental impacts.

The Department of Minerals and Energy will ensure that an integrated resource planning approach is adopted for large investment decisions by energy suppliers and service providers, in terms of which comprehensive evaluations of the economic and environmental implications of all feasible supply and demand side investments will have to be undertaken. In the electricity sector’s case, the National Electricity Regulator will only license new facilities upon the satisfactory completion of an integrated resource plan.

This policy is consistent with the requirement of the Integrated Environmental Management system, in which all project alternatives have to be considered.

The Department of Minerals and Energy will ensure that adequate capacity is available in South Africa to implement and oversee the integrated resource planning approach, and will ensure that it is adequately included in the Integrated Environmental Management process, as advocated by the Department of Environmental Affairs and Tourism.

Decision making processes around large energy investments in international economies with sophisticated energy sectors, have, over the past decade or more, adopted the integrated resource planning approach. This is an effective means of ensuring that the natural preference of utilities for large supply-side investments is compared on an equal footing with all feasible alternatives, and that their environmental costs are integrated into an economic analysis. This ‘levelling of the playing fields’ between conventional supply options and those which are potentially more environmentally-benign (such as renewables and demand-side management) could well encourage structural shifts towards a more sustainable approach in the long term.

In a report released in May 1996 commenting on South Africa energy policies, the Organisation for Economic Co-operation and Development’s (OECD’s) International Energy Agency stated that ‘the lack of good data is a major weakness in the energy policy making process in South Africa. It also hinders transparency in the energy sector.’

Not only is good data required for the energy policy process but it is fundamental to the implementation of integrated energy planning. To facilitate integrated energy planning a database needs to be maintained covering at least the following areas:

• energy resources;
• energy production from indigenous resources (mining, renewables, oil and gas);
• international energy trade (imports and exports);
• energy transformation (production of liquid fuels and electricity from other sources);
• storage, transport and distribution of energy;
• national energy trade (wholesale and retail);
• investment in plant and infrastructure associated with the above areas;
• disaggregated energy usage, expressed in energy and cost terms;
• energy efficiency;
• energy related environmental emissions;
• average sectoral energy prices and taxes;
• institutions linked to all the above areas; and
• similar data from regional and international sources.

The data should be collected, stored and reported in accordance with international specifications and standards to facilitate easy comparison, integration and exchange. Data should be collected regularly and the database should kept up to date. Modern information theory and technology make this practicable.

Despite the importance of this function, data collection is currently inconsistent and inadequate. This is partly because South African energy suppliers are not required by law to provide this data. In fact, not only is there a lack of legislation to facilitate the collection of data, but new legislation pertaining to freedom of information would oblige government to make energy sector information available to any party requesting that information. The combination of these legislative conditions therefore makes it unlikely that energy suppliers will voluntarily divulge statistics since this might compromise their commercial position.

Government will ensure the necessary resources are made available to establish structures, systems and legislation to facilitate the specification, collection, storage, maintenance and supply of energy data, and energy-related data, according to the requirements of integrated energy planning and international standards.

Government will provide information to the public at a reasonable price. The provision of this information will not compromise the commercial position of parties supplying data to government.

Since expenditure on energy constitutes a large portion of the country’s GDP (15%), and a particularly large proportion of poor households’ expenditure, it is necessary to give attention to the effective and efficient use of energy. Energy efficiency and energy conservation considerations must therefore form part of an overall energy policy. Energy efficiency should also be considered within the conceptual framework known as ‘Integrated Resource Planning’, which considers both supply-side and demand-side options for meeting energy service requirements.

In developing policies to achieve greater efficiency of energy use, government is mindful of the need to overcome shortcomings in energy markets, but without causing undue interference in the operation of market forces. In formulating energy efficiency policies government proceeds from an understanding that efficient use of energy is best achieved through the creation of an awareness of the benefits of energy-efficiency measures (both environment and economic) and the deployment of incentives to encourage such measures.

Significant scope for improved energy efficiencies exists within the industrial, commercial, domestic, and transport demand sectors.

South African energy consumers in industry and commerce are in general unaware of the need for and potential of energy efficiency improvements and savings.

Government will facilitate the creation of a consciousness around energy efficiency amongst industrial and commercial energy consumers, and will encourage the use of energy-efficient practices by this sector.

Most countries have energy conservation regulations. In South Africa, no energy efficiency standards, norms or regulations exist. There has been a recognition for some years that substantial benefits would accrue to the commercial building sector and society at large from the introduction of energy efficiency standards. Studies indicated that 20% of the total municipal electricity consumption is utilised in commercial buildings. It is estimated that energy savings of around 30% may be realised through the use of improved design and management practices as well as retrofit projects of existing buildings in South Africa. One of the keys towards achieving this is the development and implementation of standards and norms.

Government will facilitate the establishment of energy efficiency norms and standards for commercial buildings.

Energy audit schemes and demonstrations have been implemented in various countries with great success. Various options for energy audit schemes and demonstrations exist. For instance sectoral energy studies can be conducted to achieve an overview of a sector and identify opportunities for energy efficiency improvements. Sectoral energy studies provide a basis for further specific actions in a sector.

Lack of expertise in industry has been identified as one of the key barriers to increased energy efficiency. There is a lack of experienced consultants and technical knowledge amongst managers and technical supervisors in industry. Government, in collaboration with other stakeholders, can play a role by initiating formal training schemes, disseminating information, and facilitating international expertise transfer to South Africa.

Government will facilitate the performance of audits, demonstrations, information dissemination, sectoral analyses and training programmes.

Electric equipment uses a large amount of electricity in industry. Cost-effective results are possible if more energy efficient electric motors were utilised.

Government will facilitate the establishment of energy efficiency standards for industrial equipment.

Although government is itself a large consumer of energy, through its various facilities, it does not currently set a good example through the efficient use of energy. Government will implement an energy efficiency programme to reduce consumption in all its buildings.

Government will consider the implementation of an energy efficiency programme to reduce consumption in its installations.

Not only will this programme establish good precedents, it will also reduce operating expenses.

As part of government’s commitment to the socio-economic upliftment of South Africa’s peoples a large number of low income dwellings will be constructed over coming years. There is, however, a serious concern that insufficient attention is being paid to the thermal performance of this low-cost housing. Building without attention to thermal performance may reduce initial costs slightly, but will expose residents to a lifetime of low thermal comfort and high energy costs.

