Talking of flexibility to support transparency
April 29, 2018
An enhanced transparency framework is a central element to implementing the Paris Agreement. Article 13 provides for an enhanced transparency framework, including common modalities, procedures and guidelines (MPG) with built-in flexibility. Flexibility is to built-in by drawing on collective experience and is to be provided to developing countries that need it in the light of their capacities.
Flexibility seems a simple, clear requirement, right? Well, it seems not. The discussion about flexibility has become surprisingly difficult. This is due, in my view, to two unhelpful narratives being told: One that seeks to pin down flexibility or assume it only comes in two parts. This informal note proposes a more helpful narrative – and that we move on to specifics.
Just briefly, the two narratives which seem to take us backwards. The one narrative seems worried that flexibility is the enemy of robustness. It frames a high standard and requires a justification (or explanation, or some softer word, but basically the same thing) from those who deviate from the gold standard. It turns capacity into criteria. It even suggests that experts might review flexibility. Basically, it does not trust that Parties will exercise flexibility, even once this has been written into section of the MPG. Hence the tellers of this narrative want agency to rest with others than Parties– experts, or in one extremist version, even the CMA. And deep-down, the tellers of this narrative really want one single system, which just happens to be the system they are implementing. That is just not what was agreed in Paris and, in my view, this narrative is deeply mistaken. If it is imposed, it is likely to drive many to argue the two-part narrative.
Another narrative holds that flexibility means dividing transparency into two parts – one for developed and one for developing countries. A bifurcated approach is not consistent with “common” MPG. And flexibility simply can mean three, four or many options, not just two. If one reads the Paris Agreement carefully, one finds that the enhanced transparency framework is characterized neither as ‘common’ nor ‘differentiated’. Article 13 is neither a bifurcated system, nor a single common framework. The only adjective qualifying “transparency framework” in Article 13 is “enhanced”. The word ‘common’ is applied to MPG, but not to the framework as a whole.
So what might be a more helpful narrative on flexibility?
A plain reading of Art 13.1 and 13.2 that flexibility is a right and is clearly given in Article 13. Flexibility is “built-in”, drawing on collective experience. That experience clearly includes elements that are common, as well as others that are differentiated. Flexibility is something that “shall be provided” to developing countries – indeed those that need it in the light of capacities, but without any requirement to justify. In Paris, we all agreed flexibility would be written into a common MPG. That is the task at hand – and quite a bit of work needs to be done by Katowice.
Rather than argue about flexibility in general, the built-in flexibility narrative suggests focusing on specific provisions within the MPG. A clear and limited set of options for flexibility can be agreed in relation to elements of the MPG. There may be some elements not even requiring any options – national institutional arrangements being a case in point.
It is worth pointing out that within the current system, the developing country guidelines for reporting contain a lot of flexibility themselves, i.e. the flexibility in the system is not confined to having two sets of guidelines, but is built into developing country guidelines.
The Paris Agreement affirms flexibility, linked it to capacity and also the provision of capacity – both in 13.14 and importantly ‘on a continuous basis’ in 13.15. It is the enhanced human and institutional capacity that will make a difference to transparency in developing countries. Article 13.11 states that the review team “shall” include assistance in identifying capacity-building needs, and 13.12 states that the review team “shall” identify” “areas of improvement”. The construct here is that Parties identify their capacity-building needs, and the role of TER teams is to assist them in this regard. Once we have written flexibility into the MPG, flexibility should be defined by the Party.
The review teams may identify areas of improvement – again these are most helpfully in support of areas the Party itself has identified would benefit from improvement. We should speak of planned improvements by Parties – and have TER teams assist with those improvements, perhaps during an in-country visit or by identifying means of improvement. What is crucial in this narrative is that the Party is in charge, not the TER team. The Party should identify where it can make planned improvements, where it needs capacity, and TERs should assist.
A narrative that recognizes different starting points, focuses on planned improvements by the Party, and supporting capacity on a continuous basis to implement such improvements – such a narrative is constructive for negotiations.
Good to have pollution prevention plans to reduce GHGs as priority pollutants – but much room for improvement
July 25, 2017
Environment Minister Edna Molewa has declared greenhouse gases (GHGs) as priority pollutants and published regulations for pollution prevention plans (PPPs). While it is encouraging to see a system for mitigation (reducing GHG emissions) starting to be encoded in a law, including regulations, the detailed content leave much room from improvement.
Identifying GHG as priority pollutants to be controlled, and requiring the reporting and implementation of mitigation measures, are essential elements of climate change policy. So to start with the good news, it is positive to see regulations, and having all six ‘Kyoto gases’ (CO2 , CH4 , N20, PFCs, HFCs and SF6 ) formally recognized as pollutants. That is one better than then US President Bush, who seemed to struggle to understand GHGs as pollution – but that is not a very high standard. More seriously, it is helpful to have 5-year cycles of domestic mitigation measures requiring, monitoring methodologies having to be spelled out, and explicit mention of fossil fuels.
However, the devil is in the details. The regulations still do not clearly provide for facility-level reporting. ERC has considered this issue carefully, and significant parts of our research focus on climate change mitigation. Our considered opinion is that the information which will flow from a system based on company-level reporting will not provide a sufficient basis for either the development of national climate policy, nor for meeting South Africa’s reporting obligations under the UNFCCC, and especially for the reporting regime which is being developed as part of the enhanced transparency framework under the Paris Agreement. Nor will such a system support the effective implementation of a carbon tax, or the regulation of emissions by large emitters. The PPP regulations need to be read with the GHG reporting regulations , which also need to be clearer to provide for facility-level reporting. It is therefore critical that regulations be revised. For this to happen, the climate change legal framework must be crystal-clear on this point – reporting must include facilities.
Further detailed and published data is needed for a robust mitigation system. The PPP regulations require only total GHGs – not only should tehse be disaggregated by process, activity (in current regs) and facility (see above), but additional information on methodologies used to calculate, energy data, and a number of detailed elements are important. Without clear information, the Department of Environmental Affairs (DEA) officials will have to simply rely on what companies tell them. Technical guidelines can help, but the requirement to provide transparent, accurate, complete, comparable, and consistent (TACCC) data urgently needs a clear legal basis. We signed up to the TACCC principles as part of the Paris Agreement, and so need to give them effect in our domestic system.
Self-verification of data is insufficient. A system where the person who has submitted inaccurate information is themselves asked to look again lacks rigour. What is needed is independent third-party verification – for PPP and GHG reporting regulations.
Regulations should provide that all information be published (in the public interest), unless the data provider applies to have it kept confidential, and the reasons given are found to be valid. Instead, the default in the Regulations is that information is confidential, with exceptions made to that rule. This is the wrong way around, in my view. Even if the legal effect may be the same, the approach should be to put information in the public domain.
The Regulations provide for penalties – R 10 million or 10 years in jail. R 10m will be a ‘slap on the wrist’ for large emitters. Eskom emits over 200 Mt CO2–eq per year, and a carbon tax of R48 on that volume would be amount to R 9600 million. In other words, a R10 m fine would be 0.1% of its tax liability, if all emissions were taxed at that rate. If a 200 Mt emitter got 95% exemption and paid an effective tax rate of R6 per ton on 200 Mt, the maximum penalty would still be less than 1% of tax. Another simple example would be for smaller emitters, say those at the threshold of 0.1 Mt CO2–eq per year. With a R 6 tax rate, the fine is about double the tax payable on total emissions, at higher rates many multiples. With a flat maximum penalty, the system thus penalises small emitters. Surely this is not the intention? When the task is to reduce emissions by everyone, but most importantly at scale.
The Regulations and Declaration need to be strengthened, in some specific ways as outlined above. I would argue that is generally good practice to provide for improvements of the regulatory over time. Mitigation will evolve over time, and science tells us that more action is needed (in each IPCC report). So the Regulations and Declaration should be revised from time to time. The Legal Framework needs to be much clearer. Once greater clarity of the legal basis is established, that would be a good moment to make a first round of improvements.
BACKGROUND AND FURTHER DETAILS
The GHG declaration and PPP regulations  are now formally published in the Government Gazette pp. 65—9 and 81-7 respectively). Both are published by the Minister of Environmental Affairs in terms of the National Environmental Management: Air Quality Act (Act 39 of 2004 as amended up to 2014) or ‘NEMAQA’).
ERC has commented on earlier drafts (see here) as have others like the Centre for Environmental Rights (here). As the Regulations are now final, these are of academic interest – perhaps for readers interested in further detail.
One small matter that should be fixed immediately, is consistency in the two schedules of processes. The Schedule for the Declaration should be made consistent with one in the PPP Regulations.
- DEA (Department of Environmental Affairs) National Greenhouse Gas Emission Reporting Regulations, Goverment Gazette No. 40762, Notice 275 of 2017, dated 3 April 2017, Pretoria Published, 2017) http://www.gov.za/sites/www.gov.za/files/40762_gen275.pdf
- DEA (Department of Environmental Affairs) Declaration of greenhouse gases as priority air pollutants.Government Gazette 40996 no.712, in terms of National Environmental Management Act: Air Qualit Act (no. 39 of 2004). pp 65-69, Pretoria Published, 2017) http://www.gpwonline.co.za/Gazettes/Gazettes/40996_21-7_NationalGovernment.pdf
- DEA (Department of Environmental Affairs) National Pollution Prevention Plans Regulations. Government Gazette 40996 no.712, in terms of National Environmental Management Act: Air Quality Act (no. 39 of 2004). pp 81-87, Pretoria Published, 2017) http://www.gpwonline.co.za/Gazettes/Gazettes/40996_21-7_NationalGovernment.pdf
South Africa, the G20 and Climate Change: from Brown to Green?
July 13, 2017
The G20 meeting which has just been concluded in Hamburg, dogged by protests, was originally intended by the German presidency to be a way of building momentum around climate action in the wake of the Paris Agreement; however, the election of President Trump, and his subsequent decision to pull the US out of the Agreement, changed the nature of the summit altogether. There was widespread trepidation that the political consensus developed in Paris in 2015 on climate action would be shattered by the US withdrawal. In an unprecedented development, however (foreshadowed by the G7 earlier this year), the G20 Communiqué made a distinction between the US and the rest of the G20 (the G19), noting the US withdrawal, but also clearly stating that the Paris Agreement is “irreversible”, and reaffirmed their “strong commitment” to implementing the Agreement. Trump found no supporters even amongst countries traditionally hostile to climate action such as Saudi Arabia. Since the US last pulled out of a global climate agreement (the Kyoto Protocol, in 2001, during the Bush Administration), two things have changed: (i) global political will has strengthened dramatically to act on climate change, as some of the impacts are beginning to be felt, and (ii) the architecture of the Paris Agreement itself is more robust politically.
The Paris Agreement in 2015 was a landmark in the global effort to address climate change, concluded after more than two decades of painstaking international negotiations under the auspices of the United Nations Framework Agreement on Climate Change. One of the key features of the Agreement is its “bottom up” nature. Instead of prescribing what action countries should each take on climate change (one of the key sticking points of previous negotiations), the Agreement specifies a global goal which all countries will strive together to accomplish. This is in the form of a commitment to keep the global average temperature well below 2 degrees, and make efforts to strengthen efforts to limit warming to 1.5 degrees (considered the danger thresholds, over which climate change will have serious consequences). All countries also commit to making a ‘nationally determined contribution’ to this effort, decided by each country – the ‘bottom-up’ approach, as opposed to setting national emissions commitments centrally. This includes details on how their national emissions will be limited, measures taken to adapt to climate change, and in the case of developed countries, what assistance will be provided to developing countries to help them transition to a low carbon development path. Every five years, countries will jointly assess progress against the overall temperature goal under the auspices of the UNFCCC – to assess how countries are doing, and what the aggregate effect of their contributions will be in temperature terms. Countries then make further commitments, taking into consideration this global ‘stocktake’ – how the collective action of all countries matches up to the Paris Agreements goals, and what further action is required.
Read further by downloading the PDF.
G19 strong on energy and climate change – action to follow
July 11, 2017
Surprisingly strong result on energy and climate from G20 summit, or more accurately the G19. Passed the first part of ‘Trump Test’, as Germanwatch put it in an excellent, detailed analysis. The 19 (including Russia and Saudi Arabia) recommitted to the Paris Agreement. Moving to action is part 2, and a detailed Climate and Energy Action Plan is a good basis. Only the US cites ‘clean’ fossil fuels – but won’t stop momentum of the energy transition, to a greener economy based on renewables and efficiency. Much will depend on how the action plan is implemented, but a clear focus on finance, and disclosure of finance may help, among other elements. Long-term strategies are getting support too. See more reactions from civil society here from some who were there (unlike me). It was G20 minus 1 – again remarkably frank about disagreements, as the G7, um G6, had been at Ministerial level. And another strong performance from Angela Merkel, not shy to name the differences.
Trump exit from Paris will hurt America most
June 2, 2017
On 1 June 2017, Donald Trump (DT) announced that his administration was withdrawing the US from the Paris Agreement. The world’s largest economy is taking no responsibility for US historical emissions, and instead reneging on what his country had previously agreed. Trump’s exit is a deeply immoral, reprehensible act.
The speech on the Rose Garden lawns is full of the illogical statement one has come to expect from DT (see good analysis in The Guardian). It continues to astound how unethical and irrational a man holds such powerful office.
DT is entirely mistaken in the belief that pulling out of the Paris Agreement will “make America great again”. It will do quite the opposite. The trend away from fossil fuels is irreversible. No matter what campaign promises were made to rust belt states, the decline will continue. Jobs will continue to grow, not in the coal industry, but in the sustainable energy industries: Renewables and energy efficiency employ more than 3 million people in the US, compared to some 50 000 in the coal industry. Rather than helping coal communities make a transition into a low-carbon economy, Trump makes fake promises. Fake, because he cannot deliver on them. And because he does not really care, I don’t think, about relatively poorer Americans – his real base are the rich. The trend to a low-carbon economy and society are unstoppable. Wind and solar PV have passed parity with coal. Instead of positioning America for a stake in the future low-carbon economy. Trump is continuing to promote sectors and industries that will be uncompetitive. He is effectively urging investment into assets that will predictably become stranded in future. He will harm the US economy, discouraging investors in renewable energy and other low-carbon technologies. The uncertainty is compounded by the expectation that this policy cannot last – maybe it will not be the next Presidential tweet that does a flip-flop, but the next Administration quite likely. In short, the current US President misleads Americans that this move will protect the US economy and workers.
The US still the second largest emitter of greenhouse gases (GHGs) on an annual basis, and the largest in historical cumulative emissions (which are what determines the stock of GHGs in the atmosphere and a good proxy for change in temperature). But the impacts of climate change depend on global emissions, not any single country’s – whether the US or China. But the US would not have done much under the DT administration anyway.
Not much was going to happen during the DT administration, or at least not due to its policies. DT is trashing the Clean Power Plan and other domestic policies. Strong institutions like the US EPA, NOAA and others are being gutted. Funding for climate science is being slashed. With these domestic measures, the US would not have met the objective of its NDC anyway. It seems likely that the next administration will reverse the decision, while the rest of the world moves ahead
The rest of the world is united in their determination to implement the Paris Agreement. Ahead of the announcement, China made very clear its continued commitment to Paris. Trump has opened the door wide for China to take over the mantle of leadership; perhaps together with the EU. German chancellor Merkel had previously said that “the times in which we could completely depend on others are, to a certain extent, over ”. The Trump exit from Paris cements this rift in the trans-Atlantic relations, and points to a shift in geo-political patterns, as the US abandons a leadership role.
A China-EU summit in the next days will very likely reaffirm Paris. Already Germany, France and Italy have issued a joint statement that the Agreement will not be renegotiated. Contrary to what Trump said, China and India are taking action, shutting down coal plants. Many other countries – in Africa, Asia, Latin America, Australia and even the rest of North America, will go ahead. DT will not escape discussion of climate action – it is on the agenda of every forum in which the US does international business, from the G7, G20 to NATO. The US has isolated itself – the only others who have not joined the Paris Agreement are Syria and Nicaragua. The only other allies DT has are a small part of the fossil fuel industry. Given their vested interest, it was entirely predictable that companies like Peabody welcomed the Trumpexit.
But even from that constituency, many support climate action and the Paris Agreement – people like Rex Tillerson, and the CEOs of many US energy companies, as well as US business more broadly. What is really striking is the level of support which staying in the Paris Agreement has in the US – in a recent survey, 70% of US citizens, and a majority in every US state, expressed a preference for the US to stay in the Agreement; 68 mayors of great US cities such as New York, Chicago, Los Angeles and Houston to committed to sticking to the spirit of the Paris Agreement immediately after Trump’s announcement. Several US states followed, and CEOs of major US companies took out a full page ad in the Wall Street Journal to express their preference for staying in.
The ‘Berliner Kurier’ headline put it rudely “Earth to Trump: Fuck you”. Trump said that he represents Pittsburgh, not Paris. No one has asked him to represent Paris – just to stick to the Agreement made there, together with the US. The best response was from Bill Peduto, who tweeted: “As the Mayor of Pittsburgh, I can assure you that we will follow the guidelines of the Paris Agreement for our people, our economy & future.” Clearly, DT is not everyone’s president.
With wide support, the Paris Agreement will survive. It will also survive because it has been designed to be durable and flexible. Long after the DT administration has ended, the implementation of Paris will continue. The Paris Agreement was shaped very significantly by the G2 – the US and China. Now the DT administration is reneging on the US part; the second time it has rejected a climate agreement which it had a central role in shaping. Meanwhile China makes the smart move, positioning itself for climate and geopolitical leadership. With the US, technical work on implement the PA will be a little harder in the next few years, for example on meeting commitments to climate finance. In process terms, not having DT deployees mess with the Paris rule-book may be an advantage (assuming the constructive member of earlier US delegations will be replaced). The Paris Agreement remains a remarkable success of multi-lateralism – all countries working together to solve a global challenge – and probably the most ambitious instance of international co-operation ever. Ahead of DT’s speech, some said that the climate’s fate was in Trump’s hands. It’s not true. His hands are too small.
Nothing has changed in the key challenges of the 21st century – meeting the SDGs and Paris goals. The first SDG is to end poverty in all its forms, everywhere; Paris sets goals for temperature, mitigation and adaptation – and the financing pathways to make those happen. Action will be at the national level. What the DT administration seems not to understand (or wilfully ignores) is that Paris made contributions “nationally determined”. Every country sets its own target, and then tries to do better every five years. The US could not have negotiated a better deal for itself (and the answer to renegotiation Paris is simple: “of course not”). Action on sustainable development is also national. SA’s national development plan still prioritises reducing poverty and inequality – and we will continue to pursue those goal in a low-carbon and climate-resilient way.
Well, perhaps he can argue, given the idiotic things that he does. But he will not win the argument. Climate change is real, already happening, and even the Donald is subject to the laws of physics. The climate will change due to GHGs already in the atmosphere – with the US having ‘contributed’ the most to that. Whether DT believes it or not is immaterial. The impacts of climate change will hit Americans as much as everyone else. Poorer communities in the US more than the rich (the base DT is playing to), the poor in vulnerable poor countries even more. Which brings me back to that start. Addressing climate action is inescapable, both in reality and geopolitically. The withdrawal is a deeply unethical move, wrong-headed and will harm America most of all.
Harald Winkler to serve on High-Level Commission on Carbon Prices
By Carla Bernardo for UCT News
April 18, 2017
At this year’s spring meetings of the World Bank and International Monetary Fund, and the G20 Hamburg Summit in July, finance ministers will gather to discuss, among other pressing matters, climate change. Carbon pricing is expected to take up some of the discussion time, particularly at the G20 Summit. Thankfully, an in-depth report on carbon pricing will be available – one with notable contributions by UCT’s Professor Harald Winkler.
The Commission, led by the French government in its capacity as host of COP21 (Conference of Parties) where the Paris Agreement was signed, is chaired by Sir Nicholas Stern and Professor Jospeh Stiglitz.
“These are very eminent economists working on climate change, so to work on a relatively small commission with them is an honour and a fantastic opportunity for me to learn from them,” says Winkler.
Stern is, among other positions, the chair of the Grantham Research Institute, chair of the Centre for Climate Change Economics and Policy, director of the India Observatory, and president of the British Academy.
Stiglitz is a recipient of the Nobel Memorial Prize in Economic Sciences, and in his day-job, a professor at Columbia University, co-chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, and the chief economist of the Roosevelt Institute.
The Commission’s objectives are to identify a range of carbon prices that would be consistent with the temperature goal of the Paris Agreement. The Commission will also look at other climate policies that implicitly price carbon. The approach is to consider the achievement of climate goals together Sustainable Development Goals – including to eradicate poverty.
How carbon pricing works
Carbon pricing is about putting a price on carbon pollution. An economic signal is given to those who pollute, giving them the choice to reduce their polluting activities or continue and pay the penalties.
There are numerous benefits of carbon pricing, including speeding up economic transitions, generating revenue, tackling air pollution and related diseases, and easing congestion.
Equally, there are severe consequences to not acting – and to not acting now. This includes threats to economic growth, a reversal of progress in developing countries, and an increase in extreme weather-related events.
There are two main types of carbon pricing: taxation (costing externalities) and emissions trading systems. Governments can use these to begin implementation of carbon pricing and to generate revenue.
Costing externalities puts a price on something that is not priced in the market. For instance, “pollution imposes a cost,” says Winkler. “If there is local air pollution, people pay because they get sick, or the government pays by having to build more hospitals.”
Emissions trading can also generate revenue if governments auction emissions allowances or permits. Governments can begin by handing these out free, but they can also make those who omit carbon dioxide buy allowances or permits – a better design.
Countries as case studies
The mitigation measures required by the Paris Agreement could be implemented by enforcement – regulation – or by using economic instruments. The route preferred by economists is the latter: “Economic instruments generally rely on the power of the market, so they tend to be voluntary,” says Winkler.
Many countries have already indicated a willingness to join a carbon market, while others are already providing insightful case studies.
Europe, for instance, is home to an extensive emissions trading scheme. China has established pilot emissions trading schemes in several large provinces and will implement its national emissions trading system this year. Brazil and Chile are also already undertaking carbon pricing. The levels of carbon prices, in $ per ton, differ significantly across countries. The Commission will consider where an ‘average’ carbon price needs to go, to limit temperature increase. It will not prescribe any specific instrument or tax rate for any country, as each political economy is different.
Scandinavia provides particularly interesting case studies for both experts and governments Carbon pricing was introduced as far back as the 1990s, but their governments were, in addition to climate change, looking at tax reform. They reduced income tax while raising a carbon tax, thereby achieving both social developmental and climate, says Winkler. They didn’t get everything right in the beginning, but we can and must learn from them.
”It is in every country’s national interest that we have effective action on climate change, and that can only happen globally”.
It is concerning, then, that some countries remain unwilling to enforce climate-change policies.
“We are worried about the United States,” says Winkler. “The US never joined the Kyoto Protocol, which had an international emissions trading scheme. And now, of course, the Trump regime is very unlikely to pass a domestic carbon tax or an emissions trading scheme. Indeed the Republican administration is cutting support to climate action and science internationally, and moving backwards on domestic climate action. They risk becoming uncompetitive in a low-carbon future.”
Carbon pricing at home
Carbon pricing could be very effective at raising revenue for South Africa, says Winkler.
“In the first instance,” he says, “we must make sure that poor households aren’t worse off due to carbon pricing. So I would certainly argue that poor households’ energy bills shouldn’t go up. We don’t want the carbon tax to be paid for by the poor.”
Instead, those who omit the most must pay proportionately, such as those in the energy-intensive industries.
Winkler suggests that the revenue generated by carbon taxes be used to extend free basic energy – lighting, water heating, power for kettles, irons and access to media – to poor households.
The way forward
The Commission will deliver its report in April the World Bank and IMF. This report, explains Winkler, will map out a suggested carbon prices required to keep global average temperature well below two degrees Celsius above pre-industrial levels.
“We still need to determine the carbon price that the world would need to achieve that temperature goal,” he says. In other words, “if you want to achieve the goal of two degrees using carbon pricing, then $X00 to $Y00 will be the carbon price level that you would need.” Watch out for the Commission’s report to find out what X and Y might be.
Networking seminar – Economic and community development through the REIPPPP
April 29, 2016
The ongoing Renewable Energy Independent Power Producer Procurement (REIPPPP) programme is attracting attention from the social sciences. The programme’s mandated community development investment challenges industry practice in project development and implementation. Increasingly, academic attention grows in support of industry, civil society and government, to maximise the investment’s developmental contribution. The Energy Research Centre (ERC) at the University of Cape Town (UCT) hosted a networking seminar for researchers working on this topic on the 21 st April 2016.
The 23 participants were drawn from five South African universities; the University of the Free State, Wits University, Nelson Mandela Metropolitan University, Stellenbosch University and UCT. Other organisations represented included the Human Sciences Research Council, the Community Development Resource Association and private renewable energy companies.
ERC doctoral researcher, Holle Wlokas presented the early findings of her research which investigates the institutional structures established in the implementation of the community renewables projects through the REIPPPP. Holle is analysing the REIPPPP policy and bids as well as studying stakeholder experiences in 13 case study projects across three provinces. This networking event allowed her to discuss emerging findings with practitioners and academics and to facilitate the growth of an interdisciplinary network on these issues.
Each researcher present also gave a brief introduction of their work. The facilitators mapped research projects, capacity and interests on a digital map of the country. The participants agreed to continue the conversation, explore concrete collaboration opportunities and meet again in a few months. Overall, the seminar created collaborative spirit to this recent research community.
Our thanks go the Volkswagen Foundation for funding this event through the CliMiP project.
Join our MOOC
December 15, 2016
The Energy Research Centre & UCT have recorded a MOOC on Climate Change Mitigation in Developing Countries. You are invited to take part and to encourage others to join you.
The next course begins on the 26th of December 2016 and you can sign up with minimal fuss: https://www.coursera.org/learn/climate-change-mitigation
Some of the comments from previous participants
Excellent intro to Climate Change mitigation and what has already been done, and how to take forward from lessons learned.
Super-awesome course that taught me about the super-wicked problem of our time and how to effectively achieve climate change mitigation and development objectives from developing countries context
For more reviews see the ratings on the coursera site.
The cost of air pollution in South Africa
November 25, 2016
ERC researchers, Dr Katye Altieri and Samantha Keen analysed the impacts of energy-related air pollution using the environmental Benefits Mapping and Analysis Program (BenMAP) model that they developed for South Africa.
The high cost of air pollution
The Global Burden of Disease (GBD) reported in 2012 that three million people die prematurely each year around the globe due to ambient air pollution (WHO, 2012), with low- and middle-income countries suffering the worst effects. Developing countries, that have a heavy reliance on fossil fuels, like South Africa and China, face the bulk of the health and productivity losses as well as mortality associated with high concentrations of air pollution.
The associated economic costs can also be high. For China, which relies on coal for 75% of its primary energy, the economic burden of air pollution is estimated at 3.8% of their GDP (World Bank, 2007). The WHO estimates that air pollution costs European economies US$ 1.6 trillion a year in mortality and morbidity (WHO European Region, 2015).
The South African case
South Africa relies on coal for 97% of its primary energy. The costs of air pollution on human health and economic growth in South Africa are as of yet unknown. Fine particulate matter (PM) is one of the most lethal pollutants, and higher concentrations are known to cause increased mortality.
Read the full article on here
Harald Winkler on WITS Radio
November 18, 2016
With the UN’s COP22 underway in Marrakesh, Wits Radio hosts a programme called ScienceInside that focuses on climate change. In an interview with Professor Harald Winkler, the director of the Energy Research Centre at the University of Cape Town and others, they find out more about what the Paris Agreement means for South Africans. Listen to the interview on SoundCloud.
Paris Agreement comes into force
November 4, 2016
Today the Paris Agreement comes into force – thirty days after having been ratified by more than 55 countries prod for more than 55% of global emissions, the two-fold legal trigger required. In total, 97 of the 197 Parties to the UNFCCC have ratified the Paris Agreement domestically; a list can be found on the UNFCCC’s Paris Agreement page.
Below we have pulled together a number of articles from around the web to give you a clearer picture of what ‘entry into force means’ and what happens next.
SA ratifies Paris Agreement
November 2, 2016
South Africa has ratified the Paris Agreement on climate change. In doing so, it has joined the growing momentum to take climate action.
87 countries had ratified already, exceeding the requirement of 55 Parties – and on 5 October, the second ‘trigger’ of representing 55% of global greenhouse gas emissions was also met. Thirty days after these two triggers were met, the Agreement formally ‘enters into force’ – on 4 November 2016. SA snuck in with its instrument of ratification three days before, with another four countries also ratifying (see status of ratification, so total now at 92).
Domestic ratification is required, so that South Africa’s domestic legal system supports what has been internationally negotiated. Under section 231 of our Constitution, international agreements are negotiated and signed by the Executive (231.1), but an international agreement binds the Republic only after it has been approved by resolution in both the National Assembly and the National Council of Provinces (231.2). The SA delegation had been involved in negotiating the Agreement, chairing the G77&China during the Paris conference in December 2015. Cabinet considered the treaty, and Environment Minister Edna Molewa then signed for the SA government at a ceremony in New York on 22 April 2016 (see image). Approval by both houses of Parliament is required for SA to join international agreements. Officials from the Department of Environmental Affairs presented the Agreement, and the National Council of Provinces approved it on 27 October, the National Assembly on 1 November. SA’s instrument of ratification was signed by the Foreign Minister and deposited with the UN Secretary General on the same day. In plain language, SA has formally joined the climate treaty.
The first session of the Conference of the Parties serving as the Meeting of the Parties to the Paris Agreement (CMA1) will take place in Marrakech from 7-18 November. The hard work of implementing the Paris Agreement will begin, though CMA1 may meet pro forma; many of the detailed rules need to be developed
For SA, implementing its national determined contribution (NDC). Having joined the global momentum globally, we must act locally.
Prior to Paris, most countries had submitted Intended nationally determined contributions. On joining, the “intended” falls away. Various aspects of the Paris Agreement make the national determined contribution (NDC) are legally binding treaty obligations. Parties “shall” submit NDCs every five years, and pursue domestic mitigation measures to achieve their objectives. There is also mandatory review, requiring information to track progress in implementing and achieving their NDC. In other words, our NDC is now much more than an intention.
For SA, that will mean changing our energy development path. Since most of our greenhouse gas emissions are from energy supply and demand, making a just transition to a low-carbon economy and society is required. We will have to re-double our efforts to use energy more efficiently, move to electricity from renewable energy combined with gas, and move to an industrial structure that is more carbon-efficient.
Shale gas, air quality and GHG emissions
By Katye Altieri (PhD)
October 17, 2016
Technological advancements over the past decade have led to a rapid rise in unconventional natural gas production, known as “shale gas”, particularly in the USA and Canada. The large-scale and rapid development of shale gas has resulted in an abundant and cheap energy source with lower direct greenhouse gas (GHG) emissions than coal and petroleum. That South Africa has the eighth largest technically recoverable shale gas reserve in the world – located in three geological formations in the Karoo – should then surely be cause for celebration? Global concerns about the environmental impacts of shale gas development and production on local water supplies, air quality, and human health have however made the process of extracting this natural gas, called hydraulic fracturing (fracking), a very contentious issue.
To frack or not to frack?
The economic value of this deposit has been estimated to range from 3.3-10.4% of Gross Domestic Product (GDP), while estimates of the number of new jobs that could be created varies considerably from 1441-700 000. The potential impacts on GDP and job creation in South Africa – an upper middle-income developing country with a 29% unemployment rate – are critical factors to consider when weighing the pros and cons between shale gas development and environmental concerns.
A further consideration is the current power crisis in South Africa, in which the power parastatal Eskom has been unable to provide adequate electricity to match the demand. Eskom is in the process of building two new coal fired power stations, but this development is greatly at odds with South Africa’s commitment to reduce GHG emissions in the coming years. Currently, natural gas contributes only 2.8% to primary energy in South Africa, and is primarily used to produce synthetic liquid fuels. As such, the development of shale gas in South Africa could lead to a significant shift in the electricity sector by replacing coal-fired electricity. In addition, bridging from coal to natural gas could assist in South Africa’s commitment to a peak, plateau, and decline GHG emissions trajectory as gas-fired electricity generation is compatible with renewable energy in a way that coal or nuclear is not.
