Transcript Response to the NATIONAL CLIMATE CHANGE RESPONSE

Response to the
NATIONAL CLIMATE
CHANGE RESPONSE WHITE
PAPER 2011
Presented to The Portfolio Committee on Water and
Environmental Affairs,
Parliament of RSA
Prof. Eugene Cairncross
15 November 2011
Response to NCCRWP
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Overview
SA’s Greenhouse Gas Emissions
The carbon intensity of the SA economy
The energy intensity of the SA economy
Reasons for high energy/ carbon intensity
What should the response be?
Comments on the Carbon Tax
Comments on the Benchmark curves
Suggestions for an alternative approach
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SA’s Greenhouse Gas Emissions
Rest of
sources
Coal mining
Eskom
coal
Cement prod.
Steel prod.
Al, FeCr, FeMn, FeSi
Petrol
Sasol
process
Diesell
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The carbon intensity of the South
African economy
1.00
Carbon Intensities(2008) – selected countries
[kgCO2e/US$ GDP]
0.94
0.90
0.83
0.80
0.70
0.60
0.50
0.42
[kgCO2e/
US$ GDP] 0.40
0.27
0.30
0.20
0.10
0.00
South Africa
15 November 2011
China
Response to NCCRWP
USA
EKC
Turkey
4
The energy intensity of the SA
economy – reasons why?
largely due to the dominance of mining
and minerals processing in the economy
coal-intensive energy system
coal based electricity emits CO2
past and present policy of cheap electricity
to mining and minerals processing
industries -> low efficiency, waste
disincentive to recover/ generate energy
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Subsidy level to high energy industries?
reportedly 12-19c/kWh to large and energy
intensive industries,
below the production cost of 32.8c/kWh
(Eskom figure for 2010-11),
Eskom’s tariff to municipalities: 41.57c/kWh
for 2010/11, increasing to 65.85c/kWh in the
next two years.
domestic consumers, including the poorest of
the poor, pay the highest (block) tariffs
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Consequences of the ‘cheap
electricity’ (to energy intensive
industries) policy?
Improving energy efficiency requires capital
expenditure – cheap power discourages
spending capital to improve efficiency
Examples of energy efficiency projects:
replacement of inefficient fans with more
efficient units, recovery of energy rich waste
gases discharged from minerals processing
industries to generate electricity
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Consequences of the ‘cheap
electricity’ (to energy intensive
industries) policy?
Rapid growth in these industries, particularly
during 2002 to 2007, created increasing
demand for new energy capacity (at
subsidised rates!)
Main producer – Eskom, appears locked into
coal based power, hence increased demand
drives increased GHG emissions
Everybody else has to pay more, both to
cover current production costs and expansion
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What should the Response be?
Raising cost of electricity to large energy
intensive industries, at least to the cost of power
produced by new electricity plants
Higher electricity tariffs will support the internal
economic case for these companies to recover
energy from waste gases and to convert this
energy to electricity for internal use, and to sell
any surplus into the national grid.
Mandate energy recovery/ energy efficiency
measures, based on Best Available Techniques
15 November 2011
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Comments on Carbon Tax
How will it be applied? May even be regressive
and counter-productive!
Concept seems to be that a tax on carbon
usage will create positive behaviour change –
reduction in carbon usage and emissions?
Perhaps – BUT 1st remove perverse subsidies
that favour wasteful usage of energy and
carbon
What will the revenue be used for?
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On Carbon Capture and Storage
(CCS)
Why commit to a CCS pilot plant and not a
‘desktop’ study of feasibility?
Funding a pilot plant is another subsidy for
coal based, carbon emitting power
Diverts scarce resources (money and
scientific) from renewable R&D
(opportunity cost)
SA already lags far behind in the
development of renewable energy
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The White Paper Response
Benchmark Trajectory
The CCRWP Benchmark accepts a further
20% increase in GHG emissions over the
next 25 years, then a plateau of 10 years.
This really represents ‘business as usual’.
The global Climate Change crisis
demands a decrease in emissions!
This position is untenable.
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A reminder: SA’s GHG Emissions
Rest of
sources
Coal mining
Eskom
coal
Cement prod.
Steel prod.
Al, FeCr, FeMn, FeSi
Petrol
Sasol
process
Diesell
15 November 2011
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What should the benchmark (better
target) GHG trajectory be?
Have to address the carbon emitters
responsible for 76% of total emissions:
Eskom coal, Sasol, High Energy
Consumers and usage of Liquid Fuels
Benchmark all high energy consumers
against international best practice and
technologically achievable energy
efficiency and carbon efficiency
benchmarks, set targets
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Some possibilities for carbon emission
reduction, within 5 years
Sasol process, energy, 5-10% reduction
Mining and minerals beneficiation industries –
energy efficiency and/ or conversion of waste
energy to electricity: 5-10% reduction
Eskom: fast-track pumped water storage
projects, serious and rapid commitment to
installation of renewable energy systems
Peak carbon emissions within 5-10 years
instead of 25-35 years
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Further possibilities for carbon
emission reduction within 25 years
Reduce liquid fuels consumption by renewing
and developing more energy (and cost)
efficient rail based systems for freight and
commuter passenger transport
Development and implementation of large
and small scale renewable energy systems
Development and implementation of energy
storage systems, including pumped water
systems
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Thank you
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