Government will facilitate the establishment of voluntary guidelines for the thermal performance of low-cost housing.

The guidelines will facilitate minimal life-time costs and adequate thermal comfort levels. The Department of Minerals and Energy will initiate the establishment of these guidelines in conjunction with the Department of Housing and all other public authorities responsible for housing standards and construction.

A programme of education will be encouraged for decision-makers, such as designers, financiers, builders and home-owners, dealing with the costs and benefits of building dwellings with good thermal performance.

Public awareness of the operating cost of appliances is low, partly due to a lack of awareness around energy efficiency generally and partly because of a lack of information on appliance operating costs.

The Government will promote the introduction of a domestic appliance labelling programme.

Appliance labelling forms a major component of household consumer education and assists people in their choice of appliance. Not only are consumers informed about appliance energy consumption but manufacturers tend to compete to produce more efficient appliances.

Publicity campaigns will be undertaken to ensure that appliance purchasers are aware of the purpose of appliance labels.

Fuelwood usage is resulting in unsustainable situations in some areas of the country. Further details on this are provided in the sections on Household Energy Use, Renewable Energy Sources and Environment, Health and Safety.

Improved efficiency in the combustion of low-smoke fuels will relieve pressure on scarce supplies, as well as reduce the health problems associated with environmental pollution.

Government will promote the use of improved combustion techniques and appliances for low-smoke fuels in households.

It is noted that numerous investigations into this issue have already been undertaken in South Africa and, indeed, around the world. It is therefore essential that previous investigations are not repeated and that efforts are focused on achieving the successful implementation of efficiency techniques, taking into account local socio-economic factors.

As a large proportion of transport fuel is imported any reduction in motor vehicle fuel consumption will assist in reducing pressure on scarce foreign exchange reserves. Furthermore, efficiency improvements can be instrumental in reducing air pollution and increasing economic output.

Detailed policies to increase transport energy efficiency are described in the section on Transport Energy Use.

Government's capacity to undertake the energy efficiency programmes described herein is rather limited. Other countries in similar circumstances have found the establishment of an external agency to be an effective means of providing the necessary capacity and flexibility to implement such programmes. The functions of such an agency could include:

• building consumer awareness of energy utilisation and cost-saving measures;
• demonstrating to consumers the benefits of energy efficiency measures through audits, demonstrations, sectoral analyses and other activities;
• building the capacity to implement targeted energy efficiency programmes;
• training people in energy efficiency methods; and
• identifying and facilitating the removal of barriers to energy efficiency.

Government will therefore consider engaging an appropriate institutional structure and capacity for the implementation of energy efficiency strategies. However, priority will be given to developing capacity and skills within the ranks of government itself.

In order to monitor the achievement of these policies, targets may be set for energy efficiency improvements in various industries and commercial organisations. Government may monitor and evaluate the results and determine whether these targets have been met. Such targets may not be mandatory and industry and commerce may be asked to participate in the setting of voluntary targets.

In common with most countries in the world, South Africa’s energy sector causes significant positive and negative environmental and resource impacts. These have given rise to a number of environmental challenges, many of which result from the lack of infrastructure investment in poor residential areas, while others result from the methods adopted to exploit the country’s natural resource endowments. These environmental impacts vary widely in scale and severity, ranging from the local level where peoples’ health is affected on a daily basis, to regional and global impacts where the effects are more difficult to identify and control. Because energy-related environmental issues affect many sectors of society, they are often the responsibility of different government departments.

There is an inevitable interaction between environmental and development goals, necessitating an integrated approach which encompasses these two issues. The key environmental challenge for the energy sector is thus to maintain an acceptable balance between these goals through the development and implementation of appropriate policies and strategies. Where environmental and development goals converge, it is essential that full advantage be taken of such opportunities.

Whilst the long-term ecological sustainability of the energy sector is desirable, government’s current view is that the immediate priority is to address those environmental problems which affect the living conditions of millions of people on a daily basis. Amelioration of these conditions is seen as the first step on the path to achieving a more harmonious balance between society and the environment. The following set of policies on energy and the environment reflect this prioritisation. Policy implementation strategies will include both market-based and legislative approaches, depending upon the particular circumstances of each case.

Even after electrification, many households continue to use coal and wood on a daily basis although this is expected to slowly decrease as prosperity rises, and living habits changed. The result of coal and wood burning is that indoor and outdoor air environments are severely degraded. Research has found that these households are exposed at times to levels of particulate pollution up to seven times above international health guidelines.

In rural areas in South Africa, around three million households burn fuelwood for their energy needs, often in enclosed spaces and without stoves or chimneys. Research indicates that pollution levels inside these dwellings are also unacceptably high.

In the case of both urban coal users and rural wood users, the health effects which result from extended pollution exposures are generally long-lasting and, in some cases, life-threatening. Not only is the ailment burden borne primarily by those who can least afford it, but the social costs of these effects are likely to be very significant. These costs include additional expenditure on health care, and lost productivity through illness.

Government will seek, as a matter of priority, to mitigate the negative environmental and health effects of air pollution from coal and wood use in household environments.

Measures to be used will include:

• the promotion of low-smoke fuels as a substitute for bituminous coal;
• the promotion of thermal improvements to houses to reduce the amount of coal required to heat dwellings in winter;
• continued electrification of households.
• chimneys;
• improved ventilation;
• improved stoves;
• changing burning practices;
• education programmes; and
• improved coal and wood burning techniques.

The effectiveness of these interventions will be established by monitoring pollution levels.

It is acknowledged in these policies that, despite early expectations, electrification alone does not eliminate air pollution in coal and wood-using areas in the short to medium term. This finding is particularly common in rural areas and poorer urban areas, where wood and coal are more cost effective than electricity for cooking and heating purposes. Given the scale of the social and environmental costs resulting from these forms of air pollution, there may be strong economic justification for fiscal interventions to reduce pollution levels.

Almost all unelectrified households in South Africa use candles or paraffin for lighting, both of which have specific hazards. A large number of accidental fires occur every year in informal settlements, usually with devastating impacts on the residents’ property, and frequently resulting in the deaths of less mobile people, such as infants and the elderly. The causes of these fires include not only accidents with candles and paraffin lamps, but also poor quality paraffin appliances which sometimes explode under conditions of heavy or improper use. The impacts of these fires and burns, in social and economic terms, are significant in total.