Air pollution and GHG Tradeoffs
ERC participated in the Strategic Environmental Assessment for Shale Gas Development in South Africa as authors of the Air Quality and Greenhouse Gas chapter. The objective was to inform decision makers about the risks and opportunities related to shale gas development. Our chapter found that the GHG reduction benefits gained from shale gas are not guaranteed nor does shale gas come without its own set of air pollution costs. Whether or not the costs are worth it depends largely on methane leakage rates, strict monitoring and enforcement of best-practice regulations during fracking, and how the gas itself is used. Shale gas exploitation requires new wells to be drilled regularly and operate continuously, which results in 24-hour pollution from diesel generators, stationary engines and truck traffic transporting water and waste to and from the well pads. The main pollutants include nitrogen oxides (NOx), volatile organic compounds (VOCs), and particulate matter (PM). NOx and VOCs are precursors to ozone, which is linked to asthma, decreased lung function, and premature mortality. Increased PM leads to increased hospital admissions, respiratory symptoms, chronic respiratory and cardiovascular diseases, decreased lung function, and premature mortality. However, use of shale gas could result in considerable health benefits, despite the air pollution, if its use displaced other, dirtier, fuels such as coal or wood for use indoors in poorer households.
Filling the knowledge gap
The Karoo is a sparsely populated and vast area with low levels of industrial activity. Before shale gas exploration occurs in South Africa, it is important to investigate the potential negative impacts on air quality in the Karoo as well as the potential benefits for GHG emissions for South Africa as a whole. Policy makers need to formulate an air quality monitoring plan and prescribe emissions regulation levels, but they currently lack the basic information required to begin such an assessment.
A recent study conducted by ERC, and published in the journal Atmospheric Environment, seeks to fill this gap in knowledge by developing a prospective air pollutant emissions inventory for NOx, PM, and VOCs associated with all aspects of shale gas. Emissions inventories can be used to establish regulations, devise enforcement strategies and health risk assessments, as a predictive tool to establish monitoring strategies, and as inputs to regional air quality models.
The amount of air pollution that results from shale gas depends on the number of wells drilled as well as the technology used. We constructed a well development model for South Africa using information from existing well fields in the USA and what is known about the scale of the Karoo shale gas field. A wide range of technologies were assumed to be possible, from old engines (e.g., those available from mining operations), which could lead to high pollutant emissions, to newer electric engines, which would minimize air pollutant emissions. All of the uncertainty was included in the emissions calculations such that a range of emissions is determined, from the best case of very controlled resource exploitation using clean technologies, to the worst case of old polluting technologies and high levels of well development.
Prospective impact of shale gas on air quality
We find that the shale gas industry will likely become the largest regional source of NOx and VOCs (bearing in mind the current under-development of the region), comparable to adding a city the size of Durban to the middle of the Karoo. Even if the lowest estimate of NOx emissions is used, shale gas would be the fourth largest source of NOx nationally. Similarly, VOCs from shale gas activities would be the second largest source of VOCs in the country. The high estimated values of NOx and VOC emissions are a concern for regional ozone and compliance with national ambient air quality standards. But, emissions could be reduced, even with large-scale development, using already existing control technologies.
It is important to note that this is a prospective emissions inventory, for activities that have not commenced, and indeed may never happen. Good practice guidelines will be needed to minimise impacts on air quality and reduce GHG emissions, with guidelines for control technologies, consideration of effective legal regulation, early establishment of baselines and continuous monitoring and good governance enabled by coordination across several South African institutions – a challenging set of tasks. The literature on shale gas development is largely international, particularly from the USA, with relatively few studies undertaken in South Africa. This partly reflects different levels of development of shale gas, but points to the overall need for more research, including on air quality and GHG risks under South African conditions.
China and US ratify Paris Agreement on climate change – SA next?
September 5, 2016
The US and China have jointly announced that both countries are ratifying the Paris Agreement on climate change. This has increased, the percentage of greenhouse gas (GHG) emissions covered by countries that have ratified dramatically. The official UNFCCC website now shows 26 Parties having ratified, accounting for 39.08% of emissions. That latter number gets the world closer to the 55% required. And with the political momentum generated, it seems highly likely the Paris Agreement will enter into force soon.
Before the China-US announcement on 3 September 2016, the share of global emissions was less than 1%. Many small countries had ratified, but none of the major emitters. Two triggers must be me for the Agreement to enter into force: 55 countries and 55% of global GHG emissions. The precise text is in Article 21.1 of the Paris Agreement.
The pressure is now on other countries, including South Africa, to follow suit. While there were extensive consultations on SA’s intended nationally determined contribution (INDC) and the position taken to Paris, the Agreement needs to be signed off by Cabinet and presumably also go through a parliamentary process. The US and China have both deposited their instruments of ratification with the UN.
The Paris Agreement is a treaty under the Vienna Convention on the Law of Treaties. While it was agreed in December 2015 and signed by many heads of state earlier this year, formal entry into force requires the two triggers to be met. That point in time now appears to be much sooner than previously expected.
Like many other countries, SA would add around 1% to the global total – the exact percentage depends on gases, sources, sectors, years and other parameters. For the purposes of ratification, a table  was agreed in Paris. The pressure now comes from the political momentum generated by the biggest developed and developing country ratifying. There are several unofficial tools online to examine scenarios when the 55/55 ‘double trigger will be reached – for example this one. The EU would add 12.1%, taking the total to 51.16%; just short of the second trigger; add Brazil and SA and we’re there.
From the first joint US-China announcement in late 2014 onwards, joint announcements by the Presidents, Xi Jinping and Barack Obama, have been influential. The text of the latest joint statement can be found here.
 “This Agreement shall enter into force on the thirtieth day after the date on which at least 55 Parties to the Convention accounting in total for at least an estimated 55 per cent of the total global greenhouse gas emissions have deposited their instruments of ratification, acceptance, approval or accession.” (Paris Agreement, Article 21.1)
 http://unfccc.int/files/ghg_data/application/pdf/table.pdf UNFCCC (United Nations Framework Convention on Climate Change) 2015. Table: Solely for the purposes of Article 21 of the Paris Agreement, information on the most up-to-date total and per cent of greenhouse gas emissions communicated by Parties to the Convention in their national communications, greenhouse gas inventory reports, biennial reports or biennial update reports, as of 12 December 2015. Paris, France, United Nations.
Policy Brief: THE IMPACT OF STRANDING POWER SECTOR ASSETS IN SOUTH AFRICA
By Tara Caetano
Increasing attention is being given internationally to the risks associated with unburnable carbon and stranded assets (UNEP 2015, IEA, 2014; Citi, 2015). Stranded assets are assets that “have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities” (Caldecott et al, 2014), arising from environmental regulation or other regulatory shifts, as well as market forces and other causes, including the falling costs of competing technologies and structural market decline. Citibank (2015) has estimated that the value of stranded assets is as high as $100 trillion to 2050.
These are significant (mis)investments globally and in South Africa, with potentially substantial impacts on companies and investors. There are, however, other systemic impacts of stranding assets, especially for an energy-intensive economy such as South Africa’s with a large coal-based capital stock and growing energy demand. These include the risks facing Eskom, Sasol or independent coal power producers, or the risks faced by companies and investors in private and state-owned generators (UNEP, 2015). But the risks also extend beyond, to include national risks to energy security (including supply, affordability and acceptability), macro-economic impacts on the demand side (for energy-intensive industry and poor consumers) and welfare risks as a developing country with high levels of poverty and inequality.
The UNFCCC’s Paris Agreement will require commitment even from developing countries to reduce their greenhouse gas emissions, and continued investment in high-emitting infrastructure will create costly risks for South Africa in the future. The energy sector, which in South Africa accounted for 80% of emissions in 2010 (DEA 2014), will need to meet decarbonisation targets in the medium to long term. Limiting warming to 2°C over the course of the century will require the complete phase-out of coal-based electricity generation without CCS by 2050 (Johnson et al, 2013). Investing in new coal-fired assets in the short-term may well prove costly in the longer-term, as the risk associated with not recouping those investments due to policy shifts or technology changes grows higher, especially for plants built after Medupi (Bazilian et al, 2011).
This paper aims to understand the implications of South Africa reducing emissions as part of a global agreement to limit temperature rise to below 2oC and to examine the potential risks of stranded assets in the energy sector. Can South Africa meet carbon constraints without stranding assets? Given the structure of the energy sector and existing infrastructure, what are the potential effects of the country stranding energy assets to meet mitigation targets? What are the cost implications of investing in power plants that are later underutilised? What is the impact of ignoring non-electricity emissions on the costs of transition?
Key Findings and Policy Recommendations
The Department of Environmental Affairs is not currently allocating South Africa’s carbon budget (i.e. its long-term climate mitigation commitments) between different sectors. The country may also have to reduce its emissions further in the long-term, as the world moves towards emission reductions consistent with 2oC and net negative carbon emissions after 2050. A scenario with a 14Gt constraint is broadly consistent with the mid-PPD of SA’s climate policy, but since global country contributions are not yet consistent with limiting warming to below 20C, many countries, South Africa included, may need to reduce emissions further.
Having examined more stringent scenarios, we highlight two major risks currently facing South Africa. Firstly, that electricity planning will assume a higher share of the national carbon budget for the sector to 2050 and will invest in fossil power accordingly; in later years, this capacity will either have to be stranded wholesale and retired prematurely, or become stranded capacity with plants run at low average load factors. As in Johnson et al, (2013) we find that less stringent near-term climate policy results in longer-term stranded capacity. This risk was highlighted in the IRP update (DoE, 2013: 25); the study was extended to 2050 partly to overcome the risk, because “by excluding the period after 2030 there is a risk of building coal-fired generation in the period leading up to 2030 on the assumption that the carbon emission caps would continue at the same level, but this would lead to a constraint in reducing the emissions or under-utilisation of generation capacity if the cap needed to be reduced over time as indicated by the government’s peak-plateau-decline (PPD) objective.” Given that the electricity sector is a lower-cost option for decarbonisation, we argue that the IRP 2010 emissions constraints (which allow for new coal-fired capacity to be built), should be revisited.
The figure below shows how the constraints we have imposed differ markedly from the emissions constraints in the IRP update. The IRP update assumed that the electricity sector would retain a proportional share of national emissions space to 2050; however, this is not the least cost mitigation option.
Comparison of carbon constraints in the Integrated Resource Plan Update and those applied in the current study (‘SAS’ refers to the scenarios where Sasol is assumed to run for its full technical life, which would result in increased pressure on the electricity sector to decarbonise).
The rate of retirement required to meet the emission constraints exceeded the rate at which the fleet is scheduled to retire, especially when new coal plants are brought on line. Continued investment in coal plants after Medupi and Kusile need to be carefully considered by energy planners since these are likely to be costly (mis)investments for South Africa; Medupi and Kusile already run a high risk of becoming stranded capacity if emissions constraints for the country or the electricity sector are tightened. The 10 GT scenario shows significant stranding of assets as there is no coal-fired generation by 2040.
Further, South Africa’s climate policy does not adequately account for the emissions associated with liquid fuels production. If South Africa is to continue to rely on coal-to-liquids (CTL) for liquid fuels supply to 2050, then higher levels of decarbonisation in other sector will have to take place. If a least-cost mitigation plan is to be adopted for the county, then the Department of Environmental Affairs and National Treasury must (as the implementers of mitigation policy) understand the political and economic trade-offs between these sectors better. While the effects on total investment in the electricity sector (e.g. the 12 and 12 SAS scenarios) may be similar, the electricity price increases earlier when more coal-based electricity capacity is stranded to meet the emissions constraint. In essence, this means that electricity-intensive industry must endure higher electricity prices for Sasol to avoid the stranding of its coal-to-liquids asset and the mines that support it. Alternatively, mitigation in other sectors must be deepened. Continued reliance on emission-intensive industry is risky, both to South Africa’s standing as a global citizen committed to emission reductions but also directly to the economy. Not only will international pressure increase in future years as implementation of the Paris Agreement unfolds internationally, but the coal sector globally is now viewed as being in structural decline. At the same time, industrial policy continues to favour energy- and carbon- intensive industry (DTI, 2015).
The key message is that the stranding of power sector assets is unavoidable in a carbon-constrained world. This will lead to higher electricity prices, as the stranded assets are replaced by lower carbon electricity generation capacity. Building new coal plants will only add to this risk.
A higher electricity price has significant economic impacts on energy-intensive sectors overall, negatively affecting non-ferrous metals in particular. This is likely to result in the shut-down of electricity-intensive sectors or these sectors moving off-grid, both of which are already becoming a reality with current electricity price increases. The socioeconomic implications of this are significant as jobs will continue to be shed, putting more pressure on the fiscus to combat increasing poverty and inequality.
A transition to a low-carbon economy could hedge this risk for South Africa, and provide growth opportunities in the medium to long-term as South Africa recoups benefits through increased competitiveness. This is possible provided the economy shifts away from energy-intensive sectors, especially iron and steel and non-ferrous metals, and coal (upstream and downstream) as these sectors continue to decline in profitability. Without this structural change, the challenge of growing the economy to address high levels of unemployment and poverty would increase substantially if stringent mitigation targets were required in the electricity sector.
This paper has used a partially linked energy and economic model to unpack the economic effects of mitigation and the impact of stranding assets on the South African economy. There are key areas of future work that remain. These include:
• Further linking of the energy and economic models, including refineries and CTL, coal mining and demand sectors.
• Examining the coal resource implications of these scenarios, i.e. stranded resources and unburnable reserves and resources.
• Examining the inclusion of the coal baseload independent power producers programme under different future mitigation targets to understand the costs and risks of stranding new coal assets.
A MAPS (Mitigation Action Plans & Scenarios) funded paper.
No economic case for SA nuclear plan – research
By Tara Caetano
There is no economic case to be made for a firm commitment to commissioning a full fleet of 9.6GW of nuclear power by 2030.
This is the key finding in a research paper probing the potential risks and uncertainties of the commitment to SA’s proposed nuclear build plan. It reveals that South Africa should aim to have a flexible planning approach to adapt to changing electricity demand.
The paper, by the University of Cape Town’s Energy Research Centre, compares this commitment to a more flexible planning approach that aims to minimise costs.
The Energy Research Centre’s Tara Caetano explains her findings in the paper titled, South Africa’s proposed nuclear build plan: An analysis of the potential socioeconomic risks…
The study is a technical analysis of the potential risks and uncertainties of South Africa’s proposed commitment to 9.6 GW of nuclear power. The objective of the study is to review this commitment in comparison to a more flexible planning approach that aims to minimise costs.
It includes three main tiers of analysis: the first builds two alternative futures, so that we can understand the implications of different investment strategies in uncertain future worlds; the second models the socioeconomic impacts of the commitment to nuclear power versus a flexible planning approach in each of these futures (i.e. committed nuclear versus least-cost investment plans in different futures); the third estimates the risks of an increase in the electricity price to the South African economy and consumers.
If economic growth is high and the costs of nuclear are low, then the negative impact of building nuclear versus other capacity is negligible. In this future, higher demand requires higher installed capacity, and if we are optimistic about nuclear and pessimistic about alternatives, then committing to nuclear power will not impact on the electricity price or investment required compared to a flexible approach (since the capacity will be required and the forced nuclear is relatively cheap).
High vs low economic growth
In addition, if this future were to transpire, an overinvestment in electricity capacity before 2030 could lead to favourable outcomes for the economy and facilitate higher growth in later years.
When there is higher growth there are marginal positive benefits from the commitment to nuclear power, although these effects are driven directly by the supply of affordable electricity and not by the decision to invest in nuclear power explicitly. In this case, job creation and incomes are driven by higher GDP growth and not directly by the investment in nuclear power.
If South Africa follows a path of lower economic growth, and nuclear costs are high while cheaper alternatives exist, a commitment to a fleet of nuclear power plants will have negative socioeconomic implications. Electricity prices will be higher over the period 2030-2040 and could be 20% higher in 2040 when compared to a flexible planning approach; similarly, there will be negative effects on key sectors as well as on GDP.
Potentially serious ramifications on welfare for all
The investment required for electricity generation infrastructure will be significant, crowding out investment in other sectors and increasing the electricity price. This could lead to a significant number of jobs at risk as the economy contracts in response to higher electricity prices.
Given high levels of unemployment amongst unskilled workers and the potential negative impacts on relatively employment intensive industries, unskilled workers are most likely to face the worst impacts of growing unemployment.In turn, household consumption will drop for all consumer groups, with potentially serious ramifications on welfare for all.
The results discussed above are for two illustrative futures, when in reality an infinite number of futures could unfold. The Monte Carlo analysis was used to analyse 1000 of these futures combining different assumptions for the uncertain parameters, drawing from probability distributions for each one of them.
94% chance electricity prices will be higher with nuclear
This probabilistic approach was used to gain an understanding of the risks associated with committing to 9.6 GW of nuclear by 2030, by comparing in each of the 1000 scenarios the electricity price trajectory when a more flexible approach is taken.
The results show that in 2030 there is a 94% chance that electricity prices will be higher if South Africa commits to a full fleet of nuclear instead of adopting a flexible planning approach. They also show that the risks of sustained higher electricity prices are very high.
A commitment to 9.6 GW before 2030, when demand is low and more affordable alternatives exist would therefore not be prudent. The investment could have significant socioeconomic implications and the lock-in associated with the investment will result in South Africa foregoing investment in other small scale and more cost effective electricity generation technology options.
Don’t discard nuclear completely
However, this does not mean that nuclear power should be completely discarded as an option for South Africa in the longer term, as it may indeed play a role in the SA power system under certain circumstances, some which may not have been considered by the analysis. Given uncertainty, it is preferable to keep all options open, but there is no rush in terms of making this decision, and there is no justification for making a commitment of this scale at this time.
There is a balance that must be found between investing in electricity generation capacity and investing in other key areas of the economy. This study clearly shows the trade offs of investment and the potential crowding out effects that could transpire with an overinvestment in the electricity sector, especially in instances of lower growth.
What SA should do
South Africa’s electricity build plan must reflect and balance the expected electricity demand, consider least-cost alternatives and ensure the provision of affordable electricity to consumers.
Therefore, given the risks inherent in long-term electricity planning, government must, if it chooses to procure nuclear power, do so in a way that minimises the likely risks and negative effects on the economy and consumers in South Africa.
Our results show that there is no economic case to be made for a firm commitment to commissioning a full fleet of 9.6GW of nuclear power by 2030.
The findings of this study show that in all futures a flexible planning approach is preferred.
Power to the people: renewable energy projects must be a collaborative effort
By Holle Linnea Wlokas and Britta Rennkamp
October 6, 2015
Renewable energy is finally a reality in South Africa’s electricity mix. The government’s renewable energy programme has procured 92 solar, wind, hydro and biomass projects. Some of these are already feeding into the national grid. Others meanwhile are in various stages of development.
Community renewables are not unique to South Africa. It is the country’s policies and frameworks that are new. Provisions in the regulatory framework direct international investment towards community development. The companies that build renewable energy power plants must invest a specific amount of the project value in nearby communities. Over the next 20 years all approved projects will have spent more than R39 billion on community benefits.
Census 2011 reveals boom in backyard shacks: HSRC Review
October 22, 2013
Jackie Borel-Saladin and Ivan Turok discuss trends in housing and urbanisation revealed by the latest Census 2011 statistics. One of the interesting trends to emerge within the overall picture of rapid urbanisation in the major cities is the sharp growth in backyard shacks.
These, often vulnerable, households are not typically provided with access to basic services. The result is that existing service delivery is overwhelmed by the additional demand from these households that it was not designed or resourced to meet. In terms of urban electricity provision the result is overloading of networks beyond the capacity they were designed for. This contributes to the physical deterioration of infrastructure as well as impacting quality of supply for all households – causing low voltage and blackouts.
These findings discussed by Borel-Saladin and Turok therefore re-emphasize the importance of factoring in the continuing rapid and unplanned growth and densification of low-income urban settlements into future urban energy strategies (as well as other urban planning considerations).
Communities for Wind Working Group launched under SAWEA
December 3, 2013
At this years Windaba in Cape Town, the South African Wind Energy Association (SAWEA) launched a new working group. Under the name Communities for Wind, the group is aiming to provide support to the industry to enable the best possible social and economic outcomes for communities. The development of good practice when it comes to working with communities, monitoring of the impacts and the support of positive relationships is the focus of the work content for the coming months.
Relationships with local residents as well as developmental benefits to local areas around wind projects are of great importance to the renewable energy industry and have been incorporated in the economic development requirements of the Renewable Energy Independent Power Producer Procurement Process (RE IPPPP). SAWEA is the first industry association in South Africa to institutionalise a response to this challenge. The group includes private sector, academia and civil society stakeholders.
More information about SAWEA under http://www.sawea.org.za/ and more information on the issue of community development in the RE IPPPP in our report ‘Making Communities Count’.
Community renewables South Africa
Fire detectors can help to prevent shack fires
September 4, 2013
Shack fires are an unremitting scourge facing urban townships. In South Africa, between 2000 and 2010, over 230 000 people were made homeless by fires. Growing urban populations together with inadequate services, in particular electricity and water, means urban shack fires will continue to take their toll. There is an urgent need for effective solutions to address the major causes.
Last year, the City responded to 1,177 fire incidents in informal settlements around Cape Town. According to the City 3,480 shacks were damaged or destroyed and 105 lives lost in 2012 alone.
On New Year’s day (2013), a fire broke out in the BM section of Khayelitsha. More than 4,000 people were left homeless; at least four residents lost their lives.
This incident brought light to a project run by Samuel Ginsberg, an electrical engineering lecturer at the University of Cape Town, to develop a fire detector. Final year engineering student, Francois Petousis, took it on as a thesis project. Petousis wanted to develop a cheap fire detector that could be mass produced.
“Many fires are started by candles, paraffin lighting, and cooking devices. These devices are sometimes left on at night while people are sleeping, and can often be knocked over,” said Petousis. Shack fires get out of hand because there is no early warning.
“People are often not aware of the fire when it begins, and that is when the fire can be fought more easily. What makes this detector a distinctively effective solution is that, when detecting a fire, it emits a low frequency sound that is at a pitch that was recently shown in studies to be most effective at waking people.”
“The sound is distressing and makes the body react. It is an extremely effective alarm.” If a detector goes off in one shack, the pitch is powerful enough to alert neighbouring shack dwellers.
The device is smaller than the palm of the hand and is being called Khusela (meaning “protect” or “defend” in Xhosa). It can be mass produced at a cost of just under R10 per device. The detector, which is durable, can be hung or attached easily from any surface inside a shack and the prototype has a battery life of four years.
“Other fire detection technologies were not suited to a township environment,” said Petousis
Available smoke detecting technologies are designed to be highly sensitive to the slightest presence of smoke. This would be useless in a township environment, which is normally smoky. Other technologies are also more expensive and use removable batteries, which isn’t ideal in a low resourced community. What the Khusela does is sense rapid changes in temperature and then it activates.
A report, prepared by the City of Cape Town, for a Fire Safety Symposium in February corroborates Petousis’ assertion that many fires occur at night when people may be sleeping or unaware. The document reports that most fires are reported between 9pm and 3am.
Other solutions have also been put forward. Working on Fire, a Johannesburg organization, is calling for the use of foam bombs — non-harmful chemical foam that suffocates the oxygen supply to fires and is dropped from the air.
Fire detection by camera has been suggested by the City as another possible strategy
The City Disaster and Management department are focusing on the provision of ‘first strike’ firefighting skills and safety awareness programs.
The department says that fires are mostly accidental, often caused by negligent use of dangerous cooking or heating devices, and as a result of alcohol and substance abuse. Other major causes are illegal electrical connections.
Whereas many solutions emphasize effective fire fighting, the Khusela aims at prevention. The value of this approach was shown in the US, where the introduction of fire detectors for households led to a 50% decrease in home fires after several years.
Petousis hopes to provide fire detectors for most informal settlements in and around Cape Town, and later countrywide.
“We are in the process of finding the best means to distribute them, but the biggest challenge is to find funding for the mass production of these detectors,” he said. “This project is non-profit, but we need funding to pay for the production and distribution. If we get funding we may operate as an NPO, otherwise a contract from a government department could allow us to take this project out to settlements. Getting the Khusela out to people is our chief priority at this stage”.
Shack fires present a very real threat to residents of informal settlements and any measures to prevent them should be taken seriously.
To contact The Khusela project for further information or support: firstname.lastname@example.org
Article by Fergus Turner
New report: The current and future role of paraffin in South Africa
August 24, 2013
Health and safety issues related to paraffin have long been a critical issue in South Africa and yet it remains an overlooked policy issue. This report was commissioned by the Paraffin Safety Association (PASASA) – which has since expanded its mandate to become the Household Safety Association (HESASA). Through wide-ranging interviews with public, private and academic stakeholder,s as well as focus groups with low-income paraffin users, the report investigates what the future role of paraffin could and should play in South Africa.
An overview of some of the key findings in the report:
- Paraffin poses significant health and safety risks to low-income households who use this fuel for cooking, heating and lighting. These risks, rather than inherent to the fuel itself, arise due to various inadequacies in the system of supply. The principal barrier to overcoming these challenges and mitigating risks was found to be a lack of ambition from the Department of Energy to play a leading role in this regard.
- The energy sector’s policy framework outlines clear responsibilities for the Department of Energy in relation to safe usage of all household energy carriers. Policy includes provisions to address safety issues relating to appliances, packaging and labelling, and public education and awareness.
- Displacement of paraffin entirely from the household fuel mix does not appear viable in the short to medium term. Significant demand and supply barriers were identified in relation to increasing the usage of alternative modern fuels such as LPG and electricity. Nevertheless both of these alternatives could play a greater role in meeting household energy than they currently do.
- Energy safety is a cross-cutting public policy issue. It requires the co-ordination of a diverse range of government institutions at both the national and local level.
- Development of a national household energy strategy is necessary to bring coherence to the current disjointed manner in which household energy programmes are conceptualised and implemented. Such a strategy should clearly establish clear short, medium and long-term policy goals to give clarity to the sector; and address all relevant issues relating to access, affordability, efficiency, health and safety, and environmental safety.
In conversation with the DoE: challenges implementing community benefits in the RE IPPPP
August 1, 2013
Louise Tait and Holle Wlokas from the ERC and Sue Soal from CDRA attended a high level meeting with the Department of Energy’s Independent Power Producer (IPP) Unit, which comprises representatives from the Department of Energy and National Treasury, to discuss issues pertaining to the community benefit requirements in the RE IPPPP. Two representatives from GIZ’s SAGEN programme also attended the meeting.
The DoE’s Renewable Energy Independent Procurement Programme (RE IPPPP) includes requirements for independent power producers (IPPs) to make financial contributions towards the local communities in the vicinity of renewable energy projects. The requirements are a great example of pro-poor and inclusive policy design, and offer important developmental opportunities for marginalised communities. The programme is however charting new territory, and as it moves forwards towards implementation, various challenges are arising. Many of these are explored and documented here.
The IPP Unit invited the ERC to this meeting to incorporate wider stakeholder input as they review their RE IPPPP programme design going forward. The DoE’s IPP Unit acknowledged the various difficulties arising in the programme, which they had not originally foreseen. Some of these that were discussed and highlighted by both parties during the meeting included: the 50km radius definition and overlapping projects, labour relations, inadequate engagement with communities, challenges with municipalities, the diverging approaches taken in different projects, the need for wider industry support and capacitation, clarifications and guidelines, monitoring and evaluation, timing and structuring of community engagement, and dividend flows to trust structures. The IPP Unit at DoE are therefore exploring to what extent they can support community processes and outcomes through improved policy design, both for existing approved projects and for bidders in future procurement rounds.
The ERC welcomes the inclusive approach of the DoE that facilitates broader stakeholder inputs into their programme design. The community benefit aspect of the RE IPPPP incorporates a variety of stakeholders, sometimes with varying viewpoints and frames of reference with which they approach the issues and solutions. Understanding and transcending these viewpoints has been a key objective of much of the ERC’s work to date through their on-going research and hosting of multi-stakeholder participatory events for the sector. This has been invaluable to understanding the diverse nature of the challenges and opportunities in fulfilling the RE IPPPPs requirements in respect of local community benefits.
The DoE, whilst committed to doing what they can to improve outcomes, also face limitations in what they can do. As sole procurer in the programme they are restricted in how far they can direct bidders with regards to specific guidelines and recommendations. They therefore stressed that it was necessary for the industry themselves to collectively chart a way forward in this regard. The DoE is however intending to establish a team responsible for overseeing the economic development aspects of the programme and are exploring how such a team can facilitate the implementation of benefit processes.
At the meeting, useful inputs that the ERC could make into the DoE’s deliberations were discussed. It was agreed that ERC would submit detail on the key issues that had been identified in their engagements with the sector. Both parties at the meeting also made a commitment to further regular engagements around these issues, and we look forward to further constructive discussions as the programme progresses.
New report released on community benefits in the RE IPPPP
July 24, 2013
The EPD team have launched a new publication in collaboration with the International Institute for Environment and Development (IIED) titled: Making Communities Count: maximising local benefit potential in South Africa’s Renewable Energy Independent Power Producer Procurement Programme (RE IPPPP).
In South Africa, independent power producers (IPPs) of renewable energy are invited to bid to take part in a large-scale, innovative, government-led scheme which aims to not only increase the share of renewable energy in the national grid, but also to benefit impoverished communities. The Renewable Energy Independent Power Producers Procurement Programme (RE IPPPP) requires IPPs to contribute to various economic development criteria, including the local communities where their projects are located.
However, the nature of these requirements has presented private renewable energy businesses with the significant challenge of engaging with community development processes, an area typically outside their expertise. This report explores the experiences and challenges of the renewable energy sector to date, both in meeting the RE IPPPP requirements, and planning for their longer-term implementation.
Find the report here: http://pubs.iied.org/16043IIED.html
ICCG Lecture Series on Energy Poverty
June 5, 2013
The International Centre for Climate Governance (ICCG) has launched a new online lecture series on issues related to climate change governance. Content is delivered by policy and academic experts and lectures are aimed at promoting long-distance training.
The first in this interesting lecture series is on Energy Poverty:
“Reducing energy poverty in the developing world is a necessary condition to promote its economic and social development. 1.3 billion people in the world still lack access to electricity and 2.7 billion people rely mainly on traditional biomass. But extending energy access entails environmental implications. ICCG lectures series on Energy Poverty addresses the bi-directional relationship between energy access and poverty reduction, starting from the definition of the problem, reviewing the common measurement approaches, the needed resources and forecasting the future energy access technologies and scenarios for the decades to come.”
Short lectures are presented on the following topics:
- Lecture 1: Defining and measuring energy-access and energy-poverty
- Lecture 2: The energy poverty cycle and its drivers
- Lecture 3: Financing energy access
- Lecture 4: Mapping global energy needs and emissions
- Lecture 5: Energy efficiency and new technologies
Health and Energy Policy Roundtable
May 31, 2013
EPD attended and presented at a recent Health and Energy Policy Roundtable event held in Cape Town. The roundtable was hosted by the UCT School of Public Health and Family Medicine; African Climate & Development Initiative (ACDI); and groundWork South Africa.The event aimed to bring together health professionals, researchers, and academics with energy policy experts to identify the health implications of current energy policy and systems in the Western Cape and South Africa; to develop a position for a healthy energy policy; and to develop a collaborative strategy for mobilizing the health sector on energy and health impacts.
Louise Tait presented at this event on the health impacts of energy consumption by poor households. The presentation focussed on articulating a framework for understanding risks and how they arise, through systems of supply and distribution of different energy carriers. She also discussed the current energy policy framework related to this cross-cutting issue, and explored questions for the role of the health sector going forward.
