15 november 2011 response to nccrwp ekc 1 response to the national climate change response white...

15 November 201115 November 2011 Response to NCCRWP EKCResponse to NCCRWP EKC 11

Response to the NATIONAL CLIMATE CHANGE

RESPONSE WHITE PAPER 2011

Presented to The Portfolio Committee on Water and Presented to The Portfolio Committee on Water and Environmental Affairs,Environmental Affairs,

Parliament of RSAParliament of RSA

Prof. Eugene CairncrossProf. Eugene Cairncross


OverviewOverview

SA’s Greenhouse Gas EmissionsSA’s Greenhouse Gas Emissions

The carbon intensity of the SA economyThe carbon intensity of the SA economy

The energy intensity of the SA economyThe energy intensity of the SA economy

Reasons for high energy/ carbon intensityReasons for high energy/ carbon intensity

What should the response be?What should the response be?

Comments on the Carbon TaxComments on the Carbon Tax

Comments on the Benchmark curvesComments on the Benchmark curves

Suggestions for an alternative approachSuggestions for an alternative approach


SA’s Greenhouse Gas Emissions

Diesell

Coal mining

Cement prod.

Steel prod.

Al, FeCr, FeMn, FeSi

PetrolSasol

process

Eskom coal

Rest of sources


The carbon intensity of the South African economy

The energy intensity of the SA The energy intensity of the SA economy – reasons why?economy – reasons why?

largely due to the dominance of mining largely due to the dominance of mining and minerals processing in the economyand minerals processing in the economy

coal-intensive energy systemcoal-intensive energy system

coal based electricity emits CO2coal based electricity emits CO2

past and present policy of cheap electricity past and present policy of cheap electricity to to mining and minerals processing mining and minerals processing industries -> low efficiency, waste industries -> low efficiency, waste

disincentive to recover/ generate energydisincentive to recover/ generate energy


Subsidy level to high energy industries?Subsidy level to high energy industries?

reportedly 12-19c/kWh to large and energy reportedly 12-19c/kWh to large and energy intensive industries, intensive industries,

below the production cost of 32.8c/kWh below the production cost of 32.8c/kWh

(Eskom figure for 2010-11), (Eskom figure for 2010-11),

Eskom’s tariff to municipalities: Eskom’s tariff to municipalities: 41.57c/kWh 41.57c/kWh for 2010/11, increasing to 65.85cfor 2010/11, increasing to 65.85c/kWh in the /kWh in the next two years. next two years.

domestic consumers, including the poorest of domestic consumers, including the poorest of the poor, pay the highest (block) tariffsthe poor, pay the highest (block) tariffs



Consequences of the ‘cheap electricity’ (to energy intensive

industries) policy?Improving energy efficiency requires capital Improving energy efficiency requires capital expenditure – cheap power discourages expenditure – cheap power discourages spending capital to improve efficiencyspending capital to improve efficiency

Examples of energy efficiency projects: Examples of energy efficiency projects: replacement of inefficient fans with more replacement of inefficient fans with more efficient units, recovery of energy rich waste efficient units, recovery of energy rich waste gases discharged from minerals processing gases discharged from minerals processing industries to generate electricityindustries to generate electricity

Consequences of the ‘cheap electricity’ (to energy intensive

industries) policy?Rapid growth in these industries, particularly Rapid growth in these industries, particularly during 2002 to 2007, created increasing during 2002 to 2007, created increasing demand for new energy capacity (at demand for new energy capacity (at subsidised rates!)subsidised rates!)

Main producer – Eskom, appears locked into Main producer – Eskom, appears locked into coal based power, hence increased demand coal based power, hence increased demand drives increased GHG emissionsdrives increased GHG emissions

Everybody else has to pay more, both to Everybody else has to pay more, both to cover current production costs and expansioncover current production costs and expansion


What should the Response be?What should the Response be?

Raising cost of electricity to large energy Raising cost of electricity to large energy intensive industries, at least to the cost of power intensive industries, at least to the cost of power produced by new electricity plantsproduced by new electricity plants

Higher electricity tariffs will support the internal Higher electricity tariffs will support the internal economic case for these companies to recover economic case for these companies to recover energy from waste gases and to convert this energy from waste gases and to convert this energy to electricity for internal use, and to sell energy to electricity for internal use, and to sell any surplus into the national grid. any surplus into the national grid.