Paraffin poisoning is a common occurrence, especially among infants of less than three years of age in low-income households. These tragedies arise because paraffin is purchased and stored in drinking bottles, which are easily mistaken by young children as containing water or other drinking liquids.

Government will continue to encourage electrification of households, using either grid connections or off-grid means, and will monitor the impact of electrification on the number and severity of fires caused by candles and paraffin, in order to establish whether expected reductions materialise.

Government will introduce safety and performance standards for paraffin stoves.

This will be a means to prevent the sale of poor quality and dangerous stoves.

Government will require the petroleum industry, which supplies paraffin to the retail sector, to introduce safety measures as part of their marketing activities.

Such measures may include the use of child-resistant paraffin containers and lids. Should the petroleum industry fail to implement these voluntary measures, government will consider introducing legislation to make them compulsory. Government expects the recently formed Paraffin Safety Association of Southern Africa to contribute towards the implementation of this policy.

The incidence of fires and burns is expected to decrease as a direct result of electrification, because electricity is an effective substitute for candles and paraffin lamps. It will be necessary to monitor whether this result does occur. Electrification should, to a lesser extent, also reduce the number of paraffin poisoning cases and the number of accidents with paraffin stoves. Nonetheless, the continued presence of paraffin in newly-electrified homes, coupled with the cost-effectiveness of prevention measures, provides a clear rationale for the use of safer containers and stoves in the short to medium term.

The abundance of low-cost coal has led to that commodity providing approximately 70% of South Africa’s primary energy, with higher environmental impacts than the other fossil fuels. Although the impact on the environment would be considerably less if the energy economy were based on natural gas, or perhaps hydro-electric resources, the presence of large and easily-exploited coal reserves suggests that coal will continue to be the mainstay of the energy sector for the foreseeable future.

It is therefore essential that adequate environmental performance is achieved by the electricity generation, iron and steel, chemical and synthetic fuels industries as well as other smaller industries which use coal as an energy source. In addition to pressures from local environmental interests, international environmental standards are likely to become an increasingly important influence on the energy industry, particularly for its export-oriented consumers who are more exposed to international environmental pressures.

Increases in the number of bulk electricity generators, which may follow the restructuring of the domestic electricity industry and increased regional energy trade, will require a systematic and balanced means of ensuring adequate environmental performance in this sector.

Regulatory responsibility for the environmental governance of Eskom, municipal generators and private sector companies such as Sasol, is widely distributed between the Department of Environmental Affairs and Tourism, the Department of Water Affairs and Forestry, the Department of Minerals and Energy (mining), the Council for Nuclear Safety, provincial and local governments and, potentially, the National Electricity Regulator. Poor or non-existent co-ordination between these entities leads to ineffectual and inconsistent environmental governance. Improved environmental governance requires some clarification of the roles of these various bodies.

The Department of Environmental Affairs and Tourism will continue to carry principal responsibility for the establishment of environmental performance standards and the implementation of management mechanisms.

The Department of Minerals and Energy will include explicit environmental considerations into studies regarding energy suppliers and users, and will integrate these results through Integrated Energy Planning.

Implementation of this policy will require:

• systematic and independent monitoring of the environmental impacts of energy suppliers;
• quantification of the costs and benefits of possible mitigation measures where the need for these arises; and
• the development of mitigation strategies where these are shown to be in the national interest.

Appropriate mechanisms for co-operation between the Department of Minerals and Energy and the Department of Environment and Tourism in undertaking these activities will be established.

It is necessary that government takes primary responsibility for monitoring the pollution and resource impacts of bulk energy suppliers. Implementation of this responsibility may be expedited by utilising existing infrastructure and expertise developed within the various suppliers, but the system must be directly accountable to government. Moreover, it is important that monitoring and control functions are systematically applied across all suppliers, rather than in the current ad hoc manner.

Motor vehicle emissions represent a significant source of certain components of air pollution in the larger urban centres in South Africa, contributing to brown haze problems in some cities. Unleaded fuel was introduced in early 1996 without mandatory emission controls or standards. Although the introduction of unleaded fuels is expected to bring about a reduction in ambient lead concentrations, the effect of other pollutants is unknown. To date South Africa has not pursued policies adopted by many industrialised countries in response to increased environmental emissions and congestion caused by extensive motor vehicle use. The Department of Minerals and Energy, in collaboration with industry and the Departments of Transport, and Environmental Affairs and Tourism, will produce an inventory of the environmental impacts of vehicular emissions in the major urban centres of South Africa.

• Based on the results of the inventory study the Department of Minerals and Energy will identify priority areas for improvement and, together with other government departments and spheres of government, develop strategies to ameliorate those environmental impacts.

An important problem identified by low-income households is a lack of awareness about the environmental and health risks resulting from their energy usage. This is particularly the case regarding more efficient energy use practices, the health effects of pollution, practices to reduce pollution exposures, and risks of fires and poisoning. Unfortunately, government has limited resources to undertake large-scale information and education programmes on its own.

Further information on this issue is provided in the section on Capacity Building, Education and Information Dissemination.

Scientific opinion suggests that the continued emission due to human activities of greenhouse gases, principally carbon dioxide and methane, may bring about significant and long-term changes to the functioning of the earth’s atmosphere. Of great uncertainty still are the possible impacts and damage attributable to such climate change, although indications are that their scale could be significant.

South Africa is responsible for 1,6% of global greenhouse gas emissions and the country’s energy sector is the single largest source of greenhouse gas emissions in Africa, mainly as a result of the high level of coal use by the electricity generation and synthetic fuels industries, and the high level of industrialisation producing high energy content products. Although the country is unlikely to be faced with obligations to reduce its greenhouse gas emissions in the near future, international governance of this problem (through, inter alia, the Framework Convention on Climate Change) is an evolving area. Pressure on South Africa to take greater cognisance of its global environmental impacts will undoubtedly increase.