This issue is crucially important in South Africa given the significant health and safety risks that poor households are unnecessarily exposed to in the consumption of various fuels such as wood, coal, candles and paraffin. Energy access is fundamentally about promoting improved developmental outcomes from the use of modern fuels and technologies. Provision of a modern energy service should be one that is “affordable, reliable, high-quality, safe and environmentally benign… to support economic and human development” [UNDP, 2000]. It is relevant to note that safety is therefore seen as a key aspect of a modern energy service. However the energy-health nexus, being such a cross-cutting issue, often receives inadequate policy attention. There is an important need to highlight the impacts on human life, health and the economic consequences of energy health issues.
Although all energy use has inherent dangers and risks, these can be mitigated through appropriate technology (appliances), distribution systems, regulation and behaviour. Therefore health risks should be understood as failures or inadequacies in these aspects of the system of energy supply, rather than inherent to the fuel itself. The case of paraffin (or kerosene) in South Africa is a good example of this. Whilst this fuel can in theory be consumed in domestic settings in a safe and modern manner, in reality it poses severe risks to consumers in South Africa. The risks originate from inadequacies in:
- Fuel distribution systems – paraffin is distributed in bulk to retailers rather than pre-packaged containers. Customers bring their own containers to purchase the fuel – often empty cooldrink bottles. This creates significant risks in the home when children mistake it for cooldrink, and as a result SA experiences a severe incidence of accidental poisonous ingestions of paraffin by small children.
- Appliances – illegal and unsafe cooking appliances continue to flood the market despite their banning in 2006. Many households are still not aware that these appliances they use are illegal and that safer alternatives exist.
- Regulation – there is limited regulation regarding packaging and still inadequacies in appliance safety standards. Added to this are challenges in policing and enforcing existing regulations in informal settings.
- User behaviour – users lack awareness and education of the risks associated with paraffin and safe practises and behaviour.
The presentation from this roundtable is available here
RE IPPPP workshop on community benefits
April 12, 2013
The government’s utility scale renewable energy plants, being rolled out across the country between now and 2016 under the Renewable Energy Independent Power Producer Procurement Programme (RE IPPPP), has specific requirements relating to economic development and community benefits. Four of the seven criteria relate to the citizens residing within a 50 kilometre radius around a proposed project site. These require that projects have a percentage local community ownership, contribute to local job creation, as well as spending directed towards socio-economic development and enterprise development. Whilst these requirements open up exciting development potential for impoverished communities, the experiences of the industry to date, after completion of the first two bidding rounds, have revealed a number of potential problem areas emerging.
It was on this basis that the Energy Research Centre at the University of Cape Town decided to bring together specific experts in a workshop environment to explore issues regarding the RE IPPPP rollout. The workshop was attended by 22 participants comprising representatives from IPPs (representing wind, solar and hydro), South African Photovoltaic Industry Association (SAPVIA), Development Bank of South Africa (DBSA), Industrial Development Corporation (IDC), Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ) as well as community development practitioners from Community Development Resource Association (CDRA), South African National Biodiversity Institute (SANBI) and Conservation International South Africa. Whilst there are, of course, many more important voices with a stake in these issues including municipalities, communities and other government departments; the ERC targeted this event to initiate a process of on-going dialogue within the broader sector.
The workshop aimed to elicit insights and experiences from the first two bidding rounds to better understand some of the opportunities and challenges emerging. This was used to provide context to explore ideas, suggestions and recommendations around how to address these in current approved projects and/or to also improve the process going forward. These recommendations could either trickle back upstream to inform policy, or downstream to help improve the interaction between developers and communities at the implementation level. Out of the many discussions during the day, consensus emerged that there is definitely a pressing need for the industry to start collectively addressing these challenges and for more engagement with policymakers to streamline processes for implementing these requirements. Suggestions were made to establish a representative industry platform across all technologies, in the hope that this could enable different industry players to address issues in a collaborative manner. There was also agreement amongst workshop participants of the need for the renewable energy sector to work collaboratively on these issues and to explore ways of enhancing processes around governing and implementing these community benefit processes.
EPD students visit Kuyasa CDM Project
November 1, 2012
The ERC’s EPD course participants (and some eager new ERC staffers) went on a site visit of the Kuyasa project. The Kuyasa CDM Pilot Project involves the retrofitting of solar water heater (SWHs), insulated ceilings and energy efficient lighting in over 2 300 low-cost homes in Khayelitsha, Cape Town, South Africa.
More info on Kuyasa is available on the project’s website: www.kuyasacdm.co.za/.
LCEDN workshop in Brighton
September 12, 2012
The second meeting of the Low Carbon Energy for Development Network (LCEDN) conference was held in Brighton in the premises of the Sussex University on the 10thand 11th of September 2012. The programme consisted of a mix of presentations and interactive discussion sessions. The final programme is below. The meeting brought together researchers from mostly British organisations and institutions.
LCEDN Conference Programme: Transitions to low carbon energy systems: which pathways to energy access for all?
Day 1: Monday, 10th September 2012
09:00 – 10:00/ Registration
10:00 – 11:00/ Introduction and keynote
Chair: Gordon MacKerron (Director of SPRU, University of Sussex, UK)
Keynote Speaker: Kevin Urama (African Technology Policy Studies Network, Kenya)
11:00 – 11:30/ Break
11:30 – 13:00/ Session 1
The development benefits of low-carbon energy access: What is the evidence?
Speakers: Teo Sanchez (Practical Action, UK) Gisela Prasad (Energy Research Centre, University of Cape Town, South Africa) Andrew Scott (Overseas Development Institute, UK)
13:00 – 14:00/ Lunch
14:00 – 15:30/ Session 2
Transformative energy pathways: the political economy of low carbon energy access
Chair: Peter Newell (Centre for Global Political Economy, University of Sussex, UK)
Andy Stirling (SPRU and STEPS Centre, University of Sussex, UK) Farhana Yamin (Special Advisor to Connie Hedegaard, and University College London, UK) Other speakers T.B.C.
15:30 – 16:00/ Break
16:00 – 17:30/ Workshop 1
Group consultations on the evidence and the challenges
19:00/ Conference dinner
Day 2: Tuesday, 11th September 2012
09:00 – 10:30/ Session 3
Low carbon energy technology transfer, development and poverty reduction
Chair: Alison Doig (Christian Aid, UK)
Heleen de Coninck (Energy research Centre of the Netherlands)
Ambuj Sagar (Indian Institute of Technology, India) Other speakers T.B.C.
10:30 – 11:00/ Break
11:00 – 12:30/ Session 4
Financing sustainable energy for all: what works, and what needs to change?
Neil Jeffery, Renewable World, UK
Shiva Susarla, Energy Studies Institute, National University of Singapore
Smita Nakhooda, Overseas Development Institute
12:30 – 13:30/ Lunch
13:30 – 15:00/ Workshop 2
Group discussion identifying follow-on workshops, partnerships and research
15:00 – 15:30/ Break
15:30 – 16:30/ Round-up and closing
Impressions from the EVALOC conference
September 12, 2012
The one conference brought together an interdisciplinary and international bunge of researchers and practitioners. The organisers, the EVALOC research team, did an incredible job in hosting a very interesting event, including presentations, plenum discussion and workshop sessions. The absolutely beautiful venue in the TS Elliot Lecture Theater in Oxford (http://www.merton.ox.ac.uk/conferences/lecturetheatre.shtml) made me literally forget the pains from being in a conference setting the third day in a row (after the two day LCEDN meeting in Brighton the days before).
The programme offered a wide variety of speakers and topics. Examples of community lead and owned low carbon energy retrofit and new build projects in the UK and the US (Portland), India and Austria were talked about. Outstanding for me was the number of projects and the amount of activity in the UK around low carbon energy communities. Oxford alone apparently has 62 environmental groups exploring, implementing and improving renewable energy and energy efficiency interventions in and around their homes! This is not the case everywhere in the UK, but the government in the UK has taken note of the developments and programmes like the Green Deal, building codes and specific funding for low carbon community energy projects are the proof. Despite the many weaknesses and shortcomings associated with governments’ involvement in this space, the South African government could definitely learn from it.
The event also very much supported the argument that household energy mitigation (and hopefully soon also adaptation) actions are not only a matter for national, top-down efforts, but that these need to be accompanied (if not lead) by local level actions as well. The reason for that lies also within the constrains and limits associated with mitigation actions concerning individual households only. Collaboration amongst households and groups, has the potential to achieve sustained change. The EVALOC project is working on analysing exactly this. More about their inspiring work on their website http://www.evaloc.org.uk/. A full conference report is begin produced by the organisers.
Bethel Business and Community Development Centre, Lesotho, June 2012
Auguste 24, 2012
Earlier this year I visited Bethel Business and Community Development Centre (BBCDC) with three UCT students from the Engineers without borders (EWB) team (Ondela Mabusela, Tumelo Gabaraane, Matt Docherty) and ERC staff member, Anya Boyd, to see how the facility operates and gain technical and practical exposure to some of the renewable technology that is being used and developed by teachers and students at the school.
The BBDCD centre trains students and hosts workshops on topics including renewable energy, permaculture, water management, construction and integrated thinking towards water, energy, food and solar energy. During our visit, principal Ivan Yaholnitsky involved us in a variety of practical installations and tasks.
Despite the icy cold weather, our three days “off the grid” left us feeling recharged and ready to rethink the way in which we approach resource and development issues. We hope to continue to work with Ivan and the BBCDC team in order to share knowledge and expertise in the future.
For more info on BBCDC see website
EPD published MEMO on Community Development through RE IPPPP
August 20, 2012
Challenges and opportunities to maximise the sustainable development potential for local communities in South Africa's Renewable Energy Procurement Programme
This memo informs about challenges and opportunities related to the economic development elements of the Department of Energy’s current Renewable Energy Independent Power Producer Procurement Programme (RE IPPPP).
The South African RE IPPPP issued in 2011 aims to increase the share of renewable energy in the national electricity grid and stimulate growth in the renewable energy sector. Applications for renewable energy projects are developed by private companies, and selected bidders will sign energy-purchase agreement with government for the next 20 years on the green tariff basis. Applications submitted to the programme are assessed on the basis of their tariff and their contribution to specified economic development criteria. The economic development criteria in the RE IPPPP have been based on the Broad-Based Black Economic Empowerment (BBBEE) framework and include requirements in respect of job creation, local content, ownership and management control, enterprise development and socio-economic development.
This memo focusses specifically on the socio-economic development and enterprise development elements that are targeted at local communities in the vicinity of the renewable energy projects. These elements require that developers make a financial contribution of between 1.5% and 2.1% of total project revenue to communities to foster socio-economic development (this can include health, education, service delivery, arts and sports programmes) and support of local enterprise development. Developers are required, as part of their bid submission, to assess the needs of local communities and develop strategies to address these over the life of the renewable energy project using their financial contributions. Local communities are defined as settlements within 50 kilometres of the renewable project site.
Initial research undertaken by the Energy Research Centre (ERC) and the Community Development Resource Association (CDRA) highlights a number of issues in respect of these requirements, suggesting that the policy requirements in the IPPPP need further specification in order to maximise their benefits. There are currently no explicit guidelines given in the IPPPP for how developers should develop their strategies including the level of detail required in project and programme identification. There is no reference or guidance relating to community engagement or participatory approaches to development, appropriate governance structures or alignment with local municipal integrated development planning objectives. Preliminary interviews with developers reveal a multiplicity of approaches being followed. The private sector does not have in-house skills or direct experience related to community development and yet will be responsible for making significant investment decisions over a 20-year period for local communities. There is therefore an important need to specify development guidelines.
- There is no focus in the development of long-term community development plans on sustainability or integrate broader climate change objectives. The IPPPP programme was developed in recognition of the need for South Africa to mitigate emissions, and these objectives should be reflected in planning long-term, low-carbon community development strategies.
- Problems arise when attempting to align the conventional cycle of engineering projects with the process of achieving meaningful community development work. The scope of developmental activities should be clearly defined when the project is submitted for the tender, which can make it problematic to start engaging with communities about money and development projects before potential renewable energy projects have even been selected. This can lead to creating expectations and the intrusion of local politics and can damage the effectiveness of participatory development processes.
- Over a 20-year period, larger projects may result in hundreds of millions of rands being directed at specific communities and there needs to be consideration at this point around the feasibility of actually being able to develop projects and initiatives of sufficient scale to match the required spend. This also implies that it be spent it in a manner that can best unlock the economic potential of local areas (rather than focussing on charitable projects, for example). Lastly, it may be pertinent to consider issues of equity and tensions within local areas where neighbouring communities may not see similar benefits directed at them.
- The monitoring and evaluation mechanisms for the socio-economic development and enterprise development elements appear inadequate to sufficiently monitor the effectiveness of project interventions. Renewable energy companies will be evaluated on the basis of meeting their specified expenditure targets only, with no consideration of the impact of spend or the success or failure of development interventions.
ERC and CDRA are currently looking into investment in the renewable sector in South Africa and how it can innovatively contribute to reducing poverty and inequality at a local level and contribute to national developmental objectives. The IPPPP space incorporates a diverse range of stakeholders, each with their own insights, interests and expertise. Any solution or way forward requires active engagement with, and the participation of, all those involved in order to develop a shared understanding of the issue. The potential for government policy, in partnership with the private sector, to stimulate long-term and low-carbon socio-economic development in the renewable energy sector in South Africa is analysed.
Harnmeijer, A., Lipp, J., Wlokas, H.L. et al. (2012). WWEC 2012: A bird’s-eye view of community renewable energy across the world
Tait, L. (2012). The potential for local community benefits from wind farms in South Africa, Masters Thesis, Energy Research Centre, University of Cape Town.
Wlokas, H.L, Boyd, A., Andolfi, M., forthcoming. The potential for local community benefits in private sector-led renewable energy projects in South Africa: an evolving approach. Journal of Energy in Southern Africa.
EPD makes a joint submission to the National Planning Commission
August 11, 2012
The EPD team at the ERC, together with a range of stakeholders made a submission to the National Planning Commission with regards to access to energy services in the National Planning Document. This submission was borne out of a meeting of stakeholders was held by Pasasa and Sanedi in May 2012 which discussed issues around safe household energy usage in South Africa and the lack of an integrated framework or strategy for access to energy in South Africa.
This meeting of stakeholders had three overarching goals:
- To bring household energy use into the forefront of the policy agenda;
- To identify the gaps in current policy and the challenges regarding the impact of development and urbanization, energy access for rural and/or informal communities, energy supply, efficiency and safety and;
- To suggest best practices and recommendations for a national household energy strategy and policy.
Institutions present at the meeting who contributed to the submission included:
- Sustainable energy Technology and Research (SeTAR) Centre, University of Johannesburg;
- South African National Energy Development Institute (SANEDI) of the Central Energy Fund (CEF);
- Energy Research Centre (ERC) from University of Cape Town;
- The Paraffin Safety Association of Southern Africa (PASASA);
- National Regulator for Compulsory Specifications (NRCS);
- The South African Petroleum Industry Association (SAPIA).
“This submission [to the NPC] is based on a summary of presentations, discussions and on the outcomes of a “Panel of Experts” on the importance, challenges and benefits associated with developing an integrated household energy policy/strategy for South Africa. The intention of this process is to reduce ‘energy poverty’, improve affordability, reduce the strain on the national electricity grid, address the impacts of climate change and safety and create crucial jobs within the energy sector and South Africa more widely. There is agreement that a significant gap exists in the integration of current initiatives and policy developments relating to household energy.”
Download the NPC submission document here: Submission to NPC on HH Energy.
Current EPD work
August 1, 2012
The Energy, Poverty and Development group is concerned with energy issues that affect sustainable development and improved livelihoods for poorer communities in South Africa and other developing countries.
Current research topics are:
- low-carbon development, mitigation and poverty
- household energy interventions and policies
- community development in the Renewable Energy Independent Power Producer Procurement Programme (RE IPPPP)
- energy access
The research generally includes a process of feedback to national policy-makers and energy supply agencies. The experiences gained through our fieldwork and policy research are carried into the ERC Masters programme, to reach a wider spread of energy/development students and professionals from South Africa and other countries. Capacity-building and information services are also provided for groups of people involved in improved energy for the poor, such as end-users, community leaders, schools, local government and energy suppliers.
Over the last decade, important research areas have included
- assessing energy needs, resources, consumption patterns and opportunities among low-income rural and urban communities monitoring and assessing energy supply programmes aimed at assisting the poor
- in particular, tracking the progress of electrification programmes (both grid and non-grid electrification) and promoting a broader integrated development approach
- targeted research around themes like energy subsidies for the poor, gender dimension, energy poverty, the benefits/constraints of using renewable energy, and impacts of energy sector re-structuring on access to energy for the poor
- action research programmes helping people in poor communities to improve their energy supplies and use (in co-operation with energy suppliers and government)
Community Power at the World Wind Congress in Bonn
August 1, 2012
Citizen owned and organised renewable energy projects are presented, discussed and analysed at the World Wind Congress in Bonn, Germany from the 3.-5. July 2012.
The conference is attended by people from all over the world. Most countries of Europe were represented, as well as Peru, Chile, Australia, North America, a large Canadian delegation… and three South Africans. The Not-for-Profit Developer Just Energy is represented by Zukisani Jakavula and presenting a risk analysis of South Africa’s policy environment is former ERC researcher Max Thabiso Edkins.
Holle Wlokas, from the EPD team, is presenting a paper co-authored with Anya Boyd – the presentation consists of academic reflections on opportunities and challenges for community development through the current Renewable Energy Independent Power Producer Programme and is drawing on insights gained from working alongside wind developers for the past year.
Community Power at the World Wind Congress in Bonn
July 5, 2012
Citizen owned and organised renewable energy projects are presented, discussed and analysed at the World Wind Congress in Bonn, Germany from the 3.-5. July 2012. The conference is attended by people from all over the world. Most countries of Europe, Peru, Chile, Australia, North America, a large Canadian delegation….and three South Africans. The Not-for-Profit Developer Just Energy is represented by Zukisani Jakavula and presenting a risk analysis of South Africa’s policy environment is former ERC researcher Max Thabiso Edkins. Myself, I am presenting a paper co-authored with Anya Boyd – the presentation consists of academic reflections on opportunities and challenges for community development through the current Independent Power Producer Programme and is drawing on insights gained from working alongside wind developers for the past year.
SA’s coal habit hurts carbon budget
by Charlotte Mathews
October 25, 2016
SA will have to close either all its coal-fired power stations or Sasol’s coal-to-liquids plant by 2050 to stay within its carbon budget of 14 gigatonnes, Jesse Burton, a researcher at the University of Cape Town’s Energy Research Centre, says.
In any event, SA cannot build more coal-fired power stations if it is to meet its commitments under the Paris agreement to reduce its share of emissions of greenhouse gases to keep the increase in global temperatures below 2ºC above preindustrial levels by 2100, she said on Monday at a seminar on Life After Coal hosted by the Centre for Environmental Rights (CER).
Read the whole story on Business Day: http://www.businesslive.co.za/bd/companies/energy/2016-10-25-sas-coal-habit-hurts-carbon-budget/
IPCC special report on 1.5 degrees scoped out
August 19, 2016
A scoping meeting for the IPCC special report on 1.5 °C, (SR 1.5), was held in Geneva 15-18 Aug 2016. In the Paris decision, the UNFCCC had invited the IPCC to provide a speicial report (SR) in 2018 “on the impacts of global warming of 1.5 °C above pre-industrial levels and related global greenhouse gas emission pathways”. The Paris Agreement (PA) includes the aim to keep temperature increase “well below” 2 °C and pursue efforts limit to 1.5 °C. Ambitious climate action needs to happen in the context of sustainable development – and that was debated along with many other issues in the meeting.
More than 100 participants at the scoping meeting identified six themes and likely chapter structure:
Summary for Policy Makers
- Framing and context
- Mitigation pathways compatible with 1.5°C in the context of
- Impacts of 1.5 °C global warming on natural and human systems
- Strengthening the global response to the threat of
- Approaches to implementing a strengthened global response to
the threat of climate change
- Sustainable development, poverty eradication and
Impacts and global emission pathways were in the request from the UNFCCC. The 43rd IPCC plenary (April 2016) had put this in the context of sustainable development (SD) and poverty eradication (as PA Art 2.1 does). Many presentations on the first day highlighting not only the PA, but also the Sustainable Development Goals (SDGs) adopted by the UN, also in 2015. I hope it will be addressed in framing, as well as each chapter, and with a dedicated chapter 5 concluding. Transformation was another topic much debated, how to achieve them and which actors might bring about the change required. While many participants indicated they arrived aware that a carbon budget consistent 1.5 °C is close to used up, there was a sense that the challenge should be outlined – positively, while not ducking the hard issues. Somewhat surprising to me was the notion of comparing 1.5 °C only to 2 °C. It seems that comparison to higher levels of temperature (and greater avoided impacts from 1.5, and higher emission pathways) both adds more information and is highly policy-relevant – given than the aggregate effect of INDCs puts us on a path between 2.6 and 3.1 °C (see this paper in Nature).
The outline from the scoping meeting will go for approval to the next IPCC plenary, to be held in October 2016. That means an intergovernmental discussion on what scientists have proposed. Personally, I think the IPCC needs to be depoliticized and focus on the science. That was reflected in a good, collegial spirit among participants in Geneva – despite some very different views, there was always willingness to find a way forward that advances good information. I would hope the IPCC plenary has a similar spirit, certainly asks for information that is policy-relevant, but refrains from negotiating the issues – the place for that is the UNFCCC.
The draft outline will be on the IPCC web-site as part of the documentation for the next plenary.
Full title of the meeting: “Scoping Meeting for the IPCC Special Report on the impacts of global warming of 1.5 °C above pre-industrial levels and related global greenhouse gas emission pathways in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty”
Development paths consistent with zero poverty and 1.5°C
August 11, 2016
The world faces the twin challenges of development and climate change. 2015 saw the adoption of the Sustainable Development Goals (SDGs) and the Paris Agreement (PA) on climate change.1 An IPCC special report on keeping temperature below 1.5 °C is being scoped, relating to the global temperature goal in the PA;1 at the same time, the imperative is to eliminate “eliminate poverty, in all its forms, everywhere”. 2 And those are not all the challenges we face – at global, national and local level.
Reducing poverty, inequality and GHG emissions – and thereby limiting impacts, are certainly among the foremost challenges. The question of 1.5 degree is not, on its own, the most important. Looking ahead from 2016, we also face an increasingly fragmenting world, for example post-Brexit and in the Sudan. Migration is increasing due to climate and political crises. The global economy has not recovered from the financial crsis, and individual countries are struggling (not least South Africa). Levels of unemployment remain high – in SA, but also in Southern Europe and elsewhere. While climate NDCs have made a signficant step forward in mainstreamign climate change into national development planning, the sum of NDCs has us on a path to 2.6 -3.1 °C.3 No single special report cannot address all of these challenges – but SR1p5dev needs to relate to the broader challenges – if it wants to make a real difference.
The suggestion is therefore that SR1p5dev looks beyond the usual climate change literature. Some modest suggestions are offered below, for exchange and discussion with the participants of the socping meeting and the broader community (many more are interested than can attend!)
Sustainable development and climate change
The SR1p5dev would do well by framing the challenges, risks and opportunities as ‘SD and CC’. This would of course be based on assessment of literatures, on reducing poverty and inequality, GHG emissions, and the impacts of climate change. The framign should refer to the two major agreements of 2015, the SDGs and Paris Agreement. Framing chapter(s) should also assess of implementation vs goals; the literature has assessed scenarios assuming NDCs fully implemented vs 2 °C (and 1.5 °C ?), but should also look at scenarios with increased action.
Impacts of global warming of 1.5 °C above pre-industrial levels
It would make sense to understand the problems associated with 1.5 °C – the impacts of climate change. There might be more than one chapter here, certainly including one on biophysical impacts. Key developmental concerns – inclduing at local level – are the socio-economic impacts of 1.5°C and threats to sustainable development, and this literature deserves a dedicated assessment. The section should indicate the costs of inaction and investments required, providing as much information as possible.
Pathways consistent with 1.5 °C
The case we make is that a ‘mitigaiton’ section should begin with national development pathways. The information communicated in (I)NDCs can be assessed (including in good work done by the UNFCCC Secretariat on ‘aggregate effects’,4 including an update5). There is a signficant literature to assess since AR5, including studies of deep decarbonisation pathways based on national modeling.6 The assessment should of course include other modeling studies, and political, social and economic analyses, drawing on literature with more qualitative methods but equally important information to inform the realisatin of development pathways. From the assessment of bottom-up studies, a richly textured global composite can be assessed, providing global greenhouse gas emission pathways that are well grounded in analysis closer to national development planning. The global GHG emission pathways should also assess scenarios modeled by global IAMs; staring with a review of AR5 chapter 6, and updating with recent studies, in particular those that include 1.5 °C. This section would also include an assessment of literature on response measures.
Action at local level
Action takes place at the local level. So in addition to the preivous (focused on national and global scale), there should be a prominent section / chapter assessing literature on both adaptation and mitigation, and action by local authorities, social movements, businesses and other ‘non-state actors’ (who strangely are identified negatively, whereas they are the postiive actors).
Opportunities and Risks
SR1p5dev should assess all of the above, perhaps best framed in terms of risk management. In other words, what are the major opportunities and risks of 1.5 °C. This would include costs and benefits of action (but not be limited to cost-benefit analyses). It should provide information on which pathways consistent with 1.5 °C and zero poverty are ‘attainable’? The risks and opportunities could be disaggregated by sector, by technology and possibly other ways. Assessment should inlcude the costs of delaying action, and the costs and benefits of increased action
Conclusion: informing action on development and climate change
SR1p5dev should conclude with clear, policy-relevant information. Such information must inform both development and climate change, as argued at the outset. The report might identify attainable development pathways consistent with 1.5 °C and eliminating poverty.
- UNFCCC (2015) Paris Agreement. Annex to decision 1/CP.21, document FCCC/CP/2015/10/Add.1. United Nations, Paris, France.
- UN (2015) Sustainable Development Goals. Resolution adopted by the General Assembly on 25 September 2015: Transforming our world: the 2030 Agenda for Sustainable Development. A/RES/70/1. United Nations, New York.
- J. Rogelj et al. (2016). Paris Agreement climate proposals need boost to keep warming well below 2°C Nature 534, 631-639.
- UNFCCC (2015) Synthesis report on the aggregate effect of the intended nationally determined contributions. Note by the Secretariat, document FCCC/CP/2015/7. UNFCCC, Bonn.
- UNFCCC (2016) Aggregate effect of the intended nationally determined contributions: an update. Synthesis report by the secretariat. Document FCCC/CP/2016/2. UNFCCC, Bonn.
- C. Bataille et al. (2016 online). The need for national deep decarbonization pathways for effective climate policy. Climate Policy; C. Bataille, H. Waisman, M. Colombier, L. Segafredo, J. Williams (2016 online). The Deep Decarbonization Pathways Project (DDPP): insights and emerging issues. . Climate Policy; DDPP (2015) Pathways to deep decarbonsiation: 2015 report. Sustainable Development Solutions Network (SDSN) and Institute for Sustainable Development and International Relations (IDDRI), Paris and New York; K. Altieri et al. (2015). Pathways to deep decarbonisation in South Africa. Part of DDPP 2015 final report of the Deep Decarbonization Pathways Project Energy Research Centre, with Sustainable Development Solutions Network (SDSN) and Institute for Sustainable Development and International Relations (IDDRI), 2015; DDPP (2014) Pathways to deep decarbonsiation: 2014 interim report. Sustainable Development Solutions Network (SDSN) and Institute for Sustainable Development and International Relations (IDDRI), Paris and New York.
How policy drives the German Energy Transition (Energiewende): lessons for SA
May 31, 2016
Since 1990, and particularly since Energiewende was launched in 2012, the share of renewable energy (RE) within Germany’s total energy supply has steadily increased. The most significant growth has been evident within the electricity sector, where the RE supply share has grown from a base of less than 5% in 1990, to 28% in 2014. Policy is now aimed at further growing this share to between 40 – 45% by 2025, and to 80% by 2050.
How has this growth been achieved thus far?
Feed-in tariffs (FiTs) supported by the Feed in law of 1991 guaranteed eligible RE plants grid feed-in premiums on top of electricity market prices, for 20 years, but a key early policy instrument for the expansion of renewable energy in the German electricity market has been the Renewable Energy Sources Act (EEG) of 2010. The EEG grants RE legal priority access to the national grid, as well as priority transmission and distribution.
In 2012 the Feed-in tariffs were reduced and the latest revision of the EEG in 2014 aims to further reduce costs and improve market integration of renewables. The 2014 amendment also prepared the way for a policy change from feed-in tariffs to auctions. This is a great illustration of how good subsidy design includes allowance for evolution or even phase out over time, so that technology learning can be taken into account and benefitted from fully.
Beyond policy, the transformation of Germany’s power sector arguably receives the largest share of public and political attention today. Taken together, the result is a broad high priority placed on the country’s energy transition so that progress is both widely debated, fostered and driven by common vision.
What are some of the specific targets for transition and how might these be achieved?
A closer look at the energy policy history and context reveals a comprehensive policy drive toward achieving the ambitious transition goal of phasing out both Coal and Nuclear power supply.
Increasing the share of RE in final energy consumption for heating and cooling by 14% by 2020 will require drastic changes in the fields of heating and cooling, transport and energy efficiency. The principal policy instrument to attain this goal is the 2009 Renewable Energies Heat Act (EEWärmeG) which includes key new building regulations (including public buildings).
Ensuring the transport policy goal that 10% of energy consumption in transport is based on RE sources by 2020 will require comprehensive changes within the sector, including that mineral oil companies supply a rising quota of RE sources within the overall transport fuel they sell. Electric mobility is another focus of transport policy, and government aims to have one million electric vehicles on the roads by 2020. Support for electric mobility includes research and development funding and tax exemptions.
Energy Efficiency (EE) has long been considered a central lever to cost-effectively cutting Germany’s GHG emissions and increase energy security. Efficiency improvements also contribute directly to overall energy demand reduction. The energy saving ordinance (EnEV) was introduced in 2002 to enhance EE in the building sector and to introduce energy performance certificates. The law sets minimum requirements for energy performance and its most recent amendment aims for all buildings to be nearly energy neutral by 2021. In addition, a modernisation programme for buildings was introduced in 2006, to incentivise efficient construction of new and refurbishments of existing buildings, along with a special fund aimed at enhancing EE in small and medium enterprises.
On mitigation, as a member state of the European Union, Germany has committed to reduce GHG emissions by 80 – 95% by 2050 (compared to 1990 levels). Expansion of RE to substitute fossil fuels is set to make a major contribution to meeting this commitment. In 2014, redeployment of RE avoided emission of 148 Mt CO2 equivalent. The main challenge is to reduce Germany’s emissions from coal firing which rose by 7% between 2008 and 2013, alongside phasing out of nuclear and rapid expansion of RE during the same period.
In July 2015 the German government adopted a policy which will result in Lignite power plants with a combined installed capacity of 2.7 GW being placed within a capacity reserve from 2017 onward. Plants within the reserve will not offer their electricity on the spot market, instead they will receive a fixed compensation for a period of four years at the end of which they will be closed permanently. Implementation of an agreement between the government and the lignite industry to provide additional reduction of 1.5 milliion tonnes of CO2/annum as from 2018, is currently underway.
For the energy sector as a whole, the overall target of halving primary energy consumption by 2050, with the intermediary target of 20% reduction by 2020 (compared to 2008 levels), has resulted in an initial achievement of 9% by 2014.
How are these costs covered?
The debate as to whether German citizens and businesses can afford the investments required for Energiewende is vibrant and focused mainly on electricity tariffs and changes within the employment sector. The RE sector as a whole contributed 100 000 nett new jobs in 2015 (Kemfert et al, 2015). Continued growth in energy sector job creation is expected mainly in the construction, services, trade and manufacturing sectors.
Electricity levies, carbon taxes, new investments in restructuring power supply based on investment-friendly policies on transmission and distribution grids and steady growth in savings due to avoided energy imports all contribute to revenues relating to the transition. As the energy system changes to meet policy objectives, these revenue streams grow.