Mandate energy recovery/ energy efficiency Mandate energy recovery/ energy efficiency measures, based on Best Available Techniques measures, based on Best Available Techniques


Comments on Carbon TaxComments on Carbon Tax

How will it be applied? May even be regressive How will it be applied? May even be regressive and counter-productive!and counter-productive!

Concept seems to be that a tax on carbon Concept seems to be that a tax on carbon usage will create positive behaviour change – usage will create positive behaviour change – reduction in carbon usage and emissions?reduction in carbon usage and emissions?

Perhaps – Perhaps – BUT 1BUT 1stst remove perverse subsidies remove perverse subsidies that favour wasteful usage of energy and that favour wasteful usage of energy and carboncarbon

What will the revenue be used for? What will the revenue be used for?


On Carbon Capture and Storage On Carbon Capture and Storage (CCS)(CCS)

Why commit to a CCS pilot plant and not a Why commit to a CCS pilot plant and not a ‘desktop’ study of feasibility?‘desktop’ study of feasibility?

Funding a pilot plant is another subsidy for Funding a pilot plant is another subsidy for coal based, carbon emitting powercoal based, carbon emitting power

Diverts scarce resources (money and Diverts scarce resources (money and scientific) from renewable R&D (opportunity scientific) from renewable R&D (opportunity cost)cost)

SA already lags far behind in the SA already lags far behind in the development of renewable energydevelopment of renewable energy


The White Paper Response The White Paper Response Benchmark TrajectoryBenchmark Trajectory

The CCRWP Benchmark accepts a further 20% The CCRWP Benchmark accepts a further 20% increase in GHG emissions over the next 25 years, then increase in GHG emissions over the next 25 years, then a plateau of 10 years. a plateau of 10 years.

This really represents ‘business as usual’. This really represents ‘business as usual’.

The global Climate Change crisis demands a The global Climate Change crisis demands a decreasedecrease in emissions! in emissions!

This position is untenable.This position is untenable.



A reminder: SA’s GHG Emissions

Diesell

Coal mining

Cement prod.

Steel prod.

Al, FeCr, FeMn, FeSi

PetrolSasol

process

Eskom coal

Rest of sources

What should the benchmark (better What should the benchmark (better target) GHG trajectory be?target) GHG trajectory be?

Have to address the carbon emitters Have to address the carbon emitters responsible for 76% of total emissions: responsible for 76% of total emissions: Eskom coal, Sasol, High Energy Eskom coal, Sasol, High Energy Consumers and usage of Liquid FuelsConsumers and usage of Liquid Fuels

Benchmark all high energy consumers Benchmark all high energy consumers against international best practice and against international best practice and technologically achievable energy technologically achievable energy efficiency and carbon efficiency efficiency and carbon efficiency benchmarks, set targetsbenchmarks, set targets


Some possibilities for carbon emission Some possibilities for carbon emission reduction, within 5 yearsreduction, within 5 years

Sasol process, energy, 5-10% reductionSasol process, energy, 5-10% reduction

Mining and minerals beneficiation industries Mining and minerals beneficiation industries – energy efficiency and/ or conversion of – energy efficiency and/ or conversion of waste energy to electricity: 5-10% reductionwaste energy to electricity: 5-10% reduction

Eskom: fast-track pumped water storage Eskom: fast-track pumped water storage projects, serious and rapid commitment to projects, serious and rapid commitment to installation of renewable energy systemsinstallation of renewable energy systems

Peak carbon emissions within 5-10 years Peak carbon emissions within 5-10 years instead of 25-35 yearsinstead of 25-35 years


Further possibilities for carbon Further possibilities for carbon emission reduction within 25 yearsemission reduction within 25 years

Reduce liquid fuels consumption by renewing Reduce liquid fuels consumption by renewing and developing more energy (and cost) and developing more energy (and cost) efficient rail based systems for freight and efficient rail based systems for freight and commuter passenger transportcommuter passenger transport

Development and implementation of large Development and implementation of large and small scale renewable energy systemsand small scale renewable energy systems

Development and implementation of energy Development and implementation of energy storage systems, including pumped water storage systems, including pumped water systemssystems


Thank youThank you


15 november 2011 response to nccrwp ekc 1 response to the national climate change response white...

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