Although there is no requirement to do so in terms of the Framework Convention on Climate Change, several countries (such as Denmark and the Netherlands) have voluntarily introduced a carbon tax as a means of encouraging a shift away from carbon-intensive fuels. International negotiations are currently addressing the question of binding commitments for industrialised countries to reduce greenhouse gas emissions, and it is possible that carbon taxes will feature prominently in the package of mitigation strategies to be adopted by those countries. Whilst it is unlikely that any such binding commitments will be applied to developing countries, it is possible that intermediate emission reduction or stabilisation goals will be negotiated in future for the wealthier and more carbon-intensive developing countries such as South Africa.

Although South Africa carries clear responsibilities towards the global environment and will increasingly have to factor these considerations into its resource investment decisions, there is at present no justification for the voluntary imposition of a carbon tax in South Africa.

The energy sector is one of the key stakeholders in the climate change arena, and the Department of Minerals and Energy needs to increase its inputs into the development of South Africa’s position, as a developing country, in international negotiations around climate change issues. These include complex issues around ‘activities implemented jointly’.

Government will monitor international developments and where advisable participate in negotiations around response strategies to global climate change, in order to balance its environmental responsibilities and development interests in these processes.

The Department of Minerals and Energy will follow a ‘no regrets’ approach in the energy sector with regard to potential global environmental impacts of activities.

A ‘no-regrets’ option is defined as that which decreases and minimises environmental impacts commensurate with cost effectiveness and positive cash flow.

The Department of Minerals and Energy will play an active role, together with the Departments of Foreign Affairs and Environmental Affairs and Tourism, in formulating South Africa’s positions in these international climate change negotiations.

Funding sources such as the Global Environmental Facility have been established for developing countries and economies in transition to assist them in reducing the environmental impacts of developmental projects.

The Department of Minerals and Energy will take advantage of opportunities for accessing international funding to assist in re-directing development projects along lines which have more favourable global environmental effects.

The Department of Minerals and Energy needs to increase its interaction with other government authorities on the wide-ranging nature of the energy sector’s environmental impacts. Examples include environmental inputs into the licensing of electricity generation facilities and the regulation of air pollution from low-income households, power stations, vehicles and other sources. Responsibility for governing the energy sector’s environmental impacts is either severely fragmented or, in some areas, entirely unclear.

The Department of Minerals and Energy will adopt a proactive approach in communicating with other government authorities on areas of common environmental interest, and will establish mechanisms to address problems from time to time. Provincial governments, as the responsible agencies for many environmental governance issues, will receive particular attention in this regard.

The opportunity exists for South Africa to play an important leadership role amongst developing countries which seek to balance their environmental responsibilities with their national development needs.

Energy research is currently supported by government, government agencies, parastatals and the private sector. The Department of Minerals and Energy manages a limited non-nuclear research programme, currently worth only R20 million per year, focused on policy development and related programmes, which is conducted by researchers at universities, research institutions and NGOs on a contract basis. Two other public sector organisations, the Atomic Energy Corporation (AEC) and Eskom, have significant research programmes. The activities of the AEC constitute the largest item on the Department of Minerals and Energy budget, although this is decreasing. These resources are used for institutional nuclear activities carried out for the government, nuclear enrichment research, high technology nuclear-based commercialisation activities and the decommissioning of uneconomic plants. The AEC spends approximately R30 million per annum of public sector funds on energy-related research. Research spending in Eskom, predominantly through the Technology Research and Investigations division, is increasing.

Government spending on energy research has decreased steadily since 1990, particularly on nuclear energy. This reduction stemmed from the cabinet decision to phase out the funding of national energy R&D through levies on energy sales, to terminate energy technology R&D, unless related to policy development, and generally to reduce state funding for research. On a pro rata basis South African public sector expenditure on non-nuclear energy research is much lower than that of countries at the same level of development, or in relation to the contribution or potential contribution of these technologies to the country’s energy economy. Government presently supports only limited energy technology research, development and demonstration and has only recently started to actively co-operate with other countries.

In identifying the policy challenges faced by government it is useful to distinguish between three different types of energy-related research:

Policy analysis and development: which involves the identification of problems or opportunities requiring policy attention; the identification of policy alternatives; and the analysis of the implications of these alternatives as a basis for policy recommendations. This form of research is generally desk or committee-orientated and relies on the results of data collection and other fundamental research activities. Policy-oriented research is multi-disciplinary by nature, involves a systems approach to problems and requires sensitivity to social, economic, political, environmental and market related factors;

Technology-oriented research: which generally seeks to develop or adapt technologies for specific purposes. This form of research entails physical investigations using basic and applied research methodologies, in laboratories, in pilot projects and in field work; and

Demonstration projects: which attempt to demonstrate new technologies and systems in order to facilitate their adoption. This work is generally carried out in the field under actual operating conditions and is usually associated with cost verifications and the evaluation of social impacts.

In developing policy on research, development and demonstration, government needs to address the following policy challenges:

• correcting the skewed allocation of funds towards nuclear energy;
• improving energy research co-ordination and the reporting of activities and results;
• providing clarity on a national energy research strategy, including a focus on priority issues and the involvement of stakeholders;
• clarifying the roles of government, energy suppliers and the private sector in funding R&D; and
• facilitating local participation in international and bi-national research activities, particularly in technology oriented research.

Government may therefore support those programmes and projects which:

• focus on the development of national energy policies; where still applicable
• are strategic and high risk and apply to the needs of more than a narrow sub-sector or specific company;
• address the needs of important emerging sectors with limited institutional capacity, such as renewable energy and energy efficiency applications; and
• are not generally undertaken by dedicated energy organisations, the private sector or other role players.

Government assumes that established energy suppliers, acting in their own interest and collectively, may carry out the following types of research:

• establishment of client needs;
• development of products and systems to satisfy these needs;
• ensuring efficiency in the supply and consumption of the various energy carriers; and
• establishing future client needs and potential changes in operating environments.

Government expects this sector, particularly those industries concerned with the manufacture of energy appliances and those utilising energy-intensive processes, to focus on research which:

• develops products and systems for future income, including exports; and
• improves the performance of their own energy systems, so as to reduce costs and negative impacts on the physical environment.

It is known that a considerable amount of very good work is taking place in this area.

Based on these understandings government intends to apply the following policies.

A research strategy may have to be developed that will:

• take into account planned and current research within the different energy sub-sectors;
• focus the scope of government’s research priorities;
• provide a forecast of research themes for the future;
• take cognisance of local and international developments; and
• form part of the national science and technology framework which identifies opportunities and priorities in a holistic fashion and links into government’s budget cycle.