It is estimated that by 2025, investments in power sector transition are likely to reach approximately 15 billion Euros per annum (Agora Energiewende, 2015).
The knock-on effects of integrating a greater share of RE
The infrastructure challenge of integrating a growing share of fluctuating renewables into the grid is perhaps one of the most challenging ones, a subject equally relevant to South Africa’s flourishing RE sector. Even though RE integration has been prioritised in policy, the German national grid will ultimately need to be extended and reorganised technically. Regions in the north and east that generate large shares of renewable electricity will need to be connected to industrial clusters in the south. In parallel, electricity demand will need to become more flexible and adjust to intermittent supply from wind and solar plants.
In Germany it is widely understood that “intermittency” is not to be confused with “unreliability”, and that along with policy certainty and targeted infrastructure investments, intermittency can be managed with adjustment in demand patterns as well as optimally utilising the dispatchable nature of RE technologies.
And then there is the complex process of decommissioning nuclear power plants… The commission reviewing the financing of Germany’s nuclear phase-out has recommended to government on April 28th that the reactor owners pay some EUR23.3 billion ($26.4 billion) into a state-owned fund for decommissioning of the plants and managing radioactive waste. Nuclear power companies are starting to share data on actual decommissioning costs, and soon it will be possible to reliably assess whether countries planning to build nuclear power can in fact afford the full (present and future) costs of nuclear power.
I left Germany with these key insights:
- That, as in South Africa’s case where the RE Independent Power Producer Procurement Programme (REIPPPP) was initially influenced by SA’s climate commitments in Copenhagen, the German energy transition was directly linked to early climate policy. Today however, in both countries, climate policy is seldom linked to a growing domestic RE sector.
- That policy consistency, policy targets and clear leadership commitment to the energy transition provided significant and broad early assurance to all affected parties: citizens, industry and investors alike and this in turn had driven and fostered the sustained, measurable and visible transition unfolding in Germany.
- That well designed policy includes allowance for regular updates, for phasing out of aspects that do not favour astute transition and for evolution that is at least in step with evolving context.
- That German citizens have long understood that nuclear power comes with enormous risk and the success of the local anti-nuclear movement is self-evident. Now the significant associated costs of decommissioning is entering the terrain of public knowledge and the skills associated with this process are being developed recognised. Very soon, Germany will be in a position to offer the world data, experience and expertise on nuclear decommissioning.
- As we consider investing in a new nuclear build programme we should consider the emerging rule of thumb: that in Germany, costs of decommissioning are now estimated to almost equal build costs. We can learn from the experiences of others and need not make choices that leave us with consequences we could well have avoided.
Policies and policy instruments that have influenced the German energy transition:
- RE Feed-in law, 1991
- Renewable Energy Sources Act (EEG), 2000
- Energy saving ordinance (EnEV), 2002
- Modernisation programme for buildings, 2006
- Renewable energies heat Act (EEWärmeG), 2009
- Germany central strategy document for climate and policy, 2010
- The Chancellor’s decision in 2012 to phase out all nuclear power supply by 2022
 By 2014, 5.4% had been achieved.
 The RE sector as a whole created 371,000 new jobs in 2013. After accounting for job losses in the conventional energy sector, this results in a nett of 100,000 new jobs (Kemfert, 2015).
- Agora Energiewende, 2015. The energy transition in the electricity sector: state of affairs, 2014.
- Federal Ministry of Economic Affairs and Energy, 2015. Renewable Energy in 2014.
- Federal Ministry of Economic Affairs and Energy, 2014. Second monitoring report: Energy of the future.
- Kemfert C, Opitz P, Traband, T, Handrich L, 2015. Deep decarbonisation in Germany, a macroeconomic analysis of economic and political challenges of the Energiewende, Berlin Deutsches Institut für Wirtschaft.
- Kraemer, R.A, 2012. Germany, Fukushima and global nuclear governance. Ecologic Institute, Berlin.
- World Nuclear Association website: http://www.world-nuclear.org/information-library/country-profiles/countries-g-n/germany.aspx
Brenda Martin is an ERC researcher on policies related to nuclear and renewable energies and independent advisor on energy policy and practice. She recently represented SA on a 6-day study tour focused on the Energiewende in Germany. She writes in her personal capacity.
The complexity of global knowledge networks
By Yoliswa Molefe, ACDI Master’s student, class of 2016
May 27, 2016
This post relates to the presentation of this paper: Rennkamp, B and Boulle, M. 2015. Novel shapes of South-South collaboration: Emerging knowledge networks on co-benefits of climate and development policies. MAPS Working Paper No.30. Cape Town: MAPS Programme
At the core of knowledge networks are people working together to create and generate knowledge, share and spark new ideas. Knowledge networks entail a commitment to collaborative effort; bringing different groups of people together to achieve cross-sectoral knowledge exchange and learning for the betterment of research, practice and policy. In today’s interconnected world, knowledge creation and exchange, can be seen not as produced in one place, but as generated through the interaction between many actors who are both sources and users of knowledge.
Recently, the Energy Research Centre (ERC) at UCT hosted a seminar on ‘emerging knowledge networks on co-benefits of climate and development policies’. The researchers, Michael Boulle and Britta Rennkamp, focused on the role of knowledge networks in the creation of knowledge; how knowledge creation works and which knowledge holders created what specific knowledge. Particular attention was paid to knowledge networks on co-benefits of climate action. In short, analyses revealed that there is a considerable network of knowledge holders involved in the knowledge production on unifying co-benefits in climate and development. A strong argument was made that knowledge production on co-benefits can profit from strengthening the connection between actors in knowledge networks, which got me pondering about the complexity of formal global climate change networks, the challenges they face and how this affects their ability to communicate, create knowledge and work together. Moreover, how can closer connections be built when there are vast geographical and cultural differences involved?
How can global knowledge networks help to address climate change?
A primary mechanism for the spread of knowledge on climate change has been through global and regional networks. Through globalisation, technology and interconnectedness, ideas are spreading more rapidly and knowledge partners can work closer together. Global knowledge networks promote collaboration across geographic and organizational borders making them effective outsourcing tools. These knowledge networks allow for communication between disciplines, cultures, agencies, languages and territories. All users and producers of knowledge are enabled to communicate more quickly, allowing knowledge to be exchanged more effectively and actors in the network to harness the power derived from the ready availability of information. Generators of local, regional and global climate knowledge are connected and local knowledge can be linked with global science. Global knowledge networks also have greater ability to attract media attention, political and donor support than an individual or organisation. Another way in which knowledge networks can be beneficial (in conjunction with technology) is through utilising these networks where access to real-time information is needed, such as during extreme weather events, to enhance the capabilities of the decision-makers.
What are some of the challenges of complex global knowledge networks?
International networks such as the Climate Change Knowledge Network (CCKN) rely on virtual teams who work across space, time and organizational boundaries for the development of joint projects and communication. Member organizations of international climate change knowledge networks often lack critical factors which influence successful participation in global virtual teams. Many of these organisations have not invested in human resources, training and communication and collaboration technology. What’s more, cross-cultural issues can be heightened in international knowledge networks affecting the ability of the collective to work harmoniously due to possible competing values and assumptions.
Despite commitment to participation and commitment, the structure of climate change global networks has been hierarchical. Thus, broadening a network does not necessarily result in inclusiveness. Exclusiveness can be an issue in climate change global knowledge networks, especially when they cross the North-South border. For example, there may be no genuine partnership and the knowledge network could remain within the North. There is also the question of power and domination- who dominates the global climate change knowledge community and what does this mean for the character of the knowledge that is produced and exchanged? Verkoren 2006 asserts that global knowledge networks can be viewed as ‘hegemonic projects’ that naturalise specific ways of thinking and doing things and that their discourses shape the way that society conceptualises the climate change crisis. Knowledge created in global networks can then be perceived as a tool of power used to further dominant interests.
What can be done?
Greater investment must be made towards the critical factors for successful collaboration of actors in knowledge networks, including greater investment in training and development, human resources and those technologies that enable actors to work together more efficiently and effectively. A balance must be struck between respecting differences based on culture and values and making decisions on a course of action that is most beneficial. The quality of engagement with participants not in dominant positions in the network must also be improved to increase inclusiveness. While greater interconnectedness and rapid exchange of information is important, it is also necessary to critically examine how conceptualisations of the climate change crisis in global knowledge networks come about and how these are maintained through the network and ultimately how they influence the solutions that are regarded as necessary. Critical engagement will not result in immediate solutions, but it can offer improved understanding of the complexity of knowledge creation and the complexity of relations in global knowledge networks.
Originally published here: http://acdi.uct.ac.za/blog/complexity-global-knowledge-networks
Why South Africa is finding it difficult to wean itself off coal
by Lucy Baker and Jesse Burton
March 15, 2016
South Africa has made domestic and international commitments to climate change mitigation. But the country continues to depend on coal-fired power plants, which provide 92% of its electricity. A key challenge for the country in dealing with electricity shortages is that the bulk of power comes from coal, which is harmful for the environment and local communities.
The electricity sector is responsible for almost half of South Africa’s carbon emissions. As discussed in our recent report, it will be difficult to overcome the important contribution that coal makes to the electricity sector and the economy.
Decarbonisation in the electricity sector cannot be achieved without reducing the absolute contribution of coal-fired power. This can be achieved by introducing a range of low-carbon energy options. These include wind, solar photovoltaics and concentrated solar power, in addition to rapidly developing technologies for energy storage. Demand-side measurement and energy efficiency could also play a key role. All these measures and interventions offer significant potential.
But moving away from coal is proving difficult.
The reasons for South Africa’s electricity crisis are long-term and complex. They include a severe backlog in maintenance of its plants and delays in the construction of new power plants. This poses several opportunities and challenges.
The opportunities it presents include increasing the contribution of renewable energy to the national power supply. But can renewable energy compete with existing coal-fired power and a potential nuclear fleet? And can renewable energy be implemented in a way that prioritises socio-economic well-being and transparent and democratic policy processes? In other words, will the country’s moves towards a lower-carbon economy incorporate a “just transition”?
Among the challenges is the fact that South Africa’s electricity crisis is compounded by a lack of transparency in decision-making and political power struggles. For example, there are long-standing tensions within the ruling party and the tripartite alliance made up of the African National Congress, the trade union congress and the South African Communist Party. These tensions can be found in the ideologically driven disagreement between those who want a liberalised electricity market and those who want the government to hold onto the crisis-ridden, state-owned utility, Eskom.
In addition, recent steps toward transparent and democratic energy planning and policies have been undermined. For example, the latest revision of the Integrated Resource Plan for electricity has been put on ice.
The electricity master plan was launched in 2011 following a prolonged and intense stakeholder engagement process. It covers the country’s total demand requirements from 2010 to 2030.
According to the plan, an electricity project must align with the technological allocations set by the country’s electricity plan to be granted a license. The plan includes:
- a cap on CO2 emissions,
- plans to include 17GW of renewable energy that will deliver 9% of supply by 2030,
- 9.6GW from a nuclear fleet.
Coal, nevertheless, dominates the electricity generation mix.
The nuclear complication
South African President Jacob Zuma and Russian President Vladimir Putin have discussed the option of nuclear energy for South Africa. Reuters
In 2013 a revised Integrated Resource Plan was put out for public comment. This was in keeping with the expectation that the original would be updated on a biennial basis. It proposed lower electricity demand because of a decline in economic growth, higher prices and increased energy efficiency. The revised plan also stated that commitments to long-range, large-scale investment decisions should be avoided. Notably the revised demand projections suggested that:
no new nuclear baseload capacity would be required until after 2025 and, for lower demand, not until at earliest 2035.
The revised plan is unlikely to be approved because it seriously challenges the case for the proposed 9.6GW nuclear power programme.
The cost of the programme has yet to be determined and it is still unclear if it will be affordable. This programme, which is being pushed by the Presidency, is tied up in broader political wrangling. Serious questions over affordability have been linked to the firing of the finance minister Nhlanhla Nene in December 2015 who opposed the programme on the grounds of cost.
If the nuclear programme is approved, it will shape the country’s electricity mix, infrastructure and related tariffs for years to come. While it may reduce carbon emissions in the long term, this will come at a greater cost than other options.
The role of renewables
South Africa has made a significant move toward decarbonisation through a renewable energy procurement programme. Launched in 2011, the programme followed the inclusion of a carbon constraint in the country’s Integrated Resource Plan for electricity. Since then there has been significant growth in the renewable sector backed by South Africa’s banks and private investors.
The country’s renewable energy programme is internationally celebrated as a success for the procurement of renewable energy from independent power producers. In addition the costs of these renewable energy technologies have decreased dramatically in the past four years. Utility-scale wind and solar photovoltaics are now cost competitive with Eskom’s new-build coal.
Grid-tied, roof-top solar photovoltaics are also rapidly emerging, despite the continued absence of an appropriate regulatory framework. These are being installed by wealthy households and businesses who are trying to buy independence from an increasingly unreliable grid and rising electricity tariffs.
Some large industrial players are also trying to connect their own generation plants to the grid through wheeling agreements. These involve independent power producers selling electricity to a third party via Eskom’s grid.
These agreements suddenly seem more attractive in light of the supply-side crisis and the uncertainty of Eskom’s ability to meet the electricity demand. But they have been stymied because rules around their cost have not been established.
The final piece of the puzzle is to ensure that all decarbonisation efforts and energy supply reach low income consumers. If the country’s tariffs continue to increase it will become even more difficult for the lower income bracket to have access to modern energy services.
First published on The Conversation
Documentation on ‘Agroforestry systems as CER providers: an analysis for the Peruvian Amazon region’ by IIAP
December 21, 2015
Almost half of all Peru’s greenhouse gas emissions come from forestry, and other land use or land use changes. These activities also contribute significantly to the country’s economic growth and development.
Global efforts to encourage clean development in developing countries includes efforts to stimulate the preservation of existing forests, and rehabilitation of degraded ones or the reforestation of abandoned areas after a cropping period, through paying for the forests’ carbon sequestration properties.
A policy brief (see here) considers the findings of a modelling process carried out by the Instituto de Investigación de la Amazonía Peruana (IIAP) team, which compares the economic value of timber felling practices in agroforestry plots in Peru, with the potential financial benefits of using global carbon trading mechanisms to compensate the country for projects which enable reforestation, afforestation, using agroforestry plantations. This could be done through small-scale re-forestation as agroforestry projects.
The modelling uses specific definitions for what constitutes an agroforestry plantation and analyses tree-felling data from the 1950s to calculate the carbon-banking potential of timber planted in agroforestry projects in the Peruvian amazon forests area.
The research also reflects the analysis of one such project in areas close to the Iquitos-Nauta road, in the northeast Peruvian Amazon, to demonstrate viability, context and potential challenges.
Findings show that if prices of the ‘certified emissions reduction’ units, or CERs, are low, it is only worthwhile to keep trees in such projects standing for 15 years. Thereafter, the income generated by these CERs would not compensate against the income lost from communities not being able to sell the timber products.
However if the global carbon stock market kept the value of CERs at 12 Euros per CER, as they were in 2010, it might be viable to preserve trees for 30 years. This would be enough incentive for regional and local government to invest in small scale agroforestry or forest plantation related projects.
The detailed calculations are provided below as PDF files.
- IIAP Agroforestry CER calculations Results II info
- IIAP Agroforestry CER calculations Resultados modelo II.3
- IIAP Agroforestry CER calculations Resultados modelo II.2
- IIAP Agroforestry CER calculations Análisis de regresión Model II
- IIAP Agroforestry CER calculations AGB para tree
- IIAP Agroforestry CER calculations estimación de carbono Modelo II
What might the Paris Agreement mean for South Africa?
December 18, 2015
What are the implications for South Africa of the Paris Agreement on climate change? Here is my initial take, following an earlier assessment of the contents of the Agreement
The Paris Agreement is characterised by much broader participation than the Kyoto Protocol. Much more will be required for South Africa, together with all other countries, in terms of regularly communicating contributions. These contributions will be ‘nationally determined’, but subject to strong international review at the individual and collective level. This applies across mitigation, adaptation and support, in slightly different ways.
On mitigation, the Paris Agreement has individual mitigation obligations. The nationally determined mitigation contributions (NMDCs) are obligations of conduct. South Africa shall prepare and communicate successive NDMCs and there is obliged to pursue domestic measures to achieve objectives of NDMC (Article 4.2). The objective of the mitigation part of the INDC submitted prior to Paris was built around the ‘peak, plateau and decline’ (PPD) emissions trajectory range, so we will have to show what measures – carbon tax, carbon budgets, low-emissions electricity plan, renewable programme, transport policies and others – we will pursue in order to achieve PPD.
This information will be reported and reviewed regularly, meaning every two and five years. South Africa submitted its first biennial update report in 2014, and will submit another in 2016; from 2020, these will become biennial communications. The scope will be broader, including adaptation optionally and mandatorily support received. On mitigation, national inventory reports are required every two years, as well as tracking progress in implementing and achieving its NDMC. Every five years, information on adaptation, mitigation and support will be reviewed collectively, in a ‘global stock-take’. We then have to take into account what all countries are doing together – including on finance – as we nationally set our next contribution.
Successive NDMCs will have information specified, and some design features are subject to further negotiation. In other words, the information around NDMCs may become more precise over time. There is a requirement of ‘progression’, that SA’s next NDMC goes beyond its current one, and reflects our highest level of ambition.
One means of increasing ambition will be to look beyond what national governments can do on their own. Paris pointed in the decision (para 134-137) to action by ‘non-Party stakeholders’, formally recognizing that other actors have much to offer. Equally important are the more action- and implementation-focused activities increasingly happening in the UNFCCC, be they a Solar Coalition or commitments by cities to 100% renewable energy. At home, this should mean that the participatory approach to adaptation and mitigation should be taken further. Cities are at the front-lines of adaptation and mitigation, businesses have much to contribute, and civil society makes a crucial contribution.
Paris sent clear policy signals for more renewable energy and (implicitly) less use of fossil fuels. While much of the focus on renewables was with India, China and Brazil, a preambular paragraph acknowledges the importance of universal access to sustainable energy, including “in particular in Africa, through the enhanced deployment of renewable energy”. With SA’s connections to the other BASIC countries, our own REI4P and support for an African Renewable Energy Initiative from African heads of state and partner countries, the prospects of SA playing a key role in the expansion of renewables on the continent seem bright.
We will only fully appreciate what the Paris Agreement means for SA in the coming months and years. But already we know enough to have a good idea that Paris, while far from perfect, marked an important and positive change towards climate action.
South Africa thus finds itself in a different world from the one where Annex I had commitments, and non-Annex I Parties had none. The Paris Agreement moves decisively beyond these categories. That means SA will have to re-double its efforts to implement its national climate policy, and to make contributions to the global efforts set out under the Paris Agreement.
Paris Agreement: after climbing a great hill, many more to climb
December 15, 2015
Late on Saturday 12 December, a new Climate Agreement was adopted in Paris. Here is my take on the key elements. Be warned, it is a longish read – but then climate is a complex, super-wicked problem. And solving it is not easy. The key points are in bold … As Nelson Mandela said on his long walk to freedom: “I have discovered the secret that after climbing a great hill, one only finds that there are many more hills to climb.” But to start with the hills that were climbed in Paris.
The Paris Agreement sets crucial goals: to limit global temperature increase, and specific goals in three areas – mitigation, adapation and finance. The long-term goal for mitigation is 2 °C strengthening to 1.5 °C guides the Agreement; there is a global goal adaptation includes increasing adaptive capacity and resilience; and a finance goal to increase post 2020 from $100 billion per year. Finance flows will have to balance adaptation and mitigation.
The temperature goal of holding the increase of temperature to well below 2 °C is included, even adding the direction of pursuing efforts to limit to 1.5 °C. The temperature goal is clearly put in the context of sustainable development and poverty eradication. The accompanying decision indicates that emissions need to be reduced from 55 Gt to 40 Gt in 2030, a massive gap of 15 Gt.
The Paris package comes in the form of a decision by the Conference of the Parties (COP), to which the legally binding instrument, the Paris Agreement, is annexed (download here).
The long-term goal for mitigation derives from the temperature goal, and aims at peaking “as soon as possible” – a little later for developing countries – and rapid reductions to balance emissions and sinks. This reformulation came in at the very end, and is more the language of the Intergovernmental Panel on Climate Change (IPCC) scientific reports, than political concepts used in earlier versions – such as decarbonisation, climate neutrality or emissions budgets. The uncertainty about the extent to which global sinks remove carbon from the atmosphere may be an issue in future. This is balanced, however, by the clear numbers on the emissions gap in the decision text. And the IPCC is invited to produce a new special report on the climate impacts of 1.5 °C and the action needed to close the emisisons gap. The emissions gap is defined in the 2015 UNEP emissions gap report as the difference between getting to 2 °C in a least-cost way and the current intended nationally determined contributions (INDCs). .
The global goal for adaptation, which the African Group had strongly promoted, is part of the Paris Agreement. The goal includes enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change. This is put in the context of sustainable development and the temperature goal.
The finance goal of $ 100 billion is not in the Agreement, but in decisions, this scale of annual climate finance is indicated as a floor, or minimum level. The negotiations tried to balance continuing commiments by developed countries to provide finance, with recognitioin the developing countries are voluntarily mobilising resources. A ‘new collective’ finance goal – greater than $100 billion per year – will be set; but it is noteable that it will be collective, rather different to Copenhagen, where developed country leaders agreed developed countries would ‘jointly mobilise’ the $ 100 billion up to 2020 – though they fudged the sources. Despite this high-level political commitment, developed countries exerted great pressure for developing countries to join the donor pool. Unsuprisingly, the finance negotiations were among the most bitterly contested.
The Paris Agreement fulfilled the Durban promise of a ‘regime applicable to all’ under the Convention. We have moved beyond a bifurcated world – of two clear groups, the developed and developing countries. Yet Paris reflects differentiation, acknowledging that the world is not homogenous either. It expresses differences in more nuanced ways: in general, in mitigation and finance.
Differentiation is expressed in general, with language originally agreed by the US and China in a joint Presidential statement. The Agreement will be implemented to reflect “equity and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.”
Mitigation differentiates the form of mitigation contribution (as distinct from the number or stringency). Developed countries should continue with the form of economy-wide absolute emission reduction targets, and developing countries encouraged to move to a similar form over time – without the “absolute”, though further negotiation on features that is likely add back “quantified” to the form for all mitigation contributions. Article 4.4 also states that “developed countries should continue to take the lead …” – which was ‘corrected’ from“shall” in the version presented to the final plenary, significant because ‘should’ is not legally-binding.
Once again, the US was appeased in a way afforded to no other Party; everyone inside the room understood this to be a redline for the US. Yet other ‘non-negotiable’ redlines such [as no funding for adaptation explicitly mentioning] Africa’s funding for adapation were ignored,– and verbal assurances by France that the COP Presidency would address this concern. Seems that some ‘mistakes’ are more equal than others.
Differentiation in finance related to who provides finance. The Paris Agreement ended restating the obligations of developed countries to provide finance to developing countries under the Convention, and encouraging others to provide support voluntarily. The donor pool is in fact broadening over time, but some who provide money for South-South cooperation do not want this turned into an obligation. While this seems realistic, one should also note that in 2009, developed country leaders had made a political commimtnet to “joint mobilise” (among developed countries, though from vague sources) the $100 billion. Language of mobilising finance is included. Scaling up financial flows from $100 billion per year in 2020 was included – not in the Agreement, but in the decision A higher goal for post-2020 finance remains to be set later.
The Paris Agreement encodes a more bottom-up approach. If Kyoto’s ‘targets and time-tables’ was top-down, a defining feature is that nationally determined contributions will add up to the “global response”. Proposal to take global emissions budgets and divide them across countries were rejected.
Early on, the Agreement says that “nationally determined contributions to the global response to climate change” must be communicated, citing Articles on mitigation, adaptation, finance, technology, capacity building and transparency. Together, this is seen to achieve the purpose of the Agreement – which includes the global temperature goal. “Progression” means that countries will need to increase their contributions in each round.
Adaptation and Loss and Damage are much more prominent in the Paris Agreement than previous climate agreements. This include not only the goal, but plans for action, increased information flows and a more creative space.
Adaptation has been gaining in prominence for some time, but the Paris Agreement seems to have established greater parity of adaptation and mitigation. The global goal for adaptation has been included alongside one for mitigation, as described above.
Financial institutions are given clear guidance for a balance of funding for adaptation and mitigation. The GCF Board has already decided to on a 50:50 split, now the guidance is broader to all donors.
Adaption plans are mandatory, with a clear emphasis is on implementation. Countries should produce adaptation communications, which could be different forms of official information provided by Parties to the UNFCCC. Prior to Paris, 88% of INDCs included adaptation; and the US and EU (with 28 member states) submitted adaptation undertakings. Together, plans and communications will significantly strengthen the information base on adaptation. Support is crucial – as WWF commented: “the finance for adaptation, loss and damage and scaled up emission reductions should be the first order of work after Paris”.
A separate Article on Loss and Damage was included. While the provisions on Loss and Damage are relatively weak, acknowledging that there are issues beyond implementation is important to the most vulnerable countries and communities.
Mitigation in the Paris Agreement inclues a long-term goal, mitigation contributions that are obligations of conduct, require domestic measures to achieve objectives and will be strongly reviewed. Reporting and review is strengthened at individual country level, and the global stock-take will inform further mitigation targets. Longer term strategies from all Parties are encouraged.
On mitigation, Article 4 starts with a long-term goal: Linked to the temperature goal, the aim is to peak as soon as possible, though developing countries will peak later, given they are still addressing basic needs. The long-term goal, supririnsgly, was not of the formulations discussed – decarbonisation, climate neutrality or emissions budgets, but a more scientific version of “net zero” GHG emissions, namely a balance between emissions by sources and removals by sinks. This is standard language in IPCC, but the uncertainly on global sinks might have created problems; fortunately, the decision provides a very clear statement of a 15 Gt gap to be bridged by 2030
Mitigation nationally determined contributions (NDCs) are obligations of conduct. Each Party must communicate what it “intends to achieve” (for the US), but also mandatory to have domestic measures to achieves the objectives. Progression in mitigation means the next NDC has to be better than the previous one. While the mitigation NDCs are not obligations of result, the requirement of progression, taken with mandatory reporting and review, make these strong requirements. Principles of mitigation accounting are part of the Agremeent.
Future mitigation NDCs will need to take account of the global stock-take, that is, what everyone else is doing.
For my part, I’ll certainly keep working on mitigation in developing countries. We’ve been working with other developing countries over the last five years, see our brand-new Massive Open Online Course on Climate Change Mitigation in Developing Countries – sign up for free here.
Differentiation in mitigation was expected to be a big battle. However, intensive discussions at all levels meant that this issue was resolved before the end, with developing countries moving towards the form of economy-wide emission reduction or limitation targets, over time. Support and flexibility are to be retained, at least for Least Development Countries and Small Island Developing States. Africa was not included in listings among developing country groupings that is given flexibility – and even more significantly, not named as receiving support for adaptation. Information requirements are mandatory in the Agreement; the decision lists the same information as in Lima, with provision to define further information.
Common time-frames, that is 5-year implenetation periods, were not agreed. The decision fixes the ‘anomaly’ that some countries brought INDCs for 5 year periods, and others over 10 years. It should have been possible to agree common 5-year implementation periods for post-2030, but this opportunity was one that slipped away. More work will be needed to fix common implementation periods and make sure that first NDCs are submitted at the same time.
The Paris Agreement says that all countries should strive to formulate long-term low GHG emission strategies. SA has a ‘peak, plateau and decline’ trajectory range in its national policy, and put forward mitigation NDCs for 2025 and 2030 in Paris. In the next round, it will now be expected to include longer-term goals, even if aspriational, for 2050.
A global stock-take will consider mitigation, adaptation and support every five years, based on equity and science – to inform what more needs to be done.
Given that the sum of INDCs is insufficient to keep us on track for 2 °C, a means of increasing ambition is crucial. The stock-take will consider what more can be done in relation to equity and science. The outcome of the stocktake will inform countries next actions, support and international cooperation.
The global stock-take (GST) is comprehensive, focused not only on mitigation, but also adaptation, means of implementation and support.
The GST will make its assessment “in the light of equity and the best available science”. South Africa introduced language on equity in October, and it s a pleasant surprised that this made it into the Paris Agreement. It means that ratcheting up can consider how much is needed, and whether bottom-up country contributions are fairly distributed.
There was much debate whether the GST can determine what countries need to do. It cannot – no country will sign upfront to the unknown outcome of a negotiation. But the GST “shall inform Parties in updating and enhancing, in a nationally determined manner, their actions and support in accordance with the relevant provisions of this Agreement, as well as in enhancing international cooperation”. Given that the whole problem could not be solved at once, the Paris Agreement defines a process to improve over time. Of course it must deliver on that potential. With that in mind, Paris decided to take stock initially in 2018, in a facilitative dialogue – and not wait for the first global stock-take in 2023. The regular review has potential to increase ambition over time.
Transparency is, in my view, the strongest feature of the Paris Agreement. The framework applies transparency to both action and support, with the latter needing work. While moving to common modalities, it will allow flexibility for those developing countries that have less capability, to improve reporting and review over time.
The transparency framework will build on what has been established over the last eight years. Much more progress had been made on mitigation, there is now a better balance of information flows. The Paris Agreement lays out clear purposes and the information to be provided by Parties regularly: inventories and emissions projectsion on the mitigation side; ‘ information on impacts and adaptation; and information on support provided and received
The new transparency framework will also include reporting on adaptation. Hence the information flows on adaptation are crucial. And more work will need to be done on methodologies to quantify impacts – and the needs and costs associated with those impacts
Transparency of support will be improved. Developed countries have been reporting, but methodologies espeically in relation to finance, remain contested. But developing countries will have to report more on support received.
A major advance is on “review” at the individual country level. The previous transparency framework had not been able to agree ‘reporting and review’ for developing countries. A signficant shift is that all Parties will undergo a technical expert review. This can only be helpful, and the Agreement explicitly indicates that capacity-building needs for developing countries can be identified by experts.
Paris also launched a capacity-building initiative, anchored in the Agreement with details in the decision.
The Paris Agreement is a treaty in all but name. Its overall form is that of a legally binding agreement. The obligations within the treaty differ, some are binding and others not. Individual financial contributions by developed countries are not binding. Mandatory review of obligations is what is expected to strengthen action over time, together with obligations of conduct and achieving objectives – in the case of mitigation.
The Paris Agreement is a treaty in all but name. It will be equivalent to a treaty under the Vienna Convention, so legally binding overall. Some provisions within the treaty, such as mandatory reporting and review, are themselves also legally binding (“Each Party shall …”). Notable exceptions are individual mitigation and finance targets. The US could not accept legally binding obligations on either. However, one should remember that even commitments that were legally binding under the Kyoto Protocol could not, in the end, be enforced. Canada when it could not achieve its commitment simply walked away. Part of the shift from Kyoto to Paris is a greater emphasis on broad participation – INDCs were submitted by 188 countries. The individual mitigation obligations themselves include the word “shall” twice – once to prepare, communicate and maintain, and again to take domestic measures to achieve the objective – of the nationally determined mitigation contribution. So there is an obligation of conduct and an obligation to have measures (meaning policies, laws, any economic or regulatory instruments) to achieve the objective or outcome. All of that will be reviewed, internationally. Seems pretty strong to me.
Bringing in more actors into more creative spaces, ensuring a catalytic function for the Convention and perhaps changing it internally. Paris takes further processes complementary to text-based negotiations – linking with multiple actors in more creative spaces. This means the Agreement might enable action – at national level, with many other actors and international cooperation on cleaner energy.
The UNFCCC has been a fraught process, delivering negotiated text very slowly.
Paris launched a TEP-A, or technical examination process for adaptation. The TEP for mitigation had brought more actors into a more creative space, in part by simply not negotiating text. The TEP-A has huge potential to mobilise a wide range of actors on adaptation.