A system is required to ensure that medium and long-term needs are identified and addressed, and that research funding is related to the availability of resources and the R&D activities of other role players.

Government will consider the development of a system to prioritise national research funding into the three main research categories in order to address the medium to long-term research needs in the energy sector. This will consist of an integrated, multi-year, national, needs-driven, energy research strategy, developed from time to time by an experienced team of experts appointed by the Minister. This strategy will identify medium and long-term priority programmes and themes.

Stakeholders will be included in the design and implementation of this system.

Extensive energy-related research is taking place in other countries, the results of which may be of value in South Africa. These developments are monitored by researchers, energy industries, energy consumers and others. Their inputs on opportunities for local applications will assist in developing the national energy research strategy. Adaptation for local applications and evaluation could then take place by means of demonstration projects.

The national energy research strategy could be reviewed by a team of experts appointed by the Minister.

Cost sharing and interaction with experts from other countries, through direct participation in international research, development and demonstration programmes, can result in highly cost-effective results.

International and bi-national research activities may be handled as partnerships with local role players, particularly industry as this is where the main potential for improvement exists, and should be aligned with national strategic energy research priorities.

Such participation may take place through bilateral agreements with specific countries or through research programmes managed by international organisations.

Employment in the energy sector demonstrates trends similar to other economic sectors. A recent study of government energy institutions as well as the electricity, petroleum and nuclear sub-sectors showed that while 46% of staff were black, only 7% occupied managerial positions. Women were under-represented in the sector, comprising 11% of the total workforce and accounting for 5% of total management. Black women were particularly under-represented, comprising 1% of the total workforce and accounting for 1% of total management. This figure excluded petrol attendants at service stations.

Although its precise contribution is difficult to measure, human capital created through investments in education and the development of skills emerges in studies of economic growth as one of the most significant growth determinants. High levels of education, the most important element in human resource development, leads to high productivity through improvements in the ability to apply sophisticated technologies and efficient organisational structures.

Government recognises the integral nature of human resource development to its industrial strategy for the energy sector. To transform and develop appropriately trained and skilled human resources for the energy sector, the Department of Minerals and Energy will develop policies to redress the inverse skills profile and increase access to institutions, resources and opportunities in the sector.

The Department of Minerals and Energy will make recommendations for human resource development strategies and programmes in the sector.

The Department will commission a human resource and training audit to establish the current and future skill requirements of the energy sector and assess the nature and extent of current energy training provision. The audit will assess the extent to which appropriate skills exist to implement the policies contained in this white paper.

The Green Paper on Employment and Occupational Equity pulls together a number of initiatives on affirmative action already underway within government. These include Nedlac’s endorsement of the ILO Convention III, sections of the constitution, and the establishment of workplace forums in terms of the Labour Relations Act.

The Department of Minerals and Energy will align itself with government’s employment policies. In particular, it will develop an employment equity plan to assist with attracting new, appropriately skilled people into the department and correcting the effects of employment disadvantages.

The Department’s capacity will be built by attracting new skilled people, retraining existing staff and correcting the race and gender imbalances. The Department of Minerals and Energy will negotiate affirmative action targets with the workplace forum, allocate both human and financial resources to this programme and develop criteria to monitor its progress.

The Department of Minerals and Energy will strive to increase the number of black people and women on all policy development structures, forums, parastatal boards and similar structures to reach a target of at least 30% women, 50% black participants and 2% disabled persons by the year 2000, in line with the White Paper on Affirmative Action Policy.

Where necessary, strategies will be developed to ensure that people involved in these forums are equipped with appropriate skills to participate effectively.

The Department of Minerals and Energy and energy sector parastatals will promote procurement from and contracting with small and medium enterprises.

This programme will ensure increased support and access for black and women businesses providing services or contracting with the Department of Minerals and Energy and energy sector parastatals.

The Department of Minerals and Energy may issue guidelines to ensure the use of labour-based methods for energy service provision where appropriate.

The guidelines may cover such matters as skills training and the promotion of black and women contractors. Implementation of these guidelines will ensure the maximisation of opportunities to create short-term jobs and build local capacity which arise from electrification and other large scale energy-related programmes.

South African energy consumers, from low-income households to business and industry, are poorly informed about good energy-use practices and options. This lack of consumer knowledge about the effective use of energy undermines economic competitiveness, the sustainability of development initiatives, the environment and people’s health. That education and information can play a central role in addressing these problems is borne out by international experience.

Government also recognises that a lack of capacity, education and information is as much a constraint on people’s access to energy services as other factors such as market failure and limiting regulations. Policies are therefore required to improve energy practices amongst all consumer groups.

Government will promote the development and implementation of capacity building, education and information dissemination programmes. These programmes will address issues around energy matters, environmental impact and the most appropriate means to meet energy service needs.

Comprehensive strategies will be developed to build knowledge, skills and confidence, and, where necessary, change attitudes and behaviour. In particular such strategies will aim to:

• enable consumers to make informed decisions regarding the safe, healthy, efficient and environmentally sustainable use of energy;
• enable representatives (particularly at community and local government levels) to proactively take up the energy issues of the communities they represent; and
• enable development and health practitioners to provide appropriate advice and practice and to integrate energy needs into project planning and implementation.

Strategies which facilitate a flow of information between users, suppliers and government will play an important role in developing government’s understanding of consumers’ energy needs and problems.

Although the Department of Minerals and Energy will take lead responsibility for the implementation of this policy, it is clear that opportunities exist to integrate energy information into existing communication and education programmes run by other organisations. The Departments of Health, Housing, Education, and Land and Agriculture, as well as NGOs, energy utilities, the private sector and the formal training sector, can all play a role in communication and education.

The Department of Minerals and Energy may monitor the development of energy awareness and regularly assess these communication strategies.

Government will allocate appropriate funding and staffing to undertake and support capacity building, education and information dissemination programmes.

South Africa is actively involved in energy trade and co-operation with a number of countries in the region and further afield. Imports include crude oil and energy conversion plant and equipment and exports include coal for international markets and refined liquid fuels for regional markets. Active co-operation with a number of countries and organisations has developed over the years, particularly from 1993, and full official participation in Southern African Development Community (SADC) activities commenced in June 1994.