The Paris Agreement explicitly gives a greater role for non-state actors.The package in Paris included a section dedicated to ‘non-party stakeholders’. This signals a movement to add to the central focus of a multi-lateral negotiation, which is among State Parties. The explicit recognition that civil society, the private sector, financial institutions, cities and other subnational authorities play an important role sends a positive message.
Parties will continue to negotiate text. Meanwhile, those who implement action are welcomed, rather than excluded. More work is needed to bring multiple actors into the process, including the TEP-M and TEP-A, the ‘non-state actor action zone’ and lunch-time events. The UNFCCC has just started being less inward looking, this ‘catalytic role’ should be developed much more strongly. It also remains to be seen whether the more positive energy outside the process can be brought back into the text-based negotiations among countries.
What happened around the Agreement may well turn out to just as important. India launched the International Solar Alliance, with 120 countries with good sunlight. This is one area where Africa is mentioned, with the preamble of the Paris decision “acknowledging the need to promote universal access to sustainable energy in developing countries, in particular in Africa, through the enhanced deployment of renewable energy”. An African RE initiative is being supported by African leaders. Civil society generally is calling for 100% renewables and a clean energy revolution. One way the French presidency could make good on its promise to assist Africa (which was not mentioned together with LDCs and SIDS in the Paris Agreement) would be financial support to the African RE intiative.
Kumi Naidoo of Greenpeace summarised it well: “There’s a yawning gap in this deal, but it can be bridged by clean technology. We’re in a race between the roll-out of renewables and rising temperatures, and the Paris Agreement could give renewables a vital boost.”
Mayors from more than a thousand cities made the Paris City Hall Declaration,pledging support for 100 % renewable energy and 80 % reduction in emissions.
Many of initiatives are being brought into the UNFCCC process as part of the Lima-Paris Action Agenda, which has a fuller listing of the initiatives above and more.
So where does the Paris Agreement leave us overall? It is a good step in the right direction, but not enough. The Grist summarised it well in saying that “the bottom line is that the agreement gets us far closer to containing climate change than we were two weeks ago, but still far short of where we need to go. In fact, we won’t even know for years what it will accomplish.”
It is too early to tell what will be the full implications of the Paris Agreement. Kyoto tried targets and time-tables for a small group of rich countries, Paris takes a ‘nationally determined’ approach which has generated very broad participation. To solve the climate problem, we need both broad and deep solutions. The onus is all to show it work – and particularly on those who killed Kyoto softly and promoted the bottom-up, incremental approach to addresing climate change, notably the US. Yet there is no doubt in my mind that Paris created movement in the right direction.
So what created the movement ? There were many factors, but in the end, what was amazing about Paris is that it was a multi-lateral, collective solution. It was countries and many, many dedicated individuals working together than made the Paris Agreement.
Politically, once the US and China had made a joint Presidential statement in November 2014, it was clear that there was political will to have an Agreement. But it still seemed likely that the Agreement mght be weak, a lowest-common-denominator deal by the G2 with others tinkering around the edges. Certainly the two largest emitters and economies played a central role, but the agreement is much stronger than I expected, going into Paris.
Civil society played a significant role, inside and outside the Convention centre. What more creative response can you imagine to having a planned march of hundreds of thousands banned, and being unable to disagree after the terrible Paris attacks in November? NGOs simply came up with something better – climate marches all over the world, sending a message of solidarity back to Paris. Other parts of civil society worked tirelessly in the corridors, suggesting how text could be improved. NGO reactions are diverse as the movement is, with a good range of views summarised here, and many saying progress was made but more needs to be done.
Negotiators too showed that they can do text, once the pressure is strong enough and the deadline real. No single delegation can claim the credit, but I do want to reflect on what South Africa did. SA chaired the G77&China, and held that diverse group together until the final hours of Paris – a major contribution to the stability of the process and in the interest of developing countries. This effort was led by three strong women – Minister Molewa, Ambassador Diseko, and Chief State Law Adviser Sandea de Wet. South Africa can be proud of them – and the whole team, which also made contributions to the African Group and still spoke in a national capacity, building bridges where we could.
The French COP Presidency was one of the best I have seen in 12 years that I’ve been inside the process. A strong COP President was supported by a dedicated team around Ambassador Laurence Tubiana. Another strong woman, Executive Secretary Christiana Figueres, led the team in the Secretariat who worked and re-worked text tirelessly.
But in the end, no single individual or group can or should claim credit for the Paris Agreement. What was amazing about Paris is that it was a multi-lateral, collective solution to a super-wicked problem – or at least the foundations to work to a solution over time.
As one looks forward from Paris, it is worth quoting Nelson Mandela in full, and start focusing on the hills that lie ahead:
“I have walked that long road to freedom. I have tried not to falter; I have made missteps along the way. But I have discovered the secret that after climbing a great hill, one only finds that there are many more hills to climb. I have taken a moment here to rest, to steal a view of the glorious vista that surrounds me, to look back on the distance I have come. But I can only rest for a moment, for with freedom come responsibilities, and I dare not linger, for my long walk is not ended.”
SA nuclear power procurement
By Brenda Martin
July 22, 2015
A 2014 ERC research report: Procurement models applied to independent power producer programmes in South Africa found that the pending procurement of the 9600MW IRP2010 nuclear build allocation estimated to have a price tag of up to R1 trillion, was particularly vulnerable to insufficient transparency.
A few days ago (July 13th, 2015) the Department of Energy (DOE) speculated in a media update on the planned nuclear build programme that the price tag could now be estimated at R500 billion. This speculation is based on DOE’s ‘back of the envelope’ comparison of “similar build programmes in like countries”. But, as Business Day (July 14, 2015) put it: “The R500bn is an “overnight cost” — what it would cost to build in a day — and excludes financing costs. It also excludes critical dimensions of a nuclear power programme such as the costs of dealing with nuclear waste, decommissioning and insurance in the event of an accident, all of which are borne by governments rather than nuclear vendors.”
The ERC’s 2014 report pointed out that in SA, procurement is an aspect of governance, and improved governance is one of the five formal goals of SA energy policy, as outlined in the 1998 White Paper.
How is procurement in SA governed?
Procurement in SA is governed by the Constitution, the Public Finance Management Act (PFMA) and Treasury regulations and guidelines. Treasury regulations also provide minimum requirements for different stages of the procurement process, and Treasury oversees implementation of the policy via its own Supply Chain Management (SCM) office. The SCM office in turn provides a link between government, National Treasury and different sub-units in the organs of state. Treasury regulations also cover procurement via public private partnerships.
Procurement of energy supply generally takes place in this overall context, but also has specific provisions. For example, the DOE has set down regulations to govern procurement specifically for new electricity generation capacity (DOE 2011). These regulations fall under the Electricity Regulation Act of 2006, which was amended in 2007 (DME 2007). The regulations consider procurement from Eskom, other government agencies or independent power producers (IPPs). Nuclear power however, has been explicitly excluded from these regulations.
Nuclear power: Procurement of a special type?
Though it is currently somewhat unclear whether nuclear new build may or may not be built by IPPs, in South Africa nuclear power is treated as a special case.
The 2012 National budget review (Treasury, 2012) under its major infrastructure investments for Energy noted that investment of R300 billion would potentially be needed over 17 years for the nuclear build programme. It indicated Eskom as implementing agent, though it was not clear whether this also indicated who would finance the investment. Incidentally, this estimate of investment is at the very low end predicted by experts, and there is no clarity where up to R1 trillion of investment would come from. In the 2014 budget review, reference can be found to an updated budget allocation. As far as formal country budgeting is concerned, the new Energy Minister has only indicated in her 2014 budget speech that R850 million has been ‘allocated to the Department and its relevant agencies in order to undertake further research and development, especially in regard to safety matters’.
So, as nuclear energy procurement is specifically excluded from the new generation regulations and its model of Ministerial determination, different rules appear to apply, but precisely what those rules are is not entirely clear.
A possible reason for this is that nuclear procurement is usually more politically determined.
A study of the national Integrated Energy Plan (IEP) conducted for the British High Commission, involving in-depth interviews with over 30 senior South African energy planning decision-makers within eight sectors, made a key finding that with big energy development decisions, politics may over-ride logic, or more fully:
“It is not clear to what extent big energy development decisions are actually entrusted to processes like IEP and IRP vs political principals and/or strategic international deal-making. It is hard to ascertain when politics may over-ride logic, and to what extent the IEP is an intellectual exercise, or even a distraction from the real business of deal-making. The case for new nuclear build is a case in point – it seems to feature in plans regardless of a cost-benefit proposition.” (Worthington & Martin, 2014)
Today, in spite of the proposed scale and price tag of the build programme, how the winning nuclear power suppliers might be determined and on what basis, remains a matter of speculation in the energy sector, since – if current trends continue – the procurement process is not likely to be transparent.
The proposed new nuclear build programme in South Africa can therefore be understood to be supported by a combination of three features: (1) the highest political decision-making; (2) significant financial commitments required, with likely long-term sovereign debt and/or tariff hikes and related economic effects; and (3) exclusion from transparent procurement process applied to other electricity-generating technologies.
 A second amendment Bill was considered by Parliament, but no Act was passed.
Geneva was quick – but how deep will Paris go?
February 16, 2015
Climate negotiators almost pride themselves on talks going beyond the deadline. So when the most recent round finished its main task, to agree elements of a draft negotiating text, on Day 3 of six, there was confusion. In a mild panic attack, the collective unconscious said “What do we do now?”
Various reasons may have contributed to fast work. The new Co-Chairs (from the US and Algeria) cracked the whip, with a refreshingly business-like style. The G77& China, chaired this year by South Africa, surprised many by not taking up a whole morning with opening statements. With the plenary done and dusted in barely over an hour, negotiatiors got down to work. And once the sessions started, could only add text. No deletions, no questioning of other Parties’ insertions. So in some sense, this was the easy stuff – and inevtiably the text expanded with everyone’s “new” elements.
That meant by Tuesday, the main job was more or less done – the meeting ran from Sunday to Friday. The collective unconscious of the negotiators was at a bit of a loss at how to proceed. Negotiating into Saturday or Sunday has become almost de rigeur. “What, no late night drama on Friday?” But after a brief hiatus, the meeting continued to fiddle with the 86-page text until it was finally published, more respectably, on Thursday evening (download here). Meanwhile, negotiators without a text before them had some good conversations about substantive matters. Though sadly, in my view, the key topics of equity and common but differentiated responsibilities and respective capabilities (CBDR&RC) were discussed only informally, not under the guidance of the Co-Chairs.
But everyone’s ideas on key areas are on the table – on mitigation, adaptation, finance, technology, capcaity-buidllign and transparency of action and support. Plus some important norm-setting langauge in a preamble (not least for a long-term goal), and equally signficant final sections on the cycle by which commitments will be reviewed, and fun things like compliance.
When the discussion turned to ‘stream-lining’, actually removing text, things slowed down to the usual glacial pace. Even in cases where two paragraphs were identical, there was hesitation to remove anything. The good reason is that the text is “Party-owned”, so there is agreement what to negotiate. This text will now be translated into all official UN languages, and a negotiating text will be available. Having got some views on how this next step might be taken, perhaps things will move along similarly, when the negotiations convene again in early June (and Aug, and Sept), before movign to Paris in December.
So we have a text.
The challenge will become tougher, as the negotiations have to address deletions, chagnes to text – and eventually agreement. While Geneva was definitely a more positive mood, my concern remains that there will be an Agreement in Paris – but only because it may be very weak. A lowest-common-denominator agreement. One in which only that minimum acceptable to major players (the US, China, India, EU and perhaps a few others) will survive.
The mitigation pledges will very likely not put us on a path to limit temperature increase to 2 °C. They are “intended nationally determined contributions” – defined purely-bottom up, and unclear if they will become commitments. Or even housed within the Agreement.
Will adaptation – and loss and damage – get political prominence? Will the balance of funding – which the GCF Board has agreed should be 50:50 mitigation:adaptation be reflected in a Paris Protocol?
Will there be detailed rules ? and strong review of bottom-up pledges? Or are we truly in a ‘pledge-and-chat’ world, where whatever a country thinks is sufficient and fair is accepted with no multi-lateral process.
These and many other issues remain to be resolved. Geneva went fast – at least by climate negotiating standards. Will Paris go far? And deep?
How low can you go? Climate talks in Lima
December 15, 2014
Climate negotiations in Lima last week decided on national contributions – with light information and very weak scrutiny. It did put together the elements of a deal in Paris, though differences on detail remain large. But with lack of adequate long-term finance, and a refusal to balance support of adaptation and mitigation, Lima did not make reaching in a deal in Paris easier.
INDCs: Intended nationally determined contributions
A major outcome expected from Lima was to specify “contributions” by countries – the language of “commitments” being a bit too hard for some. They are known as “Intended Nationally Determined Contributions” or INDCs. A major issue of contention was whether the INDC deal with mitigation only, or also with adaptation and support (“support” meaning finance, technology and capacity-building)
Balanced support for adaptation and mitigation
The INDC decision gives some rhetorical reassurance to supporting adaptation. But it is in preambular language, as a “determination to strengthen adaptation action” in the Paris Agreement. That reassurance belies the actual decision taken, which focuses INDCs very clearly on mitigation.
The ‘heart of the bargain’ on climate change has been seen by major powers as being a deal on mitigation and finance. Lima seems to have reconfirmed again that the interests of smaller countries – including the Africa Group – which are primarily in adaptation – are not taken seriously.
INDCs only on mitigation
Loss and Damage is what happens when adaptation as a gradual response to impacts no longer suffices. But again, there was no flexibility shown by developed countries to include this core concern, except in some preambular reassurance.
Light information and very weak assessment
So at least we get hard mitigation commitments, right? Wrong – we get mitigation contributions, and those only specified by weak information and even weaker assessment.
A big focus in Lima was called “UFI” – the upfront information required to present a country’s (mitigation) INDC. So you’d think there would be clear tables to be filled in, specifying precisely how many tons are to be produced over a period of years, how accounting works, and so on.
Not the case. The final negotiations ditched an Annex that specified information in more detailed, leaving a single paragraph. Parties presenting their INDCs “may include, as appropriate, inter alia, quantifiable information …”. The details after so much fudge-language barely matter. But since I care about good information, let me make the most of what is in paragraph 14:
If you took it seriously, the mitigation INDC would specify a base year, and time frame; the scope and coverage of GHG emissions. Quite helpful is the inclusion of planning processes, as this can link into sectoral plans such as electricity that are hotly debated in SA and many other countries. Then assumptions and methodologies may be stated. A good reference that SA fought for is to have accounting for emissions from sources and removals (sinks) – that will require additional decisions to accounting rules after Paris.
Equity and Ambition
The information on INDCs must indicate “how the Party considers that its intended nationally determined contribution is fair and ambitious, in light of its national circumstances, and how it contributes towards achieving the objective of the Convention as set out in its Article 2”. In the last sentence lies some remnant of consideration of science and equity – actually assessing what countries are doing against two key questions
- Is it enough, when all INDCs are added up?; and
- Are the contributions fair in relation to each other?
Some Parties, such as the US, seem bent on redefining ambition. Ambition has a clear meaning in climate change – limiting temperature increase. The US argues that ambition should include the best it is able to do. That may be a common sense definition – but it does not make sense when it is already clear that the combined efforts of countries will not be sufficient. You cannot negotiate with the climate, no matter how constraining your political economy.
A concession wrung by developing countries in the late hours of Lima was to explicitly refer to the principle of common but differentiated responsibilities and respective capabilities (CBDR & RC). Operationally, though, each Party will present what it considers fair – and no Party is likely to indicate that it’s contribution is unfair or inadequate, is it? So that is not a very clear yard-stick.
Pledge and chat
A process of “ex ante assessment” was to be another key outcome of Lima. After Copenhagen – and the failure to agree a top-down treaty – we had entered a pledge-and-review world. The pledges are now called INDCs, pushing strongly to the bottom-up with major players insisting on their autonomy and that contributions be “nationally determined”.
Lima agreed that contributions are circulated, and put on a web-site. So it is now “pledge and chat”. Many proposals for a stronger review, with technical papers, assessment by experts, and a multi-lateral dialogue on the results were deleted from the final draft. The only remnant is a synthesis paper, to be ready a month before Paris.
The large economies of the world, which are also the largest emitters, are not willing to subject their intended contributions to any close scrutiny. Essentially, the rest of the world is told to take what they submit. To call for enhanced transparency when refusing to submit contributions to any serious examination is not credible. The US-China announcement shortly before Lima did not lead to sufficiently large positive momentum. Unless something changes next year, that does not bode well for Paris. That change might be finance – since we were told it won’t be adaptation, or loss and damage.
Fuzzy pathways towards long-term finance
On finance, the INDC urges developed countries to mobilise finance for both mitigation and adaptation. But one has to read it as a legal text: “Urging” is merely an encouragement, and much weaker than what political leaders of developed countries said in Copenhagen in 2009, when they “committing to a goal” to jointly mobilise $ 100 billion per year by 2020. Instead of a clear pathway towards that goal of long-term finance,
A separate decision on long term finance does not contain clear numerical steps, but rather requests reporting “to enhance the available quantitative and qualitative elements of a pathway”. The initial capitalisation of the Green Climate Fund was $ 10 billion – that is a significant amount of money, representing efforts to contribute and finance flows not only through the GCF. Claims were circulating in Lima that simply applying a leverage factor of ten meant – hey presto! – that $100 bn was done – simply not a credible claim. In fact, $10 billion is spread over four years, so $2.5 billion per year. That is 2.5% of $100 billion. Despite all mention of other flows and leveraging, the pledges were not sufficient to build sufficient trust for a strong decision in Lima.
Elements of a Paris deal
The Lima negotiations did succeed in identifying elements for the Agreement in Paris. A major task was to outline the key elements of a draft negotiating text. Starting as a “non-paper”, a complex document is attached to the main decision in Lima. It can be read both positively and negatively.
The positive reading is that the elements have been identified a year ahead of Paris, structured into key themes and issues. So there is a better understanding of shape of the Paris deal emerging. And the elements capture the views of all Parties. In the last lies the negative – the views captured are very widely diverging, and the ability to bridge wide differences was not demonstrated in Lima. If Parties continue to stick rigidly to positions, and delay on process issues, then the unwieldy 38-page document will not be trimmed down to a strong Agreement. If Paris is like Lima, a much weakened version would be produced in the end.
But a year still remains. Another negotiating session in February will further refine the elements, before it becomes a formal negotiating text by May 2015. And then three more meetings will negotiate the text of the Agreement. They will be needed, as there are large differences to bridge.
The overall trend, then, was of a continued swing from top-down setting of targets to an almost entirely bottom-up system of global climate governance. Commitments are determined nationally, there is very little prescription of what information to present, and only the lightest-touch of multi-lateral consideration. Many commentators have been arguing for a hybrid agreement, between top-down and bottom-up. After Lima, it seems likely it may be almost entirely bottom-up.
In my view, the pendulum has swung too far. Greater action at the national level is a good thing. So is action by cities, and host of initiatives outside of the UNFCCC. But there is currently no way of knowing what all these initiatives are adding up to – either in tons reduced, or dollars invested, or any other metric. So we are asked to take a leap of faith that the actions, once started, will ‘somehow’ scale up to what is needed to solve the problem. And we are not even being given clear means to track whether that is a happening, given the very light information and even weaker assessment. The onus is on those relentlessly driving this bottom-up approach to demonstrate that broad participation can deliver a solution to climate change.
But most worrying, in my view, is the clear refusal by most rich countries to accept adaptation as a global responsibility. Developing countries are asked to take mitigation commitments – that is quite right, as part of our responsibility for the future and to the planet. But if at the same time, developed countries are reducing their own financial obligations, and leaving the most vulnerable to adapt by themselves, that does not seem like a fair deal.
 The meetings in Lima were formally the 20th session of the Conference of the Parties (COP20) to the United Nations Framework Convention on Climate Change and the 10th session of the Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (CMP10), and took place from 1 to 12 December 2014, in Lima, Peru.
Procurement models applied to IPPP’s in South Africa.
November 18, 2014
National Treasury has announced that Base Load independent power producer bidding will commence soon (Baseload coal bidding to begin this year, cogen to follow). At the end of August 2014, ERC published a research paper by Brenda Martin and Harald Winkler – “Procurement models applied to independent power producer programmes in South Africa”.
The paper raises the questions – What is the procurement model in South Africa as it applies to renewable energy (RE) and base load (BL) independent power producer procurement programmes (IPPPP) and how might these be improved? What lessons have been learned in the RE IPPPP? What challenges might the emerging BL IPPP programme face and how might these challenges be addressed? The paper shares research findings, highlights remaining critical questions, and provides recommendations for the future. You will find specific base load recommendations under sections 6 and 10. The paper also includes a brief look at how nuclear power procurement is treated differently. You can find the full paper on the ERC’s main site http://www.erc.uct.ac.za/
Recommendations from the report
Based on the analysis of the existing RE and emergent BL IPPPP, the following recommendations are offered:
- The successes of the RE IPPPP should be built upon, as they seem transferable to a significant degree to BL IPPPP.
- It is worth investing in the development of a clear procurement framework in advance of the process being launched. Ideally, there should be one procurement model for all electricity-generating technologies. Bid windows in the REIPPPP programme allowed for continued additional learning and application in subsequent bid windows. At a minimum, transparent processes must apply in all procurement, as a matter of good energy governance.
- In time, it would be wise if the Minister of Energy’s role was limited to the highest level of policy development and guidelines which can lead to the creation of a space in which role players can apply developmental values and prove their capacities.
- Procurement should be flexible, indicative of plans, the regulator active and procurement more vibrantly competitive in order to achieve lower tariffs. Lower tariffs should not be achieved at the cost of SED and ED criteria.
- Large-scale investment and increased accountability are recognised as wise partners. The emergent BL IPPPP provides a good opportunity to add even more features of transparency and accountability to those which emerged with the REIPPPP.
- Big investment of any kind is prone to being politicised. Procurement models for BL IPPPP and nuclear need to be designed in order to proactively deal with this reality. The challenges of Eskom’s financial health and strains of sovereign debt place further stresses on these dynamics.
- It is critical to design a BL IPP procurement model that can manage and even avoid rent-seeking. At the very least, this risk should be explicitly considered and a procurement process designed to manage the risk of rent-seeking.
- Procurement of BL IPPs presents an opportunity to expand co-generation in particular, and thereby meeting both local energy security and emissions reduction targets.
- Power purchase agreements for BL IPPs need to be watertight and not be solely subject to the priorities of the Eskom system operator.
- The socio-economic and local enterprise criteria applied in the REIPPPP is innovative and appropriate in our development context. These should be included in the BL IPPPP and indeed all procurement, including nuclear.
US-China: Going in the right direction, but far and fast enough?
November 13, 2014
The US and Chinese Presidents announced on 11 Nov 2014 that
- the US is to cut net greenhouse gas emissions 26-28% below 2005 levels by 2025
- China is to peak CO2 emissions around 2030, with the intention to peak earlier, and to increase the non-fossil fuel share of all energy to around 20% by 2030.
The annoucements were a concerted move by the two largest economies in the world, and so has undoubted political significance. They have potential to create momentum and promote collective action, rather than a tenor of ‘I will if you will’. But what do these announcements add up to, assessed against science and equity?
The question is whether we should pop the champagne corks, hailing this as a game-changing announcement. When assessing the contributions more closely, including the numbers, it does not look at good. Particularly when assessed against the requirements of science and equity. That is a very different metric to assessing this against what is politically feasible. But none of us can negotiate with the climate, so we must ask if these contributions add up to fair relative efforts to address the climate challenge.
On initial analysis, the US numbers seem weaker than they were in 2009; while China’s announcement of a year in emissions would peak (2030, possibly earlier) is both politically a huge move, and withstands some analytical scrutiny (at least my initial take). But neither is adequate for 2°C. That’s bad news for the planet – and our ability as a human species to rise the challenge.
Looking at the US numbers more closely
The US further argues that this will “double the pace of carbon pollution reduction” – based on annual rates from 1.2 % (for 2005-2020) to 2.3-2.8 % for 2020-2025.They also say that this will keep the US “on the right trajectory to achieve deep economy-wide reductions on the order of 80 percent by 2050”
The US contribution is lower than before, not in the range required by science, especially in the near-term target. A long-term reduction to 83% would be worth having, iff the US will commit to multi-year targets.
Sounds good? Well, consider the following:
- The numbers are lower than President Obama put forward in Copenhagen, and his administration communicated in 2010. The main pledge then was 17% below 2005 levels by 2020 (about 2-4% below 1990 levels). But critically there was a footnote, which is worth quoting verbatim: “The pathway set forth in pending legislation would entail a 30% reduction in 2025 and a 42% reduction in 2030, in line with the goal to reduce emissions 83% by 2050.” Fast forward to Nov 2014, and the numbers 26-28% (still below 2005 levels) by 2020; and 80% by 2050. Indisputably lower numbers.
- I am of the firm view that long-term goals are crucial, but why reduce for 83% to 80%. The call has been raised for net zero by 2050, so the numbers need to be going in a more ambitious direction, not less
- The US claims that the new numbers are ambitious. They point to the rate of effort doubling. And that the upper end of the 26-28% range for US is analytically on a straight line trajectory from the 17% below 2005 in 2020 to an 83% reduction by 2050. The question is whether the US will commit to that trajectory – and in a manner that we know the next adminstrations will follow through (see legal force, below).
- We have known for a long time that what is expected of a country like the US, to have perhaps a 50:50 chance of keeping temperature below 2 °C, would be in the range of 25 – 40% below 1990 levels by 2020, and 80-95% by 2050 (as you get close to 100%, the base year stops mattering as much, but before then, it matters a lot). That means the US long-term aspiration just scrapes in. But 26% below 2005 levels by 2025 is about 14% below 1990 levels – well short, even though it is five years later.
- What we are seeing, again, is the best that the US can offer – but as I wrote in a previous blog on the US Presidential plan, what best from the US is not good enough for the planet.
- China’s announcement does seem like the stronger relative effort (see the next section). Politically, that takes away argument in the US that China is not acting, one of two reasons for the unanimous Byrd-Hagel resolution in which the US Senate said it would not sign up to Kyoto, before the event. One can only hope that the will help with the dismal state of climate debate in the USA.
China peaking - what does it mean?
Politically, for a major developing country to announce a peaking year is a huge step. It would, of course, be helpful to understand at what level China expects its emissions to peak. But even knowing when it emissions will peak, and that it may be earlier, is a big step for the world’s second largest economy. One can hope that other developing countries will be “like-minded”.
The Chinese announcements expand on the headline number (2030 or earlier), with total energy consumption coming from zero-emission sources to around 20 % by 2030.
China’s ambition on clean power is clearly large – an additional 800-1,000 gigawatts of nuclear, wind, solar and other zero emission generation capacity by 2030. Will China perhaps lead the world out of fossil fuels?
For lil’ old South Africa, just the 200 GW difference between those two numbers is 5 times our entire electricity grid. that should make South Africa think again.
But the key question goes to the headline number – is 2030 peaking “early”, and early enough? Let’s consider peaking by 2030 in analytical terms. One source is China carbon calculator , in reference case China’s emissions are still steeply climbing in 2030. OK, but that’s not mitigation, so let’s look at some good analysis of that. Cutting-edge research from Chinese colleagues Jiang Kejun and his colleagues at ERI and Renmin University published an article titled “China’s role in attaining the global 2°C target” in a leading English-language journal, Climate Policy . This is analysis that pushes the envelope to what is needed, and ambition – while understanding the context of what is feasible in China’s political economy.
They examined what would be needed for 2 °C, a reference case (BAU), a low carbon scenario (LC), and enhanced low carbon scenario (ELC). The figure below shows the trajectories.
Several things are clear:
- GHG emissions peaking by 2030 is a major departure from BAU. Those who might be tempted to claim that China’s announcement is all “easy” should read the article carefully
- Neither LC nor ELC get to what is needed for 2 °C. For that, as Jiang et al clearly state, emissions would have to peak by 2025. One should note that the announcement by the Chinese government did leave open “earlier” peaking
- LC and ELC peak around 2030 – so one might say that, according to analysis of ambitious-but-realistic scenarios by Chinese researchers, peaking in 2030 is consistent with (enhanced) low carbon trajectories
So in sum, it seems fair to say that China peaking by 2030 is consistent with enhanced low-carbon scenarios that are ambitious-but-realistic – but also fall short of what is needed for 2°C. It does, however, seems to me a fairer relative effort.
It seems many is having a good look at the numbers. Somewhat different analysis to mine is in an interesting report by Climate Action Tracker, which suggests that the US has an ambitious target (not sure I quite see that) but an implementation gap. And in their view, that China will reach their target and can and will do more. It is important to understand that their least-cost scenarios “do not necessarily reflect fair shares of reductions”; in other words, they are not claiming to have assessed against equity, mostly (only?) against what is required by science.
If others did similarly, would not reach 2°C
These announcements go in the right direction, as far as numbers on mitigation are concerned. They might help create a more positive dynamic, but only if they are treated as a floor, something to be increased prior to Paris. But with the three major players (including the EU’s 40% below 1990 by 2030) putting in targets they can probably exceed, this makes an agreement in Paris possible – but not one that is truly worthy of the adjective “ambitious”. Something really adequate would need the EU to go to more than 40%; US more than 14% below 1990; China look at the ‘earlier’ peaking – and other developing countries to follow.
Analysis by Chris Hope, running a PAGE09 integrated assessment
model, takes the US and Chinese annoucments, the EU’s pledge to cut emissions by 40% below 1990 by 2030; assumes the rest of the OECD matches the US’s actions of a 28% cut by 2025, and the rest of the developing world matches China’s pledge to stop increasing emissions by 2030.
If others acted in a similar way, the chance of staying below 2 °C in 2100 is 1.1%, and the cost of mean impacts in 2100 estimated at about $19 trillion. The underlying message: These pledges are only the first step on a very long road.
Some more useful analysis has been done by Climate Action Tracker – too long to repeat here, and I dare not summarise. See http://www.ecofys.com/files/files/ecofys-ca-pik-nci-cat-policy-brief-china-us-pledges-nov-2014.pdf
What does the 'G2' announcement mean for the 2015 Agreement?
Well, again, I’m not sure this is all good news.
As the US and China point out themselves, they jointly account for a third of global greenhouse gas emissions – that is annual emissions, not per capita or cumulatively.
The US uses some careful language, saying that its ‘contribution’ (not a commitment) is achievable “under existing law”. Careful readers will note the Copenhagen/Cancun target referred to pending legislation. In plain language, the US no longer envisages any new laws.
So in what sense will this contribution have “legal force”, something that was at the heart final negotiations that produced the Durban platform. It means the US is not only unable to sign up to internationally legally binding commitment; but it cannot pass any domestic law. So we are asked to trust that executive action will be implemented based on an existing legislation. That is not the certainty that I expect from a “Protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties”; I would expect both the overall agreement to be a legal instrument, and the key commitments – such as these announcements, to have legal character. Legal character of commitments is not an end in itself, but is crucial for confidence that future US administrations will implement what has been announced by the Obama administration. The US will not ‘commit to legislate’ – and of course they’ve regaled us all at length about the reasons why, but seem less interested in other countries’ internal constitutional and legal arrangements. My sense – not good enough.
Do we have certainty that China will do what it says? With a very different political culture to the US, my sense is it is very likely that China will do what is in its plan. Another question might be whether China will sign up for a commitment with legal character? Immediately note that this would be huge shift from the past; but since responsibility for future is equally huge, let’s explore this question. The answer seems less clear to me; perhaps once the commitment to peak by 2030 or earlier, increase renewables, 800- 1000 GW of clean power, and other elements are in the 12th five-year plan, this may not pose an insurmountable hurdle. Or China will not wish to go further than the US – and that is only fair, given that despite the absolute size of the Chinese economy, there are still hundreds of millions of lift out of poverty.
There is little certainty given that the announcements will lead to commitments with legal force. We need certainty that what is announced by leaders today will be carried out by future administrations. In terms of what the planet needs, I hope that the moment when China takes global leadership and forges ahead comes sooner, rather than later.
What about adaption, finance, technology?