The major policy challenges in this area are:

• to remove constraints on the import and export of energy commodities and equipment;
• to reduce the uncertainties faced by potential foreign investors in the domestic energy sector;
• to enhance the expertise and infrastructure required for regional co-operation and energy trade;
• to ensure that co-operation with other governments and international agencies produces optimal results for both parties; and
• to develop the country’s energy technology base.

Government proceeds from an understanding that energy markets are becoming increasingly globalised and that increased participation in energy trade has potential benefits in terms of export earnings and the improvement of energy supply security through increased diversity of supply sources. Mounting concern over long-term environmental damage arising from the large-scale use of fossil fuels has resulted in significant potential for South Africa to participate in international co-operative activities aimed at addressing this problem.

There are a number of barriers to energy trade. These include duties on specific products, import and export control, export infrastructure capacity, lack of information and, at times, negative signals on energy investment potential. Some barriers need to be reduced or removed in the short term, particularly those restricting the import of renewable energy and energy efficiency equipment, in accordance with South Africa’s trade policies and GATT obligations.

Government will develop strategies to reduce energy trade barriers, improve the availability of information required to support energy trade, and facilitate investment in the energy sector.

Current levels of regional energy co-operation are still very limited and significant scope exists for economic and political benefits for all countries within the region.

Government will facilitate active regional co-operation, including energy trade, information exchange, capacity building and the training of energy specialists.

The creation of an electricity power pool has already commenced and steps are being taken to establish trade in natural gas. South African energy demand will inevitably drive regional energy trade over coming years. Such trade will broaden the supply base, increase supply diversity, reduce the need for domestic investment, increase competition and potentially reduce environmental impacts because of the nature of regional energy resources (gas and hydro). Economic rationality thus points to the inevitability of the development of regional energy markets.

Considerable potential exists to access international support for dedicated activities, such as domestic capacity building, technological renewal and environmental protection. Memoranda of understanding have already been signed by a number of public sector energy bodies in this regard.

Government will actively pursue the establishment of energy sector co-operation with other countries and international bodies.

Implementation of this policy will require institutional capacity, a dedicated focus and specific skills for this purpose. Active liaison will be required with other government departments responsible for related functions, particularly the Departments of Foreign Affairs and Finance. Agreements will by entered into where sufficient capacity for meaningful co-operation exists, and where the short and medium-term objectives of both parties can be satisfied. Reviews will be carried out from time to time to determine whether programme objectives are being met and to ensure that positive returns on investment are being achieved.

International firms and agencies are investigating the South African energy sector’s potential. Options under consideration include energy supply, particularly electricity, energy efficiency, renewable energy in a variety of forms and environmental protection. Investment levels will depend on fiscal and energy policies, equitable investment regimes and the establishment of free market access. Investors also require improved provision of information on the energy sector, government policies, the identity of role players and indications of anticipated future developments.

Given the complexity of the energy sector and the diversity of conditions applying in the various sub-sectors, it is not possible to state a general policy on investor support. Particular policies, specific to the individual sub-sectors, are expressed in the Electricity, Liquid Fuels and Renewable Energy sections.

There is currently insufficient government capacity to fully implement these policies.

Government may allocate resources to establish appropriate capacities to implement policies on international trade and co-operation.

Capacity will be needed within the Department of Minerals and Energy to co-ordinate co-operation with regional energy activities, particularly those relating to the SADC. Indications are that in the future regional activities will be undertaken by means of task-sharing committees managed by appropriate part-time chairpersons. The Department of Minerals and Energy will act as a catalyst to these to assist energy trade and ensure that co-operation takes place on a least-cost basis to the mutual benefit of the concerned parties. The department will also ensure that public and private sector organisations are provided with information and opportunities to become involved where they have a contribution to make.

Fiscal policies have a fundamental effect on energy prices, thus affecting structural demand for energy products. The selective use of fiscal mechanisms can be very effective strategies for achieving energy policy objectives, such as encouraging fuel switching, raising dedicated sources of finance for particular needs and encouraging more efficient environmental and resource management. On the other hand, unconsidered usage of fiscal mechanisms within the energy sector can lead to unintended consequences, perhaps even directly contradicting government’s other energy policies. It is therefore essential that fiscal policies are aligned with energy policies, particularly as competition increases between energy service providers.

Government’s current fiscal policies have many linkages with the energy sector, with five main categories of fiscal transfer. Within each of these, the various energy sub-sectors are treated differently:

Value added tax: Productive activities in all sub-sectors are subject to value added tax (VAT), with the exception of certain petroleum products.

Income tax: Income tax is currently payable by private sector corporations in the coal, liquid fuels, gas and renewables sectors, but not by public utilities such as Eskom and municipal electricity suppliers.

Special taxes and levies: Special taxes and levies apply to some sectors, notably the petroleum sector, where the fuel levy constitutes about one-third of the pump price of petrol and diesel, contributing almost ten per cent of central government’s revenues. A levy (set at a fraction of a cent per kWh) is also applied to electricity sales by generators over a certain size to raise funds for the operation of the National Electricity Regulator.

Tariffs: Historically, substantial tariff protection has been provided to the synthetic fuels industry, with a direct effect on the price of fuel to consumers. As at the beginning of 1996, this represented a 9,4 c/l increase for petrol prices, although with higher oil prices such as those prevailing in the second half of 1996, this tariff protection fell away.

Implicit taxes: Public sector electricity suppliers (both Eskom and local authorities) extract sizeable surpluses from some of their electricity customers for purposes of cross-subsidising other customer classes and, in the case of local authorities, other municipal services. In effect, these transfers represent a hidden tax which, moreover, is not subject to the direct fiscal control of government.

The net effect of these practices is that levies and taxes make up a high proportion of the retail price of some fuels and a low proportion in other cases. For instance, close to half the pump price of petrol comprises government taxes and levies, whereas the price of coal includes only 14% VAT, and in the case of the informal domestic coal market, not even that amount is collected.

This differential fiscal treatment of energy sub-sectors has evolved over a number of years in response to particular problems. In the context of increasing competition between suppliers of different energy carriers, all seeking to meet the same energy demand, this tax treatment introduces structural distortions into the market, which may run counter to government’s energy policy objectives.

Fiscal issues can be reviewed from various perspectives. For the purposes of this paper it is useful to distinguish between policies:

• which aim to raise revenue for government;
• which are concerned with allocative efficiency and structural change in the economy; and
• which are concerned with environmental and resource management.

The operating budget of the National Electricity Regulator is funded by means of a levy applied to electricity sales by generators. The levy is small in relation to end-user prices. The use of a dedicated levy is an effective means of raising finance for particular regulatory or government agencies, and can be achieved at minimal administrative cost. Further, it is appropriate that the industry and its consumers should pay for regulatory services since, in principle, they ultimately receive the benefits of those services. The risk exists, however, that a multitude of special levies could be introduced in many sub-sectors, and that these will have inflationary effects outside the control of central government’s fiscal authorities.

Government supports the use of special-purpose, dedicated levies to fund regulatory and other government agencies, provided there is a clear link between those ultimately bearing the additional cost and those benefiting from the activities of the relevant agency, and that these levies are managed in a fiscally responsible and transparent manner.

These levies will remain dedicated to the special purposes for which they were designed and will not be used as general revenue-raising mechanisms.

Electricity’s role in funding local government

Surpluses earned on electricity trading accounts are currently a significant source of income for some local authorities. Unfortunately, not all local authorities own and operate electricity departments and electricity sales vary significantly between local authority areas. The bulk of these surpluses accrue to only a few local authorities. This implicit taxation on electricity varies widely between local authorities and has, to date, remained a non-transparent and unregulated form of taxation.

South Africa’s new constitution provides for a range of revenue sources for local government including new fiscal powers (regulated by national legislation). Government wishes to move away from the present system of non-transparent electricity-based cross-subsidisation of municipalities, in favour of transparent, nationally regulated taxes. Government does, however, recognise that such transfers cannot be ended abruptly as they would significantly weaken local government’s financial position.

Municipalities will be authorised to tax electricity, via an excise tax, within a limit set by government and monitored by the NER. Regional electricity distributors will collect this tax on behalf of local authorities and will show the tax separately from the electricity consumption portion of the consumer’s bill.

Government will determine whether any specific customer segments will be excluded from this tax.

The Transformation Team will be mandated to establish detailed guidelines for distributors to collect local government taxes.

Since the taxation of electricity is effectively a tax on inputs there are certain economic drawbacks to this policy. Government is sensitive to these and other related issues and will expect the Transformation Team to consider measures to ameliorate the impact of such taxes on those customers for whom such taxation might prove an unacceptable burden or where taxes will retard economic growth.

Although it is primarily the large municipalities that are funding other services out of electricity, all municipalities should be given the authority to tax electricity sales in their area. To ensure that consumers are not unfairly burdened however, a reasonable limit should be established. Municipalities currently receiving unduly large surpluses will, within a set period of time (such as three years) have to reduce their dependency on financing through electricity to the established limit. If government’s decision in future is that municipalities should no longer have the right to tax electricity sales, then the tax would be phased out over an appropriate period of time. The total change in consumer’s end-use tariffs as a result of moving to cost-reflective tariffs and transparent taxes will vary depending on the surpluses being generated today, and whether any customer segments are to be excluded from the taxes.

At present, no income tax is payable by Eskom and local authority electricity suppliers. This is primarily due to the historical fact that they are public sector utilities, and government has ostensibly had some control over the use of any surpluses they have generated. In practice, however, central government has had little influence over the use of electricity trading surpluses at the local government level and even less in Eskom, with the result that the allocation of retained surpluses has not necessarily been in line with the government’s overall fiscal and macro-economic policies. At the same time, with increasing pressures for competition at the bulk energy supply level, there is a need to treat all energy suppliers to equal taxation.

The application of income tax to the electricity industry would have complex effects. In its favour, it would increase the general revenue pool directly under the fiscal control of government. This, in turn, would require that the electricity industry’s demands on public resources be evaluated on a similar footing to the demands of the other sectors. Further, the taxation of electricity suppliers would place them on an even footing with competing energy suppliers, thereby facilitating moves towards competition in the generation sector.

On the other hand, there are disadvantages to the introduction of income tax in the industry. Firstly, electricity prices would have to rise for utilities to achieve the same (after-tax) rate of return. This would have an inflationary effect, and could also reduce the tax take in other sectors for which electricity is a significant input. Second, there would be a ‘transaction cost’ associated with the collection and allocation by government of taxation income. Thus for every Rand of tax which is payable, a portion would be consumed in its administration. In addition, the blanket introduction of income tax would be problematic given the current structure of the industry, since both Eskom and local authorities distribute electricity. There is little rationale or precedent for a central government tax on local government’s services. Moreover, selective taxation of Eskom’s profits and not local authorities’ profits would introduce further distortions into an already problematic market. Finally, the application of income taxation to the industry could change the incentive structure facing utilities, who could increasingly seek to maximise after-tax returns, which might be in conflict with public interest or other economic goals. For instance, the current practice of using operating surpluses to cross-subsidise capital expenditure would become less attractive because of their different tax implications.

Government will systematically investigate the implications of taxing the electricity industry.

Although there is no direct link between the source of taxation revenues and their allocation, the electrification subsidies to be allocated to the industry will be offset to a degree by the additional income tax collected from the industry. For further details see the Electricity section.

Policies in this category are concerned with improving the efficiency of government’s budget allocation decisions, and with bringing about structural changes in the economy through the strategic use of fiscal mechanisms.

Implementation of the policies in this white paper will clearly require a re-allocation of fiscal resources between various areas of activity. It is not the intention here to identify problems with the actual amounts allocated to various sub-sectors, but rather to address problems with the process of budgeting and resource allocation.

Budgeting processes and the allocation of general government revenues to departments (including the Department of Minerals and Energy) have historically been undertaken on an incremental basis, with the main point of departure being the previous year’s budget. This has the effect of building into allocation decisions a level of inertia and inefficiency, since resource allocations are not necessarily justified on their own merits. This practice is out of line with current trends in public and private sector management.

The Department of Minerals and Energy will follow a zero-based budgeting approach in drawing up its departmental budget, from the project and programme level through to the departmental level.

Apart from the fact that zero-based budgeting is accepted as a sound principle of modern management, both in the public and private sectors, the approach is also advocated by the Department of Finance for use by other government departments. The Department of Minerals and Energy will adhere to this practice.