And it’s not all about legal form and character. Nor is the 2015 agreement supposed to be about mitigation only. These announcements are focused on mitigation, and probably a basis for INDCs of two big countries. Both falling short of 2 °C means that even more adaptation will be needed. I could find no mention of adaptation in the joint statement.
And both Lima and Paris will require finance. An initial capitalisation of the Green Climate Fund (GCF) of at least $ 15bn will be needed in Lima next month, and then a a pathway to $100 billion must be charted by Paris. This blog is not the space to write even longer, but there is technology, reviews, and rules, rules and rules – many elements needed.
Going far fast?
An African proverb says:
“If you want to go fast, go alone; if you want to go far, go together.”
We need to go far, fast.
Unless we change high-emissions development path, high risk of irreversible climate change
November 2, 2014
The latest climate science affirms again that warming of the climate system is “unequivocal”. If we don’t change our high-emission development paths, even if we try to adapt, warming by 2011 “will lead to high to very high risk of severe, widespread, and irreversible impacts globally (high confidence)”. The IPCC’s synthesis report makes clear that the time for action is rapidly running out.
The Intergovernmental Panel on Climate Change (IPCC) assesses the state of knowledge of climate change every five to seven years. The 2014 synthesis confirms that human influence on the climate system is clear. It reiterates that global warming is “unequivocal”, a word first used in the fourth assessment (2007) – and much stronger than the first, when the signal of human-induced climate change was still being separated from the noise of natural climate variability. We know know – also through a wide range of observed changes – the climate is changing, and that human activities are contributing to this change.
If we do not change our development paths – including patterns of consumption and production, then the risks of serious impacts are high to very high – some of them irreversible. Temperatures are projected to increase “over the 21st century under all assessed emission scenarios”. We will seek more heat waves, for longer. Extreme precipitation events – cool scientific language for things like droughts and floods – will become more intense and frequent in many places.
Not only will the temperature of the atmosphere increase, the ocean too – which stores a huge amount of heat. That puts enormous inertia into the system – even if we stopped all emissions right now, some warming will still continue. Some associated impacts “will continue for centuries”. The pH of our oceans has already changed, and will continue to acidify – with consequences for huge ecosystems.
We know what we need to do: Reduce greenhouse gas (GHG) emissions, and adapt to that part of climate change that is already unavoidable. This IPCC report point out that we need to think about this from many perspectives: “governance, ethical dimensions, equity, value judgments, economic assessments and diverse perceptions and responses to risk and uncertainty.” These are important dimensions, as we are already committed to some impacts – and trends are more towards world 4 °C warmer than pre-industrial levels, than the politically agreed limit of 2 °C.
The synthesis report is candid – we will have to adapt, but we cannot adapt our way out of the problem. “Adaptation can reduce the risks of climate change impacts, but there are limits to its effectiveness.” The mitigation pledges made by countries in Kyoto, Copenhagen and Cancun are not nearly enough. Without addition mitigation efforts, we run high to very high risk of “ severe, widespread, and irreversible impacts globally (high confidence).” (a quote worth repeating, I think).
There are pathways to 2 °C – they would require “substantial emissions reductions over the next few decades and near zero emissions of CO2 and other long-lived GHGs by the end of the century”. There are many options for mitigation but not one is sufficient by itself. There is no ‘silver bullet’.
We need to strengthen a range of enabling factors for both adaptation and mitigation “effective institutions and governance, innovation and investments in environmentally sound technologies and infrastructure, sustainable livelihoods, and behavioural and lifestyle choices.” Adaptation will be needed in every sector of the economy; as will mitigation.
The IPCC synthesis points to an integrated approach to mitigation: reduced energy use, lower GHG intensity in energy use, decarbonising energy supply (electricity and liquid fuels) and enhance carbon sinks in land-based sectors. If we do this, we can promote sustainable development. If not, “climate change is a threat to sustainable development.”
The IPCC released its synthesis report on 2 November 2014. The synthesis builds on three working group reports – on the physical science basis; impacts, vulnerability and adaptation; and mitigation. Each of those reports were thousand-page-plus assessment of large bodies of peer-reviewed literature. The reports and summaries are available at www.ipcc.ch
Harald Winkler on Nuclear Build
September 23, 2014
“South Africa could soon spend over R1-trillion on its new nuclear build programme. The president himself is driving the process. Why do our nuclear ambitions seem non-negotiable when energy experts say we don’t need to rush the decision and that nuclear is neither cost effective nor necessary?
Backwards Australians on carbon pricing
July 18, 2014
Tony Abbot has fulfilled his campaign promised and repealed Australia’s carbon pricing mechanism (CPM). What his Coalition Party has misnamed a ‘carbon tax’ and made a political football. The cost to the climate will be paid by future generations, including Australians. It takes a huge step backward for Australia doing its fair share. A sad day for the climate.
The ‘carbon tax’ was in fact a very well-designed emissions trading scheme, which in its first phase had fixed prices. New research by ANU shows that the carbon price was effective in reducing carbon emissions – down by 29 million tonnes or 8.2% across the National Electricity Market over the first two years of the CPM (July 2012-2014), compared to the two years prior. The Coalition government seems to care little how the policy did for the environment. Its own plans – so-called Direct Action – have little chance of being as effective. Why take Australia backwards?
“Direct Action” is unlikely to achieve Australia’s Kyoto commitment of a 5% reduction below 2005 levels by 2020; will most more than $ 2.5 bn – and is a far cry from Australia’s “fair share”. That last point is not my analysis, but Australia’s own independent Climate Change Authority has said that Australia should increase its efforts to at least 15%, even 25%. That is based, not least, on what others, including developing countries are doing. Whatever happened to “fair dinkum”?
The Climate Institute called the repeal “taking a monumentally reckless backward leap even as other major countries are stepping up climate action”.
Tony Abbott managed to persuade several independents to join his Coalition in support his “pledge in blood” to “axe the tax” (see here). He needed, amongst others, Motoring Enthusiast senator Ricky Muir, to get the required majority in the Senate to repeal legislation. Why spend so much political capital on something that was working?
In the words of Penny Wong (former climate minister, now Oppositoin leader in the Senate): “I think future generations will look back on these bills and they will be appalled … at the short-sighted, opportunistic selfish politics of those opposite and Mr Abbott will go down as one of the most short-sighted, selfish and small people ever to occupy the office of prime minister.”
NAAA, I want my MMAA!
July 4, 2014
Ah, some more of my favourite things, new acronyms! This time for the UNSG’s Climate Summit 2014.
NAAA: National Action and Ambition Announcements. MMAA: Multilateral and Multi-stakeholder Action Announcements.
NAAAs take place in the morning, MMAAs in the afternoon. Participation at UN headquarters is by invitation only, and no side events – shocking! Action and ambition behind closed doors? The rest of us get to follow a Climate Week – or can watch on web-cast at webtv.un.org.
But quibbles aside, there is potential for change here. Political will – if it is shown – can move mountains. Let’s hope lots of it is in evidence in NAAAs, and that the MMAAs are more concrete than the shopping list in ADP WS2. Certainly some interesting themes, from renewable energy, through energy efficiency, to another personal favourite, co-benefits. In fact, developmental and climate benefits should be multi-objectives, both at the same time.
[UN Secretary General Ban-Ki Moon has called Heads of State and Government (HOSG) to New York on 23 September 2014, meeting ahead of the UN General Assembly.]
Of INDCs, elements and plumbing
July 2, 2014
The UNFCCC climate negotiations in Bonn focused in the big picture on national contributions, the 2015 agreement and rather fuzzily on pre-2020 ambition. The is the work in the Ad hoc Working Group on the Durban Platform for Enhanced Action (ADP), and lest one forgets, there are two standing Subsidiary Bodies keeping on building the ‘plumbing’ of the Convention on many detailed issues. The future of the climate regime attracts attention, but the devil– and sometimes perhaps also the solution – is in the detail.
The ADP spent most of its time, it seemed on that exciting thing to climate negotiators – a new acronym. Repeat this – Intended Nationally Determined Contributions (INDCs). INDCs were invented at COP19 in Warsaw, with many – including me – bemoaning another C-word replacing one of our favourites, commitments. But it was INDCs that started off the discussion in Bonn (June 2014). The co-chairs surprised many by producing a text on INDCs early in the first week.
Once the surprise had abated, a key issue of contestation was whether the contributions are only mitigation, or adaptation-mitigation-support. There were different reasons for broadening the scope. Surprisingly, the small islanders, long fighting to get adaptation into the negotiations, wanted a narrow scope – focus on the core task of mitigation. The Africa Group certainly saw no other place to argue for adaptation, while INDCs where the only game in town. Putting finance into a contribution – that may yet turn into a commitment – made donor countries nervous. Which pointed to the approach of the Like Minded Developing Countries (LMDCs, better learn that acronym too) – if you want mitigation to be binding on us, why not commitments to finance for you? Developed country leaders committed to mobilising $100 billion per year by 2020 back in Copenhagen. That, though, was “jointly”, specific allocations by single countries are – more specific.
The importance of adaptation is stressed by almost everyone. The negotiating challenge is that adaptation is still contained in a ‘landscape of issues’ prepared by the co-Chairs, not draft text for Lima. So there is little choice but to argue where you can.
Back to mitigation, another contentious issue was assessment. Assessment is critical in comparing contributions – whether they add up to enough, and whether relative efforts are fair. Assessment relates not only to numbers put forward, but also to rules. And Durban was widely credited for saving the “multi-lateral rules based system” – and so the ADP has to deliver on multi-laterally agreed rules. Without it, the Wild West looms – not only would every country determine its own targets, but would not really subject it to any scrutiny.
At COP 20 in Lima (Dec 2014), the focus will be not even on the detailed rules, but on the upfront information requirements of INDCs. The contributions themselves may be put forward by some as soon as the UN Secretary General’s summit in September 2014, by “those ready to do so” by the first quarter of 2015, and no later than May 2015, if they are to be part of a Paris Protocol (or whatever name is given to the 2015 Agreement)
When the INDCs will be formalised / finalized was another matter of debate. One view is that this is one step and that it should happen in 2015; another is that formalization might take place in 2015, so that INDCs are on the table with the 2015 Agreement, but that finalization (for example, inscription in a Protocol) could happen in 2016. The assessment would happen at different times – 2015 in the former view, 2016 in the latter. Placement is yet another issue – whether INDCs will be part of the Agreement, as an Annex or schedule; or housed entirely separately, as the US prefers. The legal character of the contributions/ commitments is one thing, in which overall legal form they are placed, another (important) matter.
Lima must also agree “elements of a draft negotiating text” in Lima, this was set out in a decision in Doha in 2012. This is the really big picture, but note it is only elements, not the text itself. A draft negotiating text is due also in May 2015 at the latest. But Parties are edging closer to text. An “annex” had been seen in Warsaw, but did not make it into the final text. At the start of Bonn, there was the landscape of issues – which lists all the views on all the options. In 15 pages, which by UNFCCC standards is doing quite well for brevity. By the end of Bonn, there was some sense that the Co-Chairs can start clarifying options and identifying areas of convergence – but on their own responsibility, in reflection notes.
So the ADP sessions in Bonn stepped through each of the headings agreed back in Durban: mitigation, adaptation, finance, technology development and transfer, transparency of action and support, and capacity-building; plus some other issues – fun things like compliance. It does seem, though, that Lima will produce one decision text, on both INDCs and elements of for the draft negotiating text.
Quite excitingly for MAPS, by the way, the in-country MAPS teams have a mandate from their governments to develop INDCs, based on the work done over the last three years and more under MAPS Chile, ECDBC and PlanCC.
All of this is in Work-stream 1 (WS1 to insiders) – what about WS2? That is about pre-2020 ambition. There is a series of very interesting workshops, called technical expert meetings. But I can find fascinating conferences here at my own University, don’t need to go to Bonn for that … In negotiating terms, it seems unclear where these discussion will go. May the Ban Ki-Moon summit will give action a push – if there is political will. To have a negotiated outcome, WS2 will have to focus, get to some concrete examples, and ways of implementing them effectively. It’s quite a tough question – what is it that the international community can add – that makes the total effort more than the sum of the individual (INDC) parts?
As mentioned at the outside, there is much beyond the ADP, in the SBII and SBSTA. The ‘framework for various approaches’ made some progress, even if slow, including on a new market mechanism (slow progress). There is ongoing work in building institutions, quite notably among which the Green Climate Fund. The Loss and Damage mechanism is establishing governance – all essential work to improve the climate regime. And there are more that could be listed …
There was further work on technical aspects of Article5, 7 and 8 of the Kyoto Protocol. And a few, very few, Ministers appeared in Bonn – unusual, inter-sessional do not usually include a high-level segment. But those who had pushed for early review of ambition in the KP by hoping for early changes from Ministers must have been disappointed.
So what does the road ahead look like? As mentioned, Lima will need to take a decision, on INDCs and elements. That’s the next stop on the road to Paris, in December 2015. Much will depend on how the various alliances position around a crucial issue – differentiation. How can the climate regime be both “applicable to all” but also under the Convention? There are many answer to that, but widely diverging ones – on a spectrum from ‘one template to rule them all’ to ‘binary division forever’. Fortunately, those two phrases are caricatures that no Party is seriously advancing. There are many more nuanced approaches to differentiation, without pretending that the world is homogenous. But the views are still far apart, and a long way from an agreed approach to a more nuanced form of differentiation, that enables all to take ambitious action. That may be what keeps us awake in that last night in Paris.
IRP update makes a step-change to informed decision-making
December 13, 2013
The 2013 update of IRP 2010 is very good technically – and more than that. In several respects, I think it is a significant improvement on the previous electricity plan, moving from presenting a single ‘preferred plan’ to decision-making under uncertainty. Nuclear and concentrating solar power (CSP) are to be reconsidered, in relation to actual demand, shale gas and cost (a threshold for nuclear, and learning for CSP).
To explain which document I’m referring to: The Integrated Electricity Plan (IRP 2010, published in 2011) has been updated, with a document released on the Department of Energy (DoE) web-site in early December 2013. Overall, the 2013 IRP update of the IRP presents clear information, and that enables informed debate on important matters of public policy. The more flexible approach to decision-making, given the multiple uncertainties, seems prudent – and I hope policy-makers take it on board.
To expand on two key examples: For nuclear power, the update suggests that nuclear procurement be re-examined in 2015, if demand exceeds 270 TWh and there is no shale gas development, it might go ahead. Nuclear costs are still assumed, as a central case, at a low $5800 / kW; but a more realistic $ 7000 / kW is a sensitivity analysis (with no new nuclear coming in at this cost). In the decision-making approach, it suggests that in 2015, even if demand is high and there is no prospect of shale-gas power plant, that if nuclear costs exceed $6500 / kW, then the procurement programme should be abandoned. The update effectively indicates that a decision about nuclear is not needed now, but ten years before it comes into the highest demand scenario in 2025 (in principle confirming a key finding of ERC’s Towards a New Power Plan).
Apply a similar approach to key a renewable energy technology, CSP, applies the criteria of checking actual energy demand (280 TWh), and shale gas – again. The key cost consideration is technology learning, i.e. speed at which solar costs (in terms of $ / kW installed) come down as global cumulative capacity increases. Note that PV and wind come into the modeling in all variants, and the policy implication drawn is that they should continue to be implemented.
It seems that under lower demand forecasts, neither nuclear nor CSP will be needed to meet energy demand, but both are needed to meet our GHG mitigation goals (peak-plateau-and-decline; Copenhagen). The update does suggest that, if the price of nuclear went above $6500 / kW, the procurement programme should be abandoned.
Electricity demand projections have been adjusted to more realistic levels, sensitive to recent past and future goals. The trade-offs become clear between aspirations to development and the assumptions that it is led by high GDP growth; and more realistic, lower economic and electricity demand. The higher growth scenarios are combined with shift to less energy-intensive industry – an important transition in itself.
This is sensible, following the financial crisis and persistently low economic growth. The update includes several demand scenarios (in itself good practice). It acknowledges that some assume high GDP growth rate (5.4%), and makes clear that this demand would materialize if the goals of the National Development Planare to be met, which it calls “aspirational”. The IRP update now projects electricity demand in a range of 345-416 TWh in 2030, significantly below the 454 TWh of the original.
Mitigation goals are based on 45% of our peak-plateau-and-decline trajectory, and analysis of both carbon budgets and the carbon tax are presented. The 45% share of the national carbon budget is down from the 50% assumed in IRP 2010. That is more line line with the electricity sector’s share in our national GHG inventory. The carbon budgets derived from our national policy are very clearly stated (in para 6.14 of the update, and similar to what ERC has also derived). The range for aelectricity sector is given as 6.1 to 9.6 Gt CO2-eq for 2013-50; derived from a national total under peak-plateau-and-decline (13.5-21.4 Gt CO2-eq). The update then looks at a single number towards the high end of that range (9.4 Gt CO2-eq for the period 2013-2050), and looks how different scenarios do against it. It is clear that only the “Advanced Decline” carbon budget at 9.4 Gt CO2-eq for 2013-50 stays below the upper end of the range of the carbon budget for the electricity sector. The “Constant Emissions” and “Moderate Decline” scenarios way exceed the sectoral carbon budget.
A carbon budget approach allows reductions in emissions somewhat later than “Advanced Decline”, but requires deeper cuts later. This is because reductions can be achieved over a number of years, so that a slight rise above the budget in one year can be made up by greater reductions in a later year. This illustrates the flexibility of timing that a multi-year carbon budget provides.
While good and clear information is presented on GHG emission reduction goals for electricity, there is still room for further improvement – on the shape of electricity sector carbon budgets and the emissions path up to 2030 (and what is assumed, as distinct from model results). But these detailed questions illustrate again that the IRP update enables an informed public debate, on the technical issues.
It seems that the update now considers “Coal 3”, which had been politically announced some time ago, not as another 4500 MW mega-plant (like Medupi and Kusile). Instead, it includes 1000 to 1500 MW of fluidized bed combustion plants, which use discard coal.
What is not certain is how the updated IRP will relate to Ministerial determinations, either additional renewables or baseload. Ministerial determinations are forced into the base case – but only for committed plants. How the rest of the determinations – including the entire baseload IPP determination – would relate to the updated IRP is not clear. More broadly, it would be of concern if the good technical information in this update were ignored in political decision-making.
Energy efficiency and demand side management (EEDSM) has not been updated for per unit costs – but at least this gap is clearly acknowledged. However, the update does refer to structural change to less energy intensive sectors (in ‘Green Shoots’ demand projections) and calls to “formalise funding for EEDSM programmes and secure the appropriate mandate for the national entity to facilitate these programmes”.
The most significant down-side, in my view, is on process. IRP 2010 had run a participatory process, with opportunities for many stakeholders to make inputs; this was not repeated, with the update treated as a technical exercise. To ensure that good technical planning has broad support, the next full IRP must return to transparent process. Having said that, there is a suggestion in that updates be done annually, which provides an opportunity for running a full transparent and participatory one year, and a more technical update every other year.
An overall, this update presents good information, and an important step forward. South Africa’s energy challenges required informed decision-making, and it is crucial that all electricity generating technologies – coal, nuclear, gas, renewables – are debated publicly, based on clearly presented information on the choices
When Loss and Damage is as good as it gets (reflections on Warsaw)
November 26, 2013
You know you’re in trouble when – the Warsaw international mechanism on “loss and damage” is as good as it gets. The climate negotiations the ended last week in the Polish capital launched a mechanism. Loss and Damage (L&D) is what happens when you can no longer adapt to impacts. The damages of typhoon Haiyan were a striking reminder how extreme events can lead to irreparable losses. And in the final hours, well beyond finishing time, negotiators did agree a mechanism (see a detailed account by Martin Khor here).
But they agreed no substantial finance at the ‘implementation COP’. And with two years to go to Paris, the roadmap to the 2015 Agreement is clear as mud. Frustration with the lack of progress caused many NGOs to walk out in the second week.
The big new agreement is to be developed in the ADP. Major battles prevented significant progress from being captured. One battle is whether commitments will be “nationally determined”, or negotiated multi-laterally. The final decision places more emphasis on national processes for determining – what are now called “contributions”. Some think that this is politically more pragmatic, will broaden participation – but will it enhance ambition? (see a piece by Elliot Diringer).
While potentially a creative term – that can reflect not only mitigation, but also adaptation and finance obligations – it lacks the legal clarity of commitments. Precisely this point was reiterated in the final decision, repeating several times that contributions are “without prejudice to legal form”. I find the slide from commitments to contributions disappointing: that with more clarity on national processes, we cannot agree clarity that they will deliver commitments.
And the ADP only agreed half of what is needed. It did agree to “identify the information that Parties will provide when putting forward their contribution” – without of course prejudicing legal form – but stopped short of specifying such information. Together with refusal in the SBSTA and SBI work programmes to agree common accounting rules, this is worrying for the future of the multi-lateral rules-based system. While this was affirmed in Durban, the appetite for defining rules seems rhetorical, not firm political will to agree.
And rules are not sufficient on their own; it is also necessary for ambition for country to compare their commitments (or ‘contributions’). Several countries and groups – including South Africa, the Africa Group, LDCs – had called for an equity- or principle-based reference framework (see one approach, by Xolisa Ngwadla, here). Even softer language on assessing contributions in relation to science (“do all the contributions add up to enough?”) and equity (“are the relative efforts fairly distributed?”) were not acceptable. Notably to India – ironically, since Minister Natarajan had been the most prominent defender of equity in Durban. Now, India takes issue with an ERF, saying that it forecloses options – though it is unclear to me by what analysis India would be expected to do more than keep its per capita emissions below those of developed countries. The argument seems to reduce equity to developed country leadership, meaning closing the entire mitigation ambition gap (for an analysis on why it may not be putting forward any compelling alternative vision on equity, see an article in The Hindu here). While the ERF was always intended to be a reference, it may have to be developed later or more informally. With Japan and Australia joining the low-ambition club (along with old members Canada, see here, and the US), some assessment to ratchet up ambition is surely needed.
Warsaw, in the mean-time, set up no explicit multi-lateral assessment process of any kind; there is – as yet – no review in “pledge and review”. It just about leaves open the door with a reference to presenting information “in a manner that facilitates the clarity, transparency and understanding of the intended contributions”.
The ADP, at this mid-way COP, was also unable to resolve the big political question: How differentiation will be applied in a regime applicable to all (see an article with Lavanya Rajamani on this topic here). That is unsurprising, this highly political matter will probably only be settled in Paris. The new co-Chairs of that group did well to table an Annex, which was a first sight of the elements of the 2015 agreement. But like many other issues, was lost in the final night.
A mechanism on Loss and Damage (L&D) was an important success. The Warsaw COP agreed to establish a L&D mechanism. It is to address loss and damage from extreme weather and slow onset events in developing countries that are particularly vulnerable to climate change impacts. Functions will include enhancing knowledge, action and support for L&D. The Executive Committee will be drawn from existing institutions for adaptation, finance, technology, for LDCs and the CGE. The mechanism is “under” the Cancun Adaptation Framework, but this will be reviewed in 2016. It does create an institution, and leaves open the options for risk management – but leaves open the contested issue whether L&D will deliver finance in addition to adaptation, or not.
Right now, that is somewhat academic, as there is no roadmap on long-term finance. While seven decisions were taken on finance, no serious money was on the table. Many developed countries, including Australia, seek to redefine the system whereby developed countries provide finance, and developing countries receive. Developing countries expressed frustration that the commitment by developed country leaders to “jointly mobilise” $100 billion shows little sign of being fulfilled. Calls for a roadmap, via $70 billion before 2020, were not heeded. The only relief in the financial gloom was having US$100 million for the Adaptation Fund, which was at risk of collapse since its revenue from carbon credits had decreased dramatically. And in principle agreement on ‘results-based finance’ for REDD+. But nothing could take away that pledges from developed countries were counted in the millions, not billions. The Green Climate Fund, established three years ago, is still waiting for its initial capitalisation.
Many other issues were deferred. Under the Kyoto Protocol, most of the world agreed how the famous Article 3.7 ter from Doha might be reported transparently. However, a last minute ultimatum by the Ukraine, supported by Russia and Belarus, meant text forward to the next SBI session in Bonn.
One fairly unnoticed achievement was the completion of the rules on transparency. A large set of processes (IAR, ICA, BRs, BURs to aficionados) were agreed in Durban. Warsaw completed a revision of review guidelines for Annex I national communications; details of technical teams of experts under international consultation and analysis; and general guidelines for domestic MRV by developing countries. With the first biennial reports due 1 Jan 2014 and updates by developing countries 31 Dec next year, that cycle can now commence.
So we are in trouble, with the greatest achievement of Warsaw probably being Loss and Damage. Several NGOs walked out of the conference buildings in the second week. It was a sign of frustration and got a good degree of media attention. It was, however, also divisive within civil society. More productive may be efforts to connect the actions of NGO’s outside of the process (such as protests against the nearby coal conference) with those on the inside.
Is the process not working? As one NGO activist said to me, “it’s Parties that are not working”. At least not nearly fast enough, urgently enough – nor working together very well. We all will have to find better ways of doing things, and doing less talking and more action.
Highlights from Solar Indaba. 3rd- 4th September in Cape Town, South Africa
October 4, 2013
The third annual Solar Indaba conference took place on the 3rdand 4th September in Cape Town, South Africa. This conference attracted representatives from the national government (DEA, DTI, NERSA, National Treasury) and provincial government, non-governmental organizations, lenders/ funders, Eskom, project developers, manufacturers, researchers, and other stakeholders. This diverse group of people sparked discussions on different aspects of the large and small scale solar PV and CSP projects in South Africa.
The conference began with discussions about the Renewable Energy Independent Power Producer Procurement Program (REIPPPP): specific issues in the REIPPPP such as local content requirements, the economic development requirements and the experiences of different stakeholders that were discussed. Other issues discussed were the barriers preventing the uptake of small scale solar PV projects in the commercial and residential sectors in South Africa.
Chris Haw (the Chairman of SAPVIA) gave a key presentation on the status PV in South Africa. He highlighted that the PV industry in South Africa is highly driven by REIPPPP. Many of the stakeholders expressed their satisfaction with the improvement of REIPPPP process from the first to the third window. Karén Breytenbach, the senior project advisor at the National Treasury, said “the REBID process has enabled them to understand the affordability and costs in the SA market. The intention of the Department of Energy (DoE) has been achieved as this process has resulted in much lower tariff in the third window”. However, she added that with the increased competition, the sustainability of prices and economic development become very crucial in the scoring process. Prices have to be low but also the projects must be sustainable, both financially and for the communities. It was noted that large scale PV projects have seen a significant increase with an estimated amount of 1048MW currently under construction from the round 1 and 2 program and an estimated amount of 3.5 GW to 4GW expected in the future of the solar corridor and round 3. When some of the manufacturers and developers were asked what attracted them to set up their plants in South Africa. Christain Cronje, CFO of Juwi, and Vignesh Nandakumar of SunEdison responded that though they had in interest in investing in the solar PV industry before the REIPPPP was lunched, the REIPPPP acted as the real catalyst. Christian expressed his satisfaction with the REIPPPP stating that as investor they were sure that once the projects were approved, construction was going to proceed. In order to improve the REIPPPP the stakeholders urged the government to have a defined commitment, avoid delays and enforce compliance by all parties involved in the program.
The delegates at this conference had different views about the local content requirements in the REIPPPP. Some of the manufacturers saw it as incentive while others viewed it as a cost. Local manufacturers were happy about modifications made on the local content requirements in the third round of bidding and demanded close monitoring process to ensure that it is implemented. Trevor de Vries of AEG Power Solutions said the local content driver was one of the main factors that attracted them to invest in South Africa. Christopher Steinbach of Yingli Green Energy Africa said that though the developers and international financial houses may dislike the local content requirements for various reasons, this requirement will remain important if the objective is to ensure the sustainability of the industry and support job creation. He said that local content requirements should not be limited to manufacturing; it should gradually be upscaled to include other components. He recommended that in the long run the industry should be allowed to stand on its own. Chris Haw in his presentation stressed the importance of solar PV projects in economic development and job creation. He said that the round and round 2 of the REIPPPP has created an estimated number of 15,358 jobs for the installation of 1049MW of PV. Most interesting, he presented some evidence showing that 10-16 construction jobs are created per MW of solar PV installed while only 1.67-2.08 jobs per MW of coal. Because of the local content requirements solar PV has added and will continue to add lots of benefits to the South African economy
Most developers shared their experiences particularly the challenges that they face after being appointed as preferred bidders. One of the major challenges is the huge gap and challenges experienced between being selected as a preferred bidder and getting to financial close. Most developers mentioned that getting to financial close is an incredibly painful process. This is because the contracts and loopholes between the Engineering and procurement contractors (EPC), and lenders involve detailed information not always communicated up front. Some developers asked if the market standard for EPC and lending contracts in South Africa are same with the international standards. In order to reduce this gap between preferred bidder and financial close it was recommended that first time bidders and preferred bidders should identify all the parties involve and engage with them earlier. Potential bidders were advised to start the documentation process early enough in order to meet up with the strict deadlines. Certain areas such as the economic development requirements needed more clarification and the bidders requested some feedback after the process in order to know exactly where the underperformed or outperformed. Piero Granelli of AE AMD renewable energy was concerned about the connection risk, new grid codes, and the frustration of wanting to connect earlier but face delays from Eskom.
When some developers pointed that they had been refused funding from international funders because of the local content and economic development requirements stated in these documents. Ajay Lalu of Black Lite responded by saying that the local community is a very important stakeholder in this program. He further mentioned cases where panels are being stolen by members of the local community in the Northern Cape who are concerned about the benefits of such projects to them. “In order to make these projects sustainable and avoid the repeat of incidences such as the Marikana we have to consider the local community as our partners” Ajay explained. Jonathan Frick of Mainstream Renewable Power shared the experience that they were facing at the construction stage. He said in terms of the community benefits, not much was happening in the construction stage but hope to see a lot of benefits flowing into the local community when they connect to the grid in 2014. He added they have identified specific projects in the communities that they intend addressing and will not want any impose models on them when they start generating revenue. Piero Granelli of AE AMD renewable energy also shared the same experience saying that they have been trying to manage the expectations of the people in the local community and they expect to see the benefits of their project in the local community only when they start generating revenue.
Some concerns were raised about the financing the of upcoming small scale projects under the REIPPPP. Are small scale solar PV projects going to happen under the REIPPPP? If yes what will happen to this projects? Who will fund them? Are the lenders interested in financing these projects? Are the projects going to be assessed as project or corporate finance? Some of the financial houses did not see these projects as an attractive investment. They will prefer to finance some of the rooftop solar PV systems rather than financing the small scale projects under REIPPPP. They also pointed out that these projects could not be considered under project finance because of the high risk involved. However the Industrial development Corporation (IDC) expressed their interest in funding these projects. The main issues raised by many stakeholders about developing these projects was that the requirements will be very similar to that of the large project making them very expensive and risky when compared to future revenue streams.
Some participants raised concerns about small scale solar PV projects and that the Integrated Resource Plan does not provide a framework for the procurement of embedded generation. Frank Spencer of Emergent Energy asked Ronald Chauke of NERSA what NERSA is doing to address the problem of small scale solar PV projects that are being proposed in municipalities. Frank pointed out that “municipalities generate a large proportion of their revenue from the resale of electricity and are thus resisting the roll out these projects for fear of losing their revenue especially for those who are paying the high cost of electricity. Ronald responded that NERSA is currently running a project called “providing a framework for the resale of electricity within a municipal supply area’’. He said “they are finalizing a list of different stakeholders to consult and discuss the issue on reseller tariffs”. He said “for municipalities to deal with other generation initiatives such feeding back into the grid, there is the need for policy and this policy has to come from the DoE. He added that “NERSA can only publish appropriate rules if there are directed by the policy from the DoE”. He added that “DoE and NERSA are working together to address the issue of net metering. However he recommended municipalities to use their bylaws and the regulatory powers within their operational space to provide clarity on the implication of small scale solar PV projects on their revenues and the ways in which they can insulate themselves from the revenue losses. He concluded the debate on a small scale by urging those involved in the developing the integrated Energy Plan to have a component of small scale projects so that the risk can be assessed and different ways of protecting the vulnerable players be considered.
On the other hand local municipalities and Eskom expressed their interest to promote the uptake of small scale solar PV projects by the commercial residential and industrial sectors. Dr.Susanna Godehart of eThekwini Municipality admitted that there are several legislative, regulatory and financial barriers preventing the uptake of small solar PV projects. She said NERSA has complex licensing requirements for small embedded generation and also admitted that the lack of incentives such as net metering and the high cost of bidirectional time of use meters discourage most of the small installers. Jonathan Skeen of Emergent Energy explained that though the uptake of solar PV in the past has often been affected by people’s perception, this is fast changing as the installers are increasing being approached by clients expressing their interest in this technology. He also said the financial houses have developed an interest in financing roof top systems. Chris Haw admitted that even without incentives people are going ahead and putting up their panels on their roofs. Jonathan strongly recommended that net metering and other policy incentives such feed in tariffs and energy saving subsidies be introduced to foster the growth of commercial and residential solar PV sectors. Chris added that the lack of incentives will continue to limit investment in small scale solar PVs and call for a political will, the voice of the people to create an enabling environment that can encourage the uptake of small scale PV installations.
The conference ended with a great aspiration to see more power going into the grid from solar in the coming years mainly as a result of the procurement process. It was emphasized that more still needs to be done to increase residential and commercial solar PV installations. The implementation of a net metering policy was pointed as the most important instrument needed to stimulate the growth of both residential and commercial solar PV sector.
For more information on this visit: www.greenpowerconferences.com
Why should we price carbon?
September 3, 2013
(part 1: why a carbon tax?)
After several years of discussion and an initial document dating back to 2010, the National Treasury’s Carbon Tax Policy Paper was finally released for public comment in May 2013. Since then, debate over both the efficacy and prudence of pricing carbon in the South African economy has dominated in the media, with many commentators arguing that the tax will kill industry or cost jobs.
South Africa has already announced plans to construct Coal-3, even though it is not in the IRP 2010 and would hamper efforst to meet the mitigation benchmark in the National Climate Change Response White Paper.
We think this discussion has become divorced from the realities of South Africa’s economic structure and the country’s role in global emissions (dealing with those commentators who are questioning the science underpinning climate change are beyond the scope of this article – but let the 97% of American climate scientists who support the science speak for themselves)
In short, climate change is real and already being observed – and it is a problem with some specific features. Firstly, it is a long-term problem requiring urgent solutions. Although the impacts will only really start to be felt in years to come, doing nothing now will result in infrastructure ‘lock-in’, where high carbon investments will be made precisely because there is no signal that such investments should not be made.
Secondly, for South Africa and globally, it is primarily an energy problem, that is, reducing GHG emissions from the use and supply of energy. Given how central energy is to economic activity, that means climate change is not only an environmental problem, but fundamentally a question of our socio-economic development path. And it is not a question we can escape: because even if the costs of climate action might seem large, the one thing we do know about the costs of inaction is that they are even larger, and would be paid mostly by the poor.
Thirdly, climate change is also a collective action problem – solutions only work if all countries act, and resist the temptation to free-ride on the efforts of others. This does not mean that all countries need to do exactly the same. The key task of developing countries over the next decade, is to slow the growth of our emissions. It is necessary to now start to shift very large systems, to avoid being locked into a high-emissions, high-climate-impact world.
Pricing pollution is integral to preventing carbon intensive lock-in
So what is South Africa’s role in all this? Yes, we are only a middle-income country. And yes, we do face extremely high levels of unemployment, poverty and inequality. And because of our abundant (and cheap) coal resources, we are also incredibly high emitters of carbon dioxide. We are amongst the top 20 largest emitters in the world in fact (and only the 28th largest economy by GDP). Our per capita emissions are similar to those of the United Kingdom’s (though this figure masks the extraordinary inequality in emissions between the rich in south Africa – whose emissions are as high as THE highest emitting countries in the world – and the poor, who are amongst the lowest). We are also extraordinarily dependent on coal (both for electricity and liquid fuel production), to such an extent that we are a global outlier in terms of coal’s contribution to our primary energy supply (at about 73%, this is similar to where the US was more than a hundred years ago).
Many people argue that it is not our responsibility to act. And to some extent that is true. There are other countries with much higher levels of historical emissions; there are countries who will contribute far more than we will in the future. But problems of this importance require that all countries act. The rationale for pricing carbon is to correct for market failure – to account for the costs of carbon dioxide that have not been considered when firms have made investment decisions. And decisions are being taken, even now, to retain and expand South Africa’s carbon intensive energy system – through building more coal-fired power stations, beyond those already under construction (this is despite the highly successful REIPPPP and the falling costs of renewable energy technologies globally).
Currently, a fair portion of global emissions are covered by a carbon price. Acting to internalise the costs of climate change does not make us an unusual case: there are carbon prices or taxes in the EU, in parts of China, in Australia, California, states in Canada, and in Costa Rica.
Furthermore, industry in South Africa has benefitted for many years from the cheapest electricity in the world (not to mention labour). This is changing; industry will have to adjust. They will not be ‘killed’ by a carbon tax but the incentive to invest in more efficient technology or cleaner electricity production will be felt on balance sheets (the only place where such impacts seem to matter). In the long-term, investment will shift to different sectors (that is the point of a carbon tax); in the meantime, National Treasury have provided exemptions to vulnerable sectors and we believe there are good models for providing transitional assistance to energy-intensive industry.
(Not to mention that South Africa has amongst the highest PGM, chrome and manganese resources in the world – we are not a price taker in every market in which we are producers).
Those who would have us believe that the carbon tax will destroy South Africa’s economy often leave aside that poor planning and governance in the electricity sector are resulting in significantly higher electricity price increases than the carbon tax is going to. Historical underinvestment in electricity supply infrastructure means that South Africa is going to face increasing costs to meet electricity demand over the next 5 years. In addition, the cost of the carbon tax pales in comparison to the potential cost to the economy of overbuilding infrastructure, which may happen if the next Integrated Resource Plan is not published soon (with updated costs included for coal, nuclear and renewable energy technologies).
So while we do think that the design of the carbon tax can be improved, we think it is very important that the reasons for having a carbon tax are not forgotten, or drowned out, by those who cry ‘it’s the economy, stupid!”. To them we say, ‘it’s the environment, stupid!’
Proposed carbon tax rate for SA too low, say researchers
BY AMANDA VISSER
AUGUST 23, 2013
THE effective rate for the carbon tax to be introduced by January 2015 is too low and the proposed design is complex and not easy to understand, says the Energy Research Centre of the University of Cape Town.
In comments on the Treasury’s policy paper issued earlier this year, the centre calls for a simpler tax, but applied at the absolute level of R120 per metric tonne on 40% of carbon tax emissions, rather than the proposed minimum of R48 on 100% of the emissions after exemptions.
The centre said the effective tax rate, given the “complex set of exemptions” of between R12 and R48 per metric tonne of carbon dioxide, is too little to transform South Africa’s energy economy. The tax would not make a sufficient contribution to bending the curve of national greenhouse gas emissions, it said.
Energy and chemical company Sasol recently told Parliament that the implementation of the carbon tax in 16 months’ time was premature, too onerous and not backed up by adequate analysis.
Sasol’s presentation came after the South African Chamber of Commerce and Industry warned of the significant negative effects the tax might have on the economy and job creation.
ArcelorMittal SA has also warned that the proposed tax could cost the group R600m a year.
South Africa is well ahead of other countries in introducing a carbon tax. The level at which the Treasury is pitching the tax is also much higher than in other jurisdictions, Parliament’s trade and industry portfolio committee has been told.
The first period is from 2015 to 2019, with the rate increasing 10% per year until the end of 2019.
The rate of increase for the second period from 2020 to 2025 will be announced by February 2019 at the latest. The carbon tax is to be implemented as a fuel input tax and in principle will be levied across the South African economy.
“However, with all sectors receiving partial exemptions, some full exemption and some additional allowances, the tax base is less clear,” the centre said in its report submitted this month.
All sectors will receive exemption on 60% of the emissions, with the electricity sector receiving an additional 5% or 10% exemption, and petroleum getting an additional 5% or 10% exemption as well as an additional 10% for the fact that it is a trade-exposed sector.
Iron and steel, cement, glass, ceramics, chemicals and fugitive emissions from coal mining will receive exemptions of up to 85%, while the agricultural and waste sectors will be fully exempt.
The centre said the “basic tax-free threshold” of 60% means the effective tax rate is between R12 and R48 per tonne of emissions.
US best-we-can plan not good enough to change the climate
July 1, 2013
The US President’s Climate Action Plan is the first time in a long while that the US has been proactive on climate change. It is certainly not enough, as in the US contributing a fair share of the cuts needed to actually address climate change. Yet as a refreshing change from decades of inaction it has led many observers to welcome the move. Perhaps too many of us have internalized the domestic constraints in the US, so much that we are inclined to accept what is not good enough, just because it is the best the US claims it can do. Accepting a trying-our-best plan is not good enough.
The plan is not enough to avoid dangerous climate change, nor to seriously bend the curve of rapidly rising greenhouse gas emissions. Essentially, the US is telling us by what action it will achieve its existing target (17% below 2005 by 2020, which is 2-4% below 1990 levels), how it will adapt – and then dares to claim global leadership. It does not add up.
In brief, it combines a number of domestic actions, but only to explain how it might reach the existing, unambitious target. And it claims global leadership without having earned it. This is not a plan that says “yes we can” solve climate change. It is more along the lines of here’s the best we think we can do.
The bulk of this blog explains the critique in more detail. But before moving to the critique, let me acknowledge two things.
Firstly, there is a very clear commitment to an approach based on science and ethics. It is good to have world leaders make clear there is no time to doubt that the science in clear. And to make clear ethical arguments for taking action, clearly putting down a challenge to vested interests that do not want to change. Secondly, the presentation on the White House web-site is graphically impressive and includes many numbers. Lots of claims of having made progress, but with more work to do. That’s typical for many governments putting a good show on what they do, and better than most in clarity of presentation (sure, there’s spin, but it’s not all PR)
Perhaps the most significant, at least from afar, is a cap on existing power plants. Obama directs the US-EPA to complete carbon pollution standards for both new and existing power plants. A cap on existing power plants would be significant – of course it would help to be told what the reduced levels would be, and by when EPA will complete these. With a clear Presidential mandate, though, it seems to me the Agency could make a reasonable strong move. But one has to put one’s faith into that the detail will be good.
Which leads me to the critique. It’s been a long haul for those trying to understand when and how much the US might move. From signing Kyoto in 1997 (with no chance of ratification) under Clinton; for formally withdrawing from Kyoto under Bush Senior in 2001; to proposing that it would act internationally “in accordance with domestic law” for Copenhagen 2009; to the realization that neither Waxman-Markey nor other legislation would pass; we finally arrive at the US Presidency using its executive authority.
Which has some potentially good bits. But also some aspects that are not clear, and much that is unsaid. My main concern is not with the domestic policies and measures. Others are better placed to assess whether these are ambitious enough.
What is astounding is the claim in the US President’s plan to “lead international efforts to address global climate change”. Sound like global leadership? That is real smoke-and-mirrors. Leadership cannot be simply stated, it has to be earned. And the US has been a laggard in climate action, not a leader. And there’s not enough substance in the Presidential plan on multi-lateral efforts to convince that that has changed yet.
The plan to “lead international efforts to address global climate change” consists of mini-lateralism in the Major Economies Forum; bilateral cooperation with China, India and maybe Brazil; short-lived climate forces, REDD (preferably in other countries), low-emissions development strategies (ditto?), and phasing out fossil fuel subsidies. The last is a good idea, I think, but overall there is a sense of a package of options thrown together. Where is the coherent, and dare one ask – legally binding, zero-emissions strategy for the US
Obama’s plan does refer to the 2015 Agreement under the Convention. It says the US will be “seeking an agreement that is ambitious, inclusive and flexible”. Ambitious is good, inclusive is great if it means near-universal participation. The rub is to substitute flexible for what should say ‘legally binding’. Flexibility in mechanisms and timing are helpful, but an agreement whose fundamental characteristic is flexibility will have a hard time demonstrating its contribution.
Noticeable by their absence are any numbers on international finance. In the much-loved Copenhagen Accord, President Obama with several other leaders of developed countries make a political promise to “jointly mobilise” $100 billion per year by 2020. Now all that remains is a claim to have provided $ 7.5 billion of fast-start funding – no clarity whether it was new or additional. And then to combine “our public resources with smart policies to mobilize much larger flows of private investment”. How much, by when? No idea. This seems a clear step backwards. No basis to claim global leadership, when you are still the remaining super-power, even if you are looking over your shoulder at China.
Which brings me to another major concern with the US plan. Where is the “yes we can” approach to solving climate change? If the US does this little (measured by what is needed and what is fair), will then the EU be persuaded to move from 20% to 30%, or even beyond? Taking along Poland, the host of the next COP? Countries like China, Brazil, South Africa and others will have to do better than the US President’s plan. And is that really fair?
The UNFCCC is cited a grand total of two times in twenty-one pages. Once in reference to the Copenhagen Accord, which was merely ‘noted’ by the COP. And the second time, to indicate progress in “a variety of other important negotiations”. The message could not be clearer – the US prefers to do the business of climate change in smaller settings, where it can (still?) call the shots. And where everyone pays their own way.
One of those other venues is the WTO, it seems. The US aims to negotiate a “Global Free Trade in Environmental Goods and Services”, on solar, wind, hydro and geothermal. Built on initial agreement in APEC. That sounds fine, if the realities were not the US (and others) are involved in trade wars over these technologies. And experience with ‘free trade agreements’ is that they are anything but free, and seldom favourable to the weak. A lot more detail needs to be put forward if this idea is to gain ground.
In my view, the biggest weakness of the US President’s plan is its approach to global action. This is not merely a defence of the UNFCCC (which might seem quaint to those who think they understand Realpolitik). It is the nature of the problem and its solution. Climate change is by nature a global problem (which President Obama understands, clearly) and it requires collective action. If one country has confidence that others will act, it is more likely that it will go beyond its comfort zone. The series of engagements that the Obama plan includes simply have no way of answering this question: Is its envisaged global response to climate change adequate to solving the problem?
That also applies to the domestic policies. The Obama plan seems to take up several emission reduction actions that an excellent WRI analysis on using existing federal laws and State action to reduce greenhouse gas emissions . It includes even some so-called “go-getter” policies – though not new federal legislation. The point is that ambition of that analysis was only to demonstrate whether the US can reduce its GHG emission to 17% below 2005 levels by 2020. A plan that mostly gets there does nothing close to the 25%-40% below 1990 levels required. Obama’s plan makes no statements about future increases in ambition. While we all (inside-the-beltway NGOs and international observers) have become experts in what is not possible on the Hill in Washington, the simple reality is that it is not enough.
We cannot let global action on climate change be constrained by Realpolitik of the US kind. It simply won’t do the job.
Perhaps the report card for President Obama’s plan reads: “Must try harder.”
NCCRP – stakeholder workshop
The Department of Environment Affairs hosted a two-day stakeholder workshop on the implementation of the National Climate Change Response Policy. Two researchers from the Energy Research Centre, Anthony Dane and Kim Coetzee, attended the workshop in Gauteng (20-21st of June 2013) which was billed as a NCCC+ event.
In line with section 10.4.1 of the National Climate Change Response White Paper the National Committee on Climate Change (NCCC) is a multi-stakeholder group designed to provide representation from the main stakeholder groups involved in climate change issues across South African society. The stakeholder groups are: Business & Industry, Non-governmental and community based organisations, Local Government, Provincial Environmental departments, National Government departments and DEA public entities (SANBI and SAWS). The NCCC consists of at least two (and at most five) representatives from each of the stakeholder groups above.
The NCCC is meant to advise on “matters relating to national responsibilities with respect to climate change, and in particular in relation to the UNFCCC and the Kyoto protocol. It also advises on the implementation of climate change-related activities” (section 10.4.1 of the National Climate Change Response White Paper).
The stakeholder workshop was billed as an opportunity for the DEA to report back on it’s progress on
achieving the main overarching objectives of effectively managing “the inevitable climate change impacts”; and making a “fair contribution to the global effort to stabilise greenhouse gas (GHG) concentrations in the atmosphere.”
Thapelo Letete (DEA, formerly ERC), Anthony Dane & Kim Coetzee (ERC)
A key presentation from DEA-appointed consultants, Ricardo-AEA, was on the progress made on developing a Monitoring and Evaluation (M&E) system to facilitate data collection to provide a detailed, complete, accurate and up-to-date picture on South Africa’s emissions. It is envisioned that the Greenhouse Gas Inventory process would be a part of this comprehensive M&E system. There were also presentations from Provincial Environment Departments (Gauteng, KZN and Western Capet) and Local Government (City of Cape Town, Ekurhuleni & eThekwini Metros).
An overview of the event is available on the DEA’s website
..and Prof Winkler talks EU, pre & post 2020
June 13, 2013
And this time at a Side Event at the Bonn Climate Change Conference on Tuesday 11th June, our very own director, Prof Winkler, gets his teeth into the issue of post-2020 European energy & climate policies. Topics of discussion ranged from the role for RE (and how this would impact on developing countries), the consequences of an EU-wide carbon tax.
Of course no discussion would be complete without touching on pre-2020 ambition. A succinct summary of the event has already been done by the IISD side event reporters, so I shan’t double up. You can see this coverage here: http://www.iisd.ca/climate/sb38/enbots/11jun.html#event4
Dr Marquard talks baselines
June 12, 2013
What a treat to see our very own Dr Marquard outside of the negotiation chambers and sharing his wisdom and insights on baselines at an OECD side event here in Bonn (10th June). He was sharing some of his experiences in the construction of the baseline scenarios in South Africa during the LTMS, commenting on both the technical analysis and the stakeholder processes. The broad discussion was led by representatives from the OECD, Danish Energy Agency and UNEP Riso and focused on issues of transparency, credibility, uncertainties and policies & measures. This event also launched a report called “National GHG Baseline scenarios: Learning from experiences in developing countries” availabile at:www.ens.dk/lctu/baselinereport.
“Those who adapt first, survive” Charles Darwin
May 17, 2013
ERC has been involved in a UNITAR funded study looking at “Adaptation of Deciduous Fruit Farmers in the Western Cape to climate change” with a focus on Klein Constantia as a case study.
This farm was chosen in part due to the fact that it is a traditionally white wine producing region. With climate change, white wines are likely to suffer more than reds, as the threshold for white wine production is already close to its range limit. In contrast, South African varietals such as pinotage, are favourable for consideration under a warmer climate.
The study at Klein Constantia wine estate focused largely on capacity building of two groupings of people, viz. the vineyard workers and the administrative/management staff. A series of 6 focus group discussion were conducted and were centred on energy, energy efficiency and climate change, and resulted in the development of a Strategy Plan.
As a follow on from this, ERC has recently extended the reach of this study by organising a workshop for wine farmers, their industry role players as well as researchers in the field. The aim of the workshop was for the participants to engage with one another and to share ideas related to behavioural changes, environment and climate change as well as energy efficiency. The workshop commenced with a report back on the Klein Constantia study, including a very interesting recent Masters thesis (not part of the UNITAR study, but closely aligned) presentation on renewable energy options for wine farms. The presentation of these studies as well as questions posed to the group, resulted in a stimulating and extremely worthwhile morning of debates, comparing of notes, idea-sharing and suggestions for a way forward.
An important point coming out of the discussions is how crucial water availability is to the long term existence of the wine industry. Vines are adaptable to water availability, but do require irrigation. Closely aligned to this is the need for better water recycling and more efficient reuse of effluent water. Focus should be on efficient water resource use, coupled with planting of the right cultivars and with a drip irrigation system.
Mention was also made of the increasing trend towards mechanisation on farms. This comes with a trade-off, since mechanisation comes with amplified fuel use. It also comes with a development cost, since it reduces the employment opportunities for unskilled labour.
There are a number of barriers to mitigation and adaptation efforts that were identified. Some of these include slow behavioural change in terms of getting people to buy in to energy efficiency. Coupled to this is a lack of funding as well as information on energy efficient technologies available. The German government has played a notable role in terms of funding of efforts that are currently underway in South Africa e.g. at Delheim wine farm. There is also a need for cheaper technologies, and for Eskom to push back into the grid. The latter is common in Australia and elsewhere in the world, and needs to be fast-tracked in South Africa. The costs of mechanisation create a further barrier.
Various research ideas emerged from the discussions. One suggestion is that research be conducted on varietals which are very adaptable as well as being suited to a changing climate. This comes with the challenge of acceptance of the wine style by the consumer market. Shifting away from vine planting of popularly consumed wines, under a different climate regime, will not be enough. The change would need to be marketable and with a willing consumer as an end point!
Another suggestion was that there needs to be more capacity building at a farm worker level, both in terms of buy-in and in terms of achieving long term behavioural change.
One of the key challenges, and one which received quite a bit of support from participants, is the need for a report on Sustainable Best Practice, to be used as a guideline tool for best sustainable wine practices. This is a crucial area of funding support that would need to be sought, as its contribution to the wine industry would be immeasurable.
What the E2C2 is Reading – April 2013
May 1, 2013
The Joint Implementation Quarterly Magazine on climate and sustainability (JiQ, 2013) – Anya Boyd
This edition covered various feature articles on the: EU Climate Policy after ‘Backloading’ Failure: results from the TNA project in Sudan; a focus on the BIOTEAM project for sustainable bioenergy pathways and finally How can Local Authorities Participate in Kyoto actions?
Eben Bayer: Are mushrooms the new plastic? (TED talks,2010) 20– Andrew Marquard
A fascinating and inspiring talk about a new process to produce packaging for fragile goods (e.g. TVs, computers etc) from mycelium (effectively mushroom “roots”) and various forms of valueless agricultural waste (husks etc). The process has been commercialised in the USA, and replaces large blocks of polystyrene. The packaging can be grown to any shape in a few days (in the dark, by itself), and is organic, and therefore total biodegradable, and in fact can be used for mulch or compost in one’s garden after use. Non-toxic, low-energy and no chemical feedstock.
Vijay Kumar: Robots that fly and cooperate (TED talks, 2012 ) – Andrew Marquard
Cool talk about tiny helicopter robots which co-operate. Fascinating and a little scary, of interest to those who are fascinated by automata and agent-based modelling, and generally any large-scale effect resulting from mass agent interaction.
Massimo Banzi: How Arduino is open-sourcing imagination (TED Talks, 2012)- Andrew Marquard
Great talk about the development and applications of the Arduino, a tiny, do-it-yourself electronic controller which has put a range of amazing applications in reach of ordinary people. Fascinating re technology convergence.
The Most Beautiful House In The World (Witold Rybczynski, 1990) – Andrew Marquard
Fantastic account of an architect’s long journey in building his own house, carefully documented – “an elegant examination of the links between being and building”, “establishing a spot where it would be safe to dream”.
Tieju Ma, Yoshiteru Nakamori: Modeling technological change in energy systems – From optimization toagent-based modelling (Presentation slides, 2009) – Andrew Marquard
It seems that ABM may be able to shed light on a whole class of problems which evade optimisation models, which are usually solved with an array of constraints – in this case, a very simple technology change problem is modelled, and adoption is much slower in the ABM. Various ‘non-price’ barriers, it seems, can be understood via complex multi-agent behaviour. In this context, optimisation models are simply one-agent ABMs. There are two points which I think come out of my rather cursory reading of this: 1) optimisation models and ABMs allow us to understand different aspects of the same problem-set, and 2) I think that it is worth considering in more detail what models and modelling actually MEANS.
Towards a New Power Plan – Harald Winkler
Apart from making the front page of Business Day, which was dominated by the finding that nuclear was not needed by 2040, or 2029 at best. The former is with revised demand projections, the latter higher. It finds very little further investment is needed before 2025. It does not say this, but it begs the question – why the rush to build Kusile, then? Though 32 GW, almost our entire grid capacity, will have retired by 2040. On nuclear, also note that higher-cost would be have a lower levelised cost, if run more than 80% of the time, than CCGT from LNG. Cheaper nuclear has a similar comparison to shale gas CCGT. Seriously, hats off to Bruno and Alison.
Your ambition is low – oh, maybe not quite that low – Harald Winkler
I’ve also been reading a revision of a study that relates to ambition by developing countries. In 2012, PBL raised my eyebrows. They looked at 7 developing countries (China, India, Brazil, Indonesia, Mexico, South Africa and South Korea). Even though China’s reduction of carbon intensity of GDP is pledged to reduce by 40-45%, authors from the Netherlands Environmental Assessment Agency (PBL 2012) found that the seven “by 2020, are estimated to reduce emissions, by 2020, by approximately 3% to 6% below PBL/IIASA business-as-usual emission projections”. SA’s 34% became 19% – deviating against the PBL baseline. Fast forward to a recent article in Energy Policy, with the same lead authors (Den Elzen, Hof & Roelfsema, 2013). The seven developing countries, in analysis a year later, are “13% to 16% below PBL/IIASA BAU projections”. 3-6% last year, 13-16% this year? Oh, and SA’s number is now 29%, back up from 19% within the year. Even adjusting baselines, there seems to be something funny going on.
Various Papers by Robert W. Cox – Kim Coetzee
One of the key facets of Robert W. Cox’s theory is his emphasis on the need for a historically informed approach to the analysis of world order. In line with his belief that all theory is embedded in, and a product of, its time and place, Cox posited that a specific configuration of forces characterises any historical period and the raison d’être of the historicist approach is to unveil the “historical structures characteristic of particular eras” and to explain any changes between different eras. Thus in order to explain the differences between historical periods Cox proposed analysing three categories or types of forces – which interact to inform a historical structure – are material capabilities, ideas and institutions. The configuration of forces is not directly determinant, but rather imposes pressures and constraints on both state and civil society actors.
99% invisible (Podcast) – Kim Coetzee
A relaxing podcast about the influence of design – from architecture, to signage, to urban planning – that which is, well, 99% invisible). Recently I listened to a discussion of ‘queuing’ – did you know that one of the reasons that busy elevators are often surrounded by mirrors is to distract you (tie fixing, hair checking) from the fact that you’re queuing for the elevator.
Peru Holds NAMAs Workshop (iisd, 2013) – Michael Boulle
Encouraging to see Peru making some progress with NAMAs. A workshop on developing roadmaps for the implementation of NAMAs in the construction, transport and bioenergy sectors.
Good Bicycle Week in Cape Town (Future Cape Town, 2013) – Michael Boulle
A small but positive sign to show that non-motorised transport and integration in Cape Town’s transport network is improving. These may be baby steps, but are key baby steps in developing a lower-carbon, more inclusive transport network in Cape Town. Hopefully a sign of things to come.
Paraguayan landfill orchestra makes sweet music from rubbish (The Guardian, 2013) – Michael Boulle
Not the most glamorous sustainable development initiative but viewing rubbish as a resource has its benefits – both recycling by re-using materials from landfills and providing musical education and improved opportunities for low-income communities.
Derisking Renewable Energy Investment (UNDP, 2013) – Britta Rennkamp
Derisking Renewable Energy Investment introduces an innovative framework to assist policymakers to quantitatively compare the impact of different public instruments to promote renewable energy. The report identifies the need to reduce the high financing costs for renewable energy in developing countries as an important task for policymakers acting today. The framework is structured in four stages: (i) risk environment, (ii) public instruments, (iii) levelised cost and (iv) evaluation. To illustrate how the framework can support decision-making in practice, the report presents findings from illustrative case studies in four developing countries. It then draws on these results to discuss possible directions for enhancing public interventions to scale-up renewable energy investment.
What the E2C2 is Reading – March 2013
April 14, 2013
The “The Quest” by Daniel Yergin. – Jesse Burton
It is the sequel to Yergin’s Pulitzer prize-winning The Prize, about the global oil industry (I have a soft copy if anyone is interested in the history of the industry). He is updating the book to cover the period from the late 1980s/1990 or so up until 2010/2011 – including the price spikes, what has been happening in the former USSR countries, Venezuelan oil politics etc. There is a great chapter on unconventional sources – resource estimates etc – and the latter part of the book (still haven’t gotten there yet) is on energy security, climate change and RE. Yergin is a complete free market ideologue but other than that, he has great anecdotes and has interviewed a phenomenal range of people in oil, including presidents, supermajor CEOs etc.
Written by Sheppard and a bunch of others, mainly from UBC. It’s a great article in that it seeks to integrate visual information on climate impacts, and both adaptation and mitigation – at the local level. But it tries to realise ‘thinking globally, acting locally’. Some highlights for me were on “bridging the gap between formalized analytical models and fuzzy social realities” and a set of “conceptual requirements of a scenario based process”. The want to show not only 4-D visuals of impacts, but also “the cumulative impacts of low-carbon development”. They are also refreshingly candid in saying that old IPCC scenarios, without action, are not good enough. Read this if you’re interested in: fair shares, adaptation-mitigation nexus, scenario-based processes, visualisation, and local action!
The four day week – less is more. – Michael Boulle
We know about renewable energy and energy efficiency, but what about the four day week as a low-carbon initiative?
Short term thinking costs us the future. – Michael Boulle
Interesting article by one of the authors of the 1972 Limits to Growth on the failure of democratic governments to change the direction of societies, with a preference for making short-term decisions. Concerning that not much progress has been made since he co-authored the Limits to Growth over 40 years ago.
Monitoring, Reporting & Verification: A Primer on MRV for Nationally Appropriate Mitigation Actions. (UNEP Riso, Dec 2012) – Anya Boyd
It touches upon various issues relating to MRV – particularly in the context of NAMA’s. It raises the challenges of quantitative and qualitative indicators & data required for MRV systems – however sadly doesn’t add much thinking on the MRV of qualitative indicators.
There is an attempt to define some boundaries to ‘what is a NAMA’ and how it sits within national or broader LCDS programmes, as well as project level action. It attempts a distinction between Policy NAMAs that represent action (e.g. Tax credits) vs. Policy NAMAs that require action (e.g. An energy efficient target).
Discussions move to institutional architecture, developing country capabilities, and concludes by reiterating the complexity of designing flexibly but standardised approaches to MRV. This ‘MRV Primer’ aims to be an inspirational piece to further the understanding of what in a future climate regime will need to be measured, reported and verified.
Adaptation Network. – Debbie Sparks
It is a nice site for general adaptation references as well as what’s happening from time to time.
Governance of Renewable Energy Incentives Across Varying Levels of Statehood (John Fay, 2012) – Anthony Dane
The risk profile of a developing country increases the cost of capital for renewable energy projects, which in turn increases the required tariff and widens the price differential between electricity from renewable sources and fossil fuels. This results in greater challenges for designing effective market incentives in emerging and developing countries”
Reduced work hours as a means of slowing climate change (David Rosnik 2013) – Anthony Dane
Intuitively the results are entirely expected. I am not sure how valuable such analysis is- I can’t see countries implementing this policy… but then there is Gambia of course
Hans Rosling: Stats that reshape your worldview (TED talk, 2006) – Anthony Dane
A little dated but still relevant: a great way of presenting data that forces us to rethink our reconceived notions development.
Allan Savory: How to fight desertification and reverse climate change (TED talk, 2006) – Britta Rennkamp
Interesting talk on how to stop desertification. It’s a Zimbabwean researcher explaining the phenomena of expanding deserts and how to “reforest” the grasslands, and all of this from a mitigation perspective. It also shows you that the distinction between mitigation and adaptation doesn’t always make much sense
End This Depression Now (Paul Krugman, 2012) – Britta Rennkamp
End this depression now, Paul Krugman’s take on Keynesian wisdom: why times of boom are time for austerity and governments need to spend in times of crisis
The fifth BRICS summit – growing influence
April 12, 2013
The fifth BRICS summit took place in Durban from 26-27 March. The BRICS countries are made up of Brazil, Russia, India, China and South Africa and represent the fastest growing emerging markets in the world, accounting for 42% of the world’s population and 20% of output. Increasing cooperation between BRICS countries in key areas such as finance, culture, transportation links, and developing an integrated market for trade and investment were key objectives of the summit.