At present, considerable resources are allocated every year to the electrification programme, mainly through the mechanism of internal cross-subsidisation within Eskom and local authority distributors. Not only is this subsidy non-transparent, but government has little influence over its collection and allocation.

Government will fund a National Electrification Fund from a tax deductible levy on electricity.

A levy will be placed on the net electrical energy sold by licensed electricity generators and electricity importers at the wholesale level inside South Africa (in c/kWh). The levy will be payable to the National Electrification Fund monthly in arrears, based on the wholesale sales recorded in the previous month. Based on current industry targets of 450 000 household connections per year, a constant electricity levy of approximately 1c/kWh, or approximately five per cent of the average bill, would be required to fund electrification over the next ten years.

This explicit subsidy mechanism, subject to governmental control, is expected to result in a more efficient allocation of resources to the electrification programme. The levy could be implemented with a sunset clause to ensure that when electrification is completed the levy is eliminated. The implementation of this policy will have to be co-ordinated with the Ministry of Public Enterprise’s proposal on the taxation of Eskom.

Related policies appear in the electrification sub-section of the Electricity section.

As noted in the section on Transport Energy Use, fiscal policy has a major effect on the prices of, and thus demand for, various transport fuels. On the whole, these taxes and levies have traditionally been determined without any reference to environmental and other goals. One area in which tax differentials could have favourable impacts is in the diesel market, since demand for diesel is lower than production of the fuel by local refineries, resulting in excess diesel having to be exported.

Tax differentials may be used to support government’s policy of promoting more efficient and environmentally sound transport modes, such as diesel-driven motor vehicles.

Strategies for the implementation of tax differentials require further research as to their likely impacts in order to minimise undesirable consequences. In particular, the sensitivity of demand to price changes will be investigated, so as to establish what scale of tax differentials is required to achieve the desired shifts in demand. Differentials may have to be phased in over time to avoid price shocks.

Policies in this category are concerned with influencing the decisions of energy consumers so as to achieve macro-level environmental goals.

The production and consumption of energy has many undesirable impacts on the environment, often resulting in external costs, also known as negative externalities. This is particularly the case in South Africa where the energy economy is heavily dependent on coal-based fossil fuels, which provide over 90% of the country’s electricity needs and tend to be more polluting than many other supply options. Although the electricity generation industry has an active environmental management programme, evidence suggests that there are measurable external costs resulting from the use of coal.

In contrast with this situation, the incentives for investment in more environmentally-benign alternatives, such as energy efficiency and renewables, are insignificant. Historically, relatively few resources have been directed by the public or private sectors towards these options, even though they can offer significant economic and environmental advantages. This is attributable to many factors, including the low price of energy in South Africa and the absence of government funding or support for these options.

Government will investigate the introduction of an environmental levy on energy sales, the proceeds from which would be dedicated to the support of more environmentally-benign and sustainable energy options, including energy efficiency.

The mechanisms and implications of such an environmental levy require further analysis and investigation, but there is sound economic rationale for its introduction in the form of a pollution tax. Moreover, the proceeds from such a levy could be used to contribute to the financing requirements of, for example, an Energy Efficiency Agency. Finally, an environmental levy could partly correct for the failure to account for all environmental costs in energy prices, thereby providing more efficient economic signals to energy consumers.

This topic is covered in the Environment, Health and Safety section.

Governance can be described as the complex set of processes and control relationships which occur between various players. In the energy sector, these players include parliament, cabinet, individual ministries, the minister responsible for energy in particular, parliamentary portfolio committees, government departments at national, provincial and local levels, regulators, statutory energy agencies, energy suppliers, energy consumers, other stakeholders (including organised labour, civic organisations, NGOs, researchers, consultants, financiers, contractors, equipment manufacturers and marketers), and supra-national bodies such as the SADC and foreign governments and organisations with whom agreements have been entered into. Not surprisingly, the range of players and the complexity of their inter-relationships makes energy sector governance difficult to understand, and even harder to manage.

At present parliament and its committees are responsible for energy legislation and the supervision of the executive arm of government. The executive consists of cabinet, the minister and the department, who are together responsible for formulating and implementing energy policy. Appointed boards or councils supervise a range of government-owned energy organisations, some created by means of a specific act, in order to provide them with strategic direction on their operational activities.

The department is accountable to the minister and is responsible for general governance of the energy sector, the formulation of long-term integrated energy policies, communication with stakeholders, the management of investigation and demonstration programmes, the management of regional and international co-operation, and ensuring that appropriate institutions are established to achieve energy policy objectives.

The minister is responsible for the development and implementation of energy policy and is accountable to cabinet and parliament.

The cabinet assists with the co-ordination and implementation of energy policy and ensures its integration with other sectoral policies. Cabinet is accountable to parliament.

Parliament is responsible for the approval or amendment of energy-related legislation. Parliament is accountable to the electorate.

Parliamentary committees are responsible for considering proposals for new or amended legislation in detail and also supervise the actions of the minister and the department, particularly through the budget.

The other two spheres of government have a limited role in energy governance. They are, however, responsible for economic and physical planning and, as such, are concerned with the supply and use of energy.

These institutions all have specific mandates, usually defined in terms of founding acts.

Due to the multi-sectoral impacts of the energy sector, extensive co-ordination is required with other government departments. It is, unfortunately, not feasible to achieve this through any one specific structure or system. Attention should, however, be given to increasing the capacity of all departments to engage on energy-related matters in order to make consultation more effective. Policies on this matter are receiving attention by the Public Service Ministry.

There is clearly a need for improved communication and co-ordination between national, provincial and local government. For instance, the implementation of energy policies should be better integrated with provincial and local economic and physical planning activities.

The Department of Minerals and Energy will seek to create mechanisms to improve communication on energy policies and the co-ordination of their implementation with provincial and local government.

Implementation of this policy could entail the establishment of provincial energy committees in which the Department of Minerals and Energy might participate on an ad hoc basis. The department could also facilitate communications between the chairs of these committees.

The department may also investigate the feasibility of establishing energy advisory functions within its regional offices to assist with and participate in provincial and local planning activities.

Appendices

Documents produced and circulated

Submissions in response to the Energy Policy Discussion Document

Written comments were received from the following organisations or persons during October and November 1995. Multiple authors generally involved separate comments.

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