There were four major outcomes from the summit, represented in the following four agreements: to set up a BRICS Development Bank, a Contingency Reserve, business council and a think tank council.
Formal negotiations on a BRICS Development Bank were kicked off in Durban. The structure and operational elements of the bank are yet to be decided as is a figure for the total sum of the bank. However it is expected that these decisions will be reached during the period of South Africa chairing BRICS before the summit next year in Brazil. Questions also arose around which country the Bank would be based in and what the voting arrangements would look like. It is believed that China is in a favour of differentiated weighting of votes according to contributions to the Bank. An important attribute of a proposed funding model for the Bank is that it would support multi-country projects, something that the majority of existing development banks have failed to accommodate. This is a significant development particularly for the prospect of regional power projects, such as those discussed in the Southern African Power Pool.
Encouragingly a figure of $100 billion was agreed upon for the Contingency Reserve. This is intended to act primarily as a safety net in financial emergencies, although it still needs to be established which countries would be eligible to access this fund.
In order to strengthen collaboration between the governments of the BRICS nations and the private sector a business council has been formed. A top business executive in each country has been selected to represent the relevant countries on the council. Patrice Motsepe, the executive chairman of African Rainbow Minerals is the South African representative. The council will Disse finner man i flere versjoner, inkludert fransk, europeisk, og «engelsk» rulett, blackjack casino med en eller flere kortstokker (for ikke a snakke om flere hender samtidig), og baccarat med hoy online casino og lav innsats. meet bi-annually with the aim strengthening business collaborations and fostering knowledge-sharing between academics and think tanks.
South Africa’s President Jacob Zuma outlined: strengthening trade relations; technology transfer, skills development, green economy, manufacturing, and industrialization amongst the core objectives of the business council. Furthermore energy was identified as a key new area for exploring cooperation.
Although the Fifth Summit may not have delivered all that was expected of it, the decisions of the BRICS countries will justin-bieber-news.info is apologizing for telling a racist joke when he was 15 . have important implications in the long term and should be paid attention to. For the African continent an important development from the Durban meeting is the eThekweni Declaration and Action Plan outlining the vision for the involvement of BRICS in Africa. A retreat entitled “Unlocking Africa’s potential: BRICS and Africa Cooperation on Infrastructure” will take place in the coming months for African and BRICS leaders to participate in discussions of how to further develop collaboration between BRICS and African countries.
The influence of the BRICS countries is clear, but what does it mean from a climate change perspective and for South Africa? With infrastructure and sustainable development being highlighted as future priority areas of the BRICS Development Bank, the Bank has the potential to act as a valuable resource for South Africa to draw upon for its investments to build a more climate compatible economy. At the summit the countries showed their commitment to addressing climate change by signing a multilateral agreement on climate cooperation and the green economy. A focus of the agreement is on the technical and financial support required by developing countries to respond to the challenges of climate change. Education, energy, food and health care are seen as key areas of concern. Brazilian President Dilma Vana Rousseff expressed the commitment of Brazil to climate compatible development by drawing attention to the country’s investment in non-fossil energy projects. For South Africa with over 90% of its electricity coal-based, energy is chief concern for South Africa and a sector that would benefit from being a subject of the Bank’s investment focus.
The improving levels of development in BRICS countries (particularly China and India) have been accompanied by significant elevations in their emissions profiles, with China now the largest emitter in the world. The political decisions made by BRICS countries in the coming years and the degree to which they align with climate objectives will play a crucial role in determining the effectiveness of the global response to climate change. Watch this space to see how the path unfolds.
Some useful links:
How to reduce CO2 emissions and poverty – in Mexico, Thailand and South Africa?
April 2, 2013
A glance of South Africa’s challenges in pro-poor mitigation in one image: Anti-electricity theft campaign, low cost solar water heating roll out at Gautrain station in Johannesburg
Researchers from five countries – Germany, Italy, Mexico, Thailand and South Africa – started off a new project on the question of how to reduce emissions and poverty at the same time. In freezing Hamburg, researchers from the Monterrey Institute of Technology and Higher Education, the National Institute of Development Administration, the Public Policy Studies Institute at the University of Chiang Mai, the Energy Research Centre at the University of Cape Town, the Fundazione Eni Enrique Mattei and the German Institute for Global and Area Studies met to discuss ways forward in the research project on Climate Mitigation and Poverty Reduction (CliMiP), funded by the Volkswagen Foundation.
Mexico, Thailand and South Africa share the challenges of high income inequalities, remaining poverty levels, growing emissions from semi-industrialized economies.
The research project takes a closer look at the key question in climate change and developing countries: how to continue to develop while reducing emissions? Under the United Nation’s Framework Convention on Climate Change (UNFCCC) developing and industrialized countries acknowledge the principle of “common but differentiated responsibilities”, which acknowledges that all parties need to act to slow climate change despite the fact that it’s a problem, which was caused by the industrialized nations in the first place. Therefore, industrialized nations need to support actions of developing nations in their efforts of reducing emissions and to adapt to the consequences of climate change. For a long time, developing nations, especially the middle income countries, claimed that they could not reduce emissions, because they need to continue to develop in a way, which does not allow them to reduce emissions at the same time. In the negotiations, this lead to the (in)famous targets of emissions trajectories, which “peak, plateau and decline”.
This project aims to investigate how the trade-offs between reducing emissions and poverty unfold in three middle income countries, Mexico, Thailand and South Africa. All three countries have high emissions profiles, where emissions basically derive the industrial basis of the economy and the high dependency on fossile fuels. South Africa ‘s economy highly depends on a coal-based electricity sector, which traditionally supplied heavy mining, steel, chemical and manufacturing industries with inexpensive electricity. Recently, tarrifs have increased mainly in the residential, but also in the industrial sectors. The impact of the increases of the tariffs on the economy, employment and the poor population is unknown.
At the same time, the South African government announced a carbon tax, which will price the carbon emissions from industry as well as transport. The research will investigate the distributional impacts of a carbon tax in South Africa and Mexico on different income groups. Thailand has no carbon taxing or trading scheme in place yet.
Besides the carbon taxes and prices, the researchers investigate the impact of renewable energy programs on poverty. All three countries have renewable energy incentives in place. The South African scheme functions as a competitive bidding scheme, which demands companies to offer a price, local technology content and contributions to community development. Thailand has a feed-in tariff, which guarantees a fix price for independent power producers. Mexico is in a similar process of rolling out renewable energy programs similar to the South African one. The differences in the incentive schemes allow for interesting comparative research on the beneficiaries and losers of these programs. We will identify more case studies for comparative research after analyzing the structures of the political economies of poverty alleviation and climate change mitigation in all three countries.
Why does this research matter? This research is relevant in three ways. Firstly, the findings will be important for the selection and design of “Nationally Appropriate Mitigation Actions” (NAMA), which are the key vehicle towards reducing emissions in developing countries with the support of Annex 1 countries as stated in the Bali Action Plan in 2007. None of the three countries has put forth any so called NAMAs into the UNFCCC’s registry.
Secondly, climate finance is another important international dimension. Does the support for NAMAs and the Green Fund bring additional funds or are these re-labeled from other purposes? Does this affect the funding originally dedicated for poverty alleviation through “official development aid” (ODA)?
Thirdly, insights into priority setting, design and impacts of mitigation actions in Mexico, Thailand and South Africa matter to decision-makers, private sector and civil society within the three countries as well as European and other international actors and donors who are trying to support these actions.
The project will run until 2015 and I will keep you posted about activities and products in this blog.
Shifting mobility- the potential role of electric vehicles in South Africa
March 28, 2013
South Africa’s Technology Innovation Agency (TIA), a government organisation whose role is to support innovation to stimulate economic growth, launched an electromobility programme on the 13th of this month. The minister of Environmental Affairs launched the DEA’s Green Cars (Zero Emission Electric Vehicles) programme on the 26th of February. The Department of Trade and Industry (DTI) is (we are told) about to release the Electric Vehicle Industry Roadmap for South Africa. And electric vehicles are heading our way. The Nissan Leaf has arrived and the BMW i8 (hybrid electric) and i3 (fully electric) sports cars are due to arrive in 2014.
So things are happening; but why are they happening? What are the reasons for transitioning towards greater use of electric vehicles in this country and are we making the appropriate investments considering South Africa’s development and climate change objectives?
Transport contributes significantly to South Africa’s greenhouse gas emissions and transport demand is expected grow. Recent ERC research (soon to be published) has found that electric vehicles can significantly reduce emissions (even with our current grid) and contribute to energy security by providing a storage facility that can help smooth consumption of Eskom electricity and potentially facilitate decentralized electricity generation (e.g. through solar panels). Electric vehicles are also more efficient on a joule / kilometer basis than conventional vehicles. Add the benefits of reduced exposure to volatile oil prices, reduced oil imports, no local noise or air pollution and lower running costs and you have a winner.
However the cars do cost more and there is no obvious poverty alleviation benefit. Added to this are consumer concerns around range, reliability and performance. This anxiety is largely unjustified as many electric vehicles can meet the technical requirements of certain applications. You can’t drive a long way but you can commute quickly, safely, reliably and cheaply. Investments in infrastructure are also not as significant as people think. If cars are charged intelligently and consumers are educated, in many applications the benefits outweigh the costs.
The technologies to achieve these benefits are already available and as the grid gets cleaner and technologies more efficient and effective, these benefits will increase over time. So if we want more electric vehicles on the roads we can get them. Investments need to be made and government needs to create an enabling environment through financial and non-financial incentives.
Getting electric vehicles on the road is only one part of the story. Making electric vehicles and the components, infrastructure and support services is the other part. The development of the electromobility industry is the key objective when it comes to stimulating economic activity and creating jobs in South Africa. This is the focus of the DTI. The second Industrial Policy Action Plan saw an ambitious role for electric vehicle production in contributing to job creation. With the demise of the Joule, this ambition has been scaled back and the country is looking beyond the vehicle, to the full electromobility value chain as a potential source of job creation. But without a significant local market and uncertainty around the future demand for electric vehicles globally, there is considerable uncertainty around how to maximize potential benefits in this industry and whether in fact there could be substantial benefits that would warrant investing in this industry.
So what is government doing?
There does not appear to be a coordinated approach to stimulating the electric vehicle market and promoting the local industry. The Department of Environmental Affairs includes electric vehicles in the flagship programmes. The department believes that a transition to electric vehicles in South Africa is one of the best solutions to cut down on CO2 emissions, in line with the aims of the National Climate Change Response policy and ensure implementation of the resolutions of many Climate Change conferences
The Department of Transport is broadly supportive of electromobility as a long-term strategy but does not see it as a priority area in the short term. The DTI is calling for greater local production in the electric vehicle value chain but the Automotive Production and Development Programme (APDP) does not mention electric vehicles and so it appears that the Electric Vehicle Industry Roadmap under development is not regarded as a core approach to developing the broad automotive industry. The roadmap shows intention to take steps towards greater electromobility in the country (through the proposed purchase of 3000 – 5000 electric vehicles per year by government from 2015) but that this is rather an attempt to make an investment without taking significant risk, to assess impacts and technology options, and to allow flexibility to adapt to changing market conditions and technologies. This model is supported by the TIA which acknowledges the need for innovation to happen on the ground. The TIA model focuses on the full electromobility value chain rather than the vehicle itself.
The DTI target of 3000 – 5000 electric vehicles publicly procured per year from 2015 is a soft target. This investment will incur costs with regard to setting up the supportive infrastructure and the premium charged on the vehicles. Government has not adequately assessed the viability and the costs and benefits of this investment. There is also no clear idea of the vehicles or technologies that would be adopted although the intention in the short term is to import vehicles such as the Nissan Leaf. While there is risk, uncertainty and a general lack of information around electromobility in the country, this approach, together with efforts by the TIA and other agencies conducting research in this area, will hopefully provide useful lessons to make an informed strategic decision in the future.
The result is a “living lab” approach which will allow the country to keep abreast of developments, be ready to move in the direction of greater electromobility but not to invest too heavily in this area while there is significant market risk and uncertainty. The shortcoming with the current regulatory context is the lack of coordination and integration within and across departments. Without a local market high levels of localisation and value addition will not be possible. This “testing” phase may prove beneficial but in the longer term greater coordination of different departments and other stakeholders will be necessary.
In memoriam: Peet du Plooy.
March 20, 2013
It was with great shock and immense sadness that we heard the news that our friend and colleague, Peet du Plooy, was murdered in his home in Pretoria last week Sunday. Many of the E2C2 team have had the good fortune of working with Peet over the years in his various roles at WWF and TIPS, and have come to enjoy his enthusiasm for life, offbeat sense of humour and the passion with which he approached both work and life.
This is another sad example of the toll crime exacts on the capacity of our country to improve itself.
Yesterday we held a seminar Electric Vehicles – on one of Peet’s favourite topics – as a memorial lecture. Peet has been taken from us, but he is not forgotten.
Normalising apples & pears: comparing trade offs for pro-poor mitigation options
March 6, 2013
Imagine the juggling act being asked of policy makers: they’ve got to spread limited resources between meeting the government’s objective of reducing poverty to zero percent; at the same time, they’ve got to make a handbrake turn on the country’s greenhouse gas emissions.
And since poverty alleviation is often linked with development, and development usually translates into emissions increases, it seems as though they’re being asked to do the impossible.
This week, the University of Cape Town’s Energy Research Centre (ERC) hosted a workshop space to talk about precisely this: what kind of tradeoffs are needed if South Africa is to deal with the twin challenges of poverty alleviation and slowing climate change related emissions.
The ERC presented their latest research on poverty & mitigation from the group’s work under the UNITAR Climate Change Capacity Development (www.c3d-unitar.org) partnership and the Mitigation Action Plans & Scenarios programme (www.mapsprogramme.org).
Experts from civil society, academia, private sector, local government, development practitioners, and technology experts were asked to grapple with the following question:
If you are a government with limited funds, how do you spend them in a way that addresses socio-economic challenges in the country, while trying to reduce emissions?
A myriad of national development objectives have been outlined across South African policy – job creation, GDP growth, energy security to name a few. But South Africa’s focus, as a middle-income country, is on poverty and inequality. The 2012 National Development plans sets targets to reduce levels of inequality and reduce the current 39% of the population living below the national poverty line to 0% by 2030.
At the same time the national climate goal is to ‘implement mitigations actions that will collectively result in a 34% and a 42% deviation below its “Business As Usual” emissions growth trajectory by 2020 and 2025’ (DEA, 2011). Meanwhile internationally the Nationally Appropriate Mitigation Actions (NAMA’s) framework progresses, yet it remains unclear as to how sustainable development objectives will be assessed against mitigation potential – raising flags that emission reductions may trump socio-economic development objectives again (as with the CDM).
With climate mitigation objectives often being perceived to constrain development and with the risk of NAMA’s developing in an emissions-centric manner, how do we make sure the poorest don’t get ignored? How can mitigation and poverty reduction be achieved at the same time?
Comparing Apples and Pears
But one of the biggest difficulties in this kind of decision making is how to compare the socio-economic merits of mitigation actions that are as different from one another as a solar water heating programme is from a public transport initiative? How do you make key decisions around trade offs between continuing to grow a national economy currently dependent on cheap coal electricity versus building a local renewable energy industry? How do you gauge the ‘quality’ of a job created?
A sharpened tool for the toolbox: The Matrix
In a bold attempt to tackle some of these challenges and trigger debate amongst experts on these issues, the ERC developed a mitigation action impact matrix for South Africa. This is an excel based tool based on the Action Impact Matrix initially developed by Professor Munasinghe of the MIND institute in Sri Lanka. The matrix allows researchers to combine the government’s main development goals with mitigation options. The matrix has been tailored for the South African context, and allows for a comparison between different mitigation actions and their implications on broader socio-economic issues beyond climate change & energy security – including poverty, job creation and inequality.
The initial thinking is informed by qualitative and quantitative research, namely case studies, macro-economic or so-called ‘CGE’ modeling, and experts’ inputs.
During the workshop, the ERC presented case studies for mitigation actions around solar water heating (link to poster), electric passenger vehicles (link) and wind energy (link). For context, a case study comparing different large scale electricity generation options of nuclear, concentrated solar power, wind, and photovoltaic technology (link) was also presented.
The purpose of the workshop was to bring together experts to interrogate the application and value of this approach, whilst providing an opportunity for participants from different backgrounds, to get their teeth into some of the unresolved issues.
The discussions bounced between:
- Job creation: is local manufacturing possible and to what degree (bearing in mind how much China undercuts everybody)? Who are the jobs being created for?
- Increased electricity costs: would increasing private renewable energy installations deprive municipalities of a key revenue stream and thereby increase the price of electricity for the poor?
- Hidden costs and risks: we must be sure to reflect the hidden costs and externalities from both renewable and non-renewable energy options (embodied energy, health impacts, decommissioning costs).
- Smart or dumb grids? Without the necessary grid capacity, how realistic is large scale and private level renewable energy?
- Benefiting who? Even once socio-economic benefits have been estimated and modeled, how are these benefits getting to the poor?
‘There are no doubts that these actions can have positive benefits on the poor,’ noted one workshop participant, ‘but implementation is the main problem, how do these benefits filter down to the poor?’
The above issues require ongoing debate and analysis, but it is clear that bringing together poverty, development and climate change, will bring apples, pears and oranges to the surface. At the end of the day, as a workshop participant highlighted, we are dealing with trade-offs that are just impossible to make.
‘This is a difficult question, but [this research & workshop is] a very valuable contribution.’
 (418 ZAR per month/ 2009 prices)
 Depending on suitable technical, financial & capacity building support
 Based on the Action Impact Matrix of the Sri Lankan Munasinghe Institute for Development (MIND)
C-tax 2013 – a bit later, but broader and for sure?
February 27, 2013
An initial assessment of Minister Gordhan’s budget speech for 2013 suggests that the carbon tax proposal has been deferred. It has not been dropped, but a definite date set – for 1 January 2015.
Last year, the Minister proposed a similar tax for the 2013/14 financial year, this year he indicates it should come into effect on 1 January 2015 – a more precise date. The Minister has also given his department, Treasury, a deadline to release an “updated carbon tax policy paper” – something mooted last year, but not published.
The carbon tax remains at the same level as proposed last year, R120 per ton CO2-equivalent. As before, there are thresholds that effectively lower the tax rate by 60%. Ideas for better-designed thresholds, related to sector-average baseline for emissions and electricity as well as production, have not been incorporated, it seems.
The intention seems firmer to price carbon. The carbon tax is listed a second time (with the same date) as one of the “main tax proposals for 2013”, although it indicates that this particular tax will happen in 2015.
The carbon tax in the 2013 speech is placed in the context of a more substantial section on “low carbon economy”. So the particular economic instrument, the carbon tax, is placed together with fuel standards; spending on solar water heater, renewable energy, low carbon public transport, and other environmental goods; and finally, South Africa’s Green Fund, which is increased by R300m to R800m. The latter is substantial, but still a tiny fraction of investment in electricity supply, coal haulage to Richards Bay or other parts of the infrastructure programme.
A bit more detail is given the Budget Review chapter 4 that deals with tax proposals. The carbon tax is considered as one of the “indirect tax proposals” (ch. 4, p. 57). The overall aim is to align the carbon tax, energy-efficiency savings tax incentives and the electricity levy. The carbon tax is to be phased in, rising at 10% per year, while the electricity levy is phased out. The exemptions for energy-intensive and trade-exposed (EITE) sectors are still at a basic rate of 60% – thus reducing the effective tax rate to R48 / t CO2-eq. Some revenues from the carbon tax will be used ot help these sectors increase their energy efficiency, through the “energy-efficiency savings tax incentive”.
There is also a proposal to phase out the electricity levy, that is a 3.5c/kWh levy on non-renewable sources of electricity. This in effect will broaden the carbon tax to other sectors.
In two areas, levies and taxes that encourage cleaner transport and lighting are increased. Noting that existing levy of R70 for every gram of GHG emissions above 120 g CO2 / km has been correlated with decreasing average CO2 rates – the levy is increased to R90. And for double cab vehicles, the increase is from R100 to R125 – but their threshold is higher at 175 gCO2 / km.
The levy on incandescent light bulbs goes up from R3 to R4 per bulb on 1 April 2013. Guess an outright ban might have been seen as an April fools’ joke – or made some customers incandescent with rage.
Reflections on pricing carbon in Australia and South Africa
A trip to Australia to look at their carbon pricing mechanism (CPM) and related institutions and initiatives prompted some reflections on what might be possible in South Africa . The CPM is the centre-piece of climate policy led by the Australian Department of Climate Change and Energy Efficiency (DCCEE)
Before digging into the details, my overall impression: There is an impressive set of institutions and people in Australia, ready to implement the CPM, meet the renewable energy target (20% of electricity by 2020), a range of demand-side measures and a carbon farming initiative. All of these fall under the , and central to the Clean Energy Future plan. A wide range of people in the DCCEE, other departments (including Energy), regulators, authorities, commissions, businesses (both associations and individual companies) academics and NGOs are actively engaged. Several times I found myself wishing we in SA could have, just for example, the enthusiastic and skilled staff of a Clean Energy Regulator, or the legislated reviews (including their timing) of a Climate Change Authority (which I understand to be primarily a review body, but one with some teeth). The levels of awareness of climate change are also something to envy. Managing the continuous tension between the Commonwealth federal government, and powerful state governments, is something we can perhaps do without – though we’ve had our own issues between national and local governments.
There is strong bi-partisan (across Labour and the opposition Coalition) for Australia’s international commitment to reduce GHG emissions by 5%-15% below 2000 levels by 2020, and for its renewable energy target. It’s more fuzzy when one talks of moving to 25% (the bottom of the IPCC’s AR4 range). What is clear is that Australia intends to achieve much of this by buying international units. One could say that Australia will take domestic action by pricing carbon, renewables, efficiency and reducing land-based emissions; but roughly twice as much internationally.
And yet, and yet, there are always two sides to the coin. The high climate awareness of the Australian electorate means the CPM is a good thing, in my view, in making climate an important policy issue, but the flip-side is that it is also deeply political issue – and when it becomes party-political, that’s not good for climate action. I’ll explain what I mean in more detail below – but first some background on the two countries.
Background - similar and different
Part of my interest in going to Australia is that our energy economies are quite similar. Both have high shares of coal in energy in general and electricity supply in particular; energy-intensive industries use much of the electricity in both countries, with smelters and mining being common sector, indeed sometimes the same companies. This results in similar intensity of emissions – both across the entire economy and for electricity specifically. Absolute annual greenhouse gas (GHG) emissions are at fairly similar levels – but then the differences start. Australia’s per capita emissions are significantly higher (given the smaller population) – not something a South African energy and climate researchers gets to say very often – ours being high by world and developing country standards. Australia’s economy is only somewhat larger, but its the average Australian earns an income (GDPppp / capita) that is about 3.5 times higher than the average South African. Of course there is no such thing as the average SA’n, with our high inequality and large portion of the population in serious poverty. While energy is similar, Australia has found so much coal seam gas (what we’d call coal bed methane) that large investments are being export liquefied natural gas (LNG) to Asia; whereas SA is only just starting to consider the potential of LNG imports. We make 30% of our liquid fuel from coal, which is the major source of process emissions, while Australia does no coal-to-liquids.
The carbon pricing mechanism (CPM)
A brief overview that the DCCEE staff presented divides the CPM into four phases: 1) a reporting and regulatory framework – NGERS National Greenhouse and Energy Reporting System, 2) a fixed price period ($23, $24.15; $25.40 in three years); 3) a flexible period with price ceiling and partial link to EU (but no price floor); and finally 4) a fully operational ETS and full linking to the EU. The mechanism covers 60% of Australian emissions (with some sectors covered for new emissions, but not legacy emissions). Facilities are liable if they emit 25 kt CO2-eq or more per year – or natural gas supplier. There is a jobs and competitiveness programme (JCP) giving support to EITEs – primary metals; non-metallic minerals, pulp and paper, petroleum and coal, chemicals. Also important is the Clean Energy Future package – this is a great overview to read for the CPM and associated measures – the strapline suggests that “carbon price + renewable energy + energy efficiency + land use = clean energy future”.
The announcement of an election in September 2013 means that the CPM is a highly political issue, with the Coalition – of conservative opposition parties – says it will repeal the carbon tax. The spokesperson for the opposition Coalition, Greg Hunt, he expressed great determination to repeal the ‘carbon tax’ – and he says under any conditions. Apparently it is not so simple, needing majority in both houses – and at odds, at least for me, with a clear commitments to using economic instruments. Somehow the $10 billion Clean Energy Finance Corporation is ‘inefficient’, but Hunt propose an Emissions Reduction Fund of his own, which for some reason will be efficient. When asked support for which renewables is inefficient, it seems to be solar PV, but then that’s part of his plan for “Direct Action” as well. It seems inexplicable why a CPM is unacceptable, but it’s okay that “businesses that reduce emissions below their baseline … sell their CO2 abatement to the government”. I walked away with the impression of a highly intelligent person making an argument for purely political reasons – to oppose a specific instrument of the Gillard government, because of previous campaigns promises and a perception that the carbon tax hurts the electorate. Rather than affirming certainty about the need to price carbon, the debate about the instrument has become a political football. Business in Australia seems to be taking this as a sign not to move too fast, though this may also be a comfortable position despite the oft-espoused wish for ‘loud, long and legal’ pricing signals.
And where are we with SA’s C tax?
For SA, we have our own uncertainties, at an earlier stage. Pravin Gordhan in the 2012 budget speech and associated review said that “a carbon tax at R120 per ton of CO2e above the suggested thresholds is proposed to take effect during 2013/14, with annual increases of 10% until 2019/20”. Seemingly a clear move to carbon, this was qualified by exemptions energy-intensive and trade-exposed (EITE) sectors.
Impact on EITEs and poor
The design of compensation for Australian EITE sectors has been more thoroughly considered, with thresholds relating to output (rather than absolute emissions), free permits differentiated in two categories, defined by thresholds in kt CO2-eq / $m revenue (or value added). The CPM allocates free permits to businesses in EITE, based on an industry-average emissions and electricity intensity baseline, giving 94.5% assistance to those above a higher threshold (by emissions / revenue or value added), or 66% if at a lower threshold. Assistance declines at 1.3% per year, so that the ‘grandfathering’ even in these sectors is phased out over time.
Economy-wide modeling analyses by Treasuries in both countries highlight the importance of how revenue is used – particularly for contributions to mitigation by EITEs (e.g. through energy efficiency) and for poor households. The key political uncertainty for us is whether Minister Gordhan will indeed announce on 27 February 2013 the implementation of his (refined) proposal from last year. If Australia indeed were to step back from its carbon price, it would be difficult to argue SA should increase its initial rate. The tax rate is still, in my view, too low to really transform the SA energy economy, particularly with exemptions granted before it has even started. Yet the most important step is to start pricing carbon – and to ensure it does so with positive benefits for the poor.
Impacts on the poor
The possibility of increased energy prices and impacts on poor households is a particularly challenging issue for SA’s proposals for a carbon tax. In Australia, there seemed to be no evidence that the carbon price had been terrible for low-income households. Having now seen a fixed price period, it has neither ‘killed industry’ nor been a major cause for higher energy prices. Rising electricity prices are a problem, but they are due to huge investment in networks (what Ross Garnaut calls ‘gold-plated poles’). Minister Combet, with a strong trade union background, in a brief meeting explained that a million households no longer paid income tax – a massive benefit to poorer households.
Modeling by our own Treasury has shown that the impacts of carbon tax of R100 – R200 / t CO2-eq on GDP is modest. With recycling of revenue, the small negative impact can be further reduced (if put to reduce VAT, company and / or personal imcome tax, or increase direct transfers). If put to government savings and investments, it even can have a net positive benefit – reducing existing inefficiencies. Australia’s Treasury similarly used both sectoral and economy-wide models (global and national on the latter) – and also found modest impacts on GDP – though the story is much more complex in the Strong Growth Low Pollution study. The Garnaut Review in 2008 had already found impacts between -1.1% and -1.6% of GDP.
Renewable energy target
The Australian CPM is a complex instrument, but not the only instrument. The renewable energy target is 20% of electricity by 2020. While there is debate, given falling electricity demand, whether the absolute value of 45,000 GWh originally set should be retained, or adjusted to revised projections, there is bi-partisan political support for this. And a range of institutions is implementing, across government and the private sector – with an important role for consumers. A startling acceleration in solar systems in households has taken place. In SA, we are focused primarily on solar water heating (SWH), in Australia, solar PV has also taken off. Some 4-5,000 homes per week have installations, I was told by the Clean Energy Regulator. South African friends whom I visited have installed a system – not cheap, but with a substantial subsidy, and are earning back by selling electricity back, in total maybe A$2,000 per year, so it will pay back in four or five years. Overall, somewhere between 1.5 and 2 million homes have gone solar – according to one article, 18% of all households in Sept 2012 had SWH or PV, and counting solar PV only, 10%. Chloe Munro, the dynamic CEO of the CER, pointed out this article – which also argues that solar is popular not only among the upper class “technology enthusiasts”, but even more so in “struggle street” – relatively poor Australian households (though this means something different to poor in SA).
In our own electricity plan, solar PV was dramatically increased late in the process, due to information about falling costs, with 8.4 GW by 2030. This is all grid-connected, as I understand, and the Australian experience might prompt a rethink of how much can be done in households – and which ones.
It’s not all energy, but Australia also has a carbon farming initiative (CFI). Some activities (e.g. afforestation) will generate off-sets that can be used under the Kyoto Protocol, another set of activities (e.g. carbon sequestration) incentivies by a Non-Kyoto Carbon Fund. The latter at least has bi-partisan report – though whether it can deliver 60% of a reductions of even 5% below 2000 by 2020, as the Coalition suggests, seems implausible to this energy researcher.
Decentralised generation and avoidable network costs
At the Institute for Sustainable Futures, Chris Dunstan makes even more far-reaching argument. He – and the team around him – argue for energy efficiency and decentralized energy. Careful analysis of the ‘avoidable network costs’ suggests that ability to delay further investment can fund other things – such as hybrid solar-biomass systems.
From the local back to the global. The agreement to link the CPM with the EU’s emissions trading scheme (ETS) was done bi-laterally, rather than multi-laterally. Certainly one can say that movement on market-based mechanisms in the UNFCCC negotiations has been slows. Clearly Australia has a big incentive of a lower carbon price – and since the EU insisted that the price floor of the CPM design be dropped, the prices are likely to be significantly lower than in the current fixed price period (A$23, rising to 25); and much lower than if only done domestically (A$60). There is a limit of 50% on use of international units, and 12.5% Kyoto units; since EUA’s are the ETS units, this effectively seems to mean Australia would buy 37.5% of its units from the EU, and only a third of that (12.5%) from the CDM – or JI, if there are credits. That’s before talking about other market-based instrument, under the Convention – or even outside of it. My view remains that to have the benefits of trade, you need to set a cap – and a credible cap at that, which is not exactly what we have under the Convention yet for non-KP developed countries.
Gas prices and exports
Meeting with Ross Garnaut, apart from discussing carbon pricing, gave me another insight. Prof Garnaut predicts that the carbon price will be overwhelmed by rising gas price, quadrupling form earlier levels. Also fascinating is the different effect of finding cheap gas in the US and Australia. Australia has coal seam gas and allows free exports – and investment in export facilities has already increased the gas price. In US, increased availability of shale gas, with restriction on exports, has led to collapse of gas price. Others, like Tony Wood from the Grattan Institute, also indicated that gas prices – and those of the liquid component, are a factor to watch.
Climate aside, Australia has an interesting set of institutions focused on energy and electricity. The Australian Energy Regulator (AER) sets distribution tariffs; the Australian Energy Market Commission (AEMC) makes detailed rules; and the Australian Electricity Market Operator does dispatch (except in Western Australia, which seems like another country – and whose gird is not connected to the eastern one).
I only had time to visit one energy company, but an impressive one it was. AGL is the 2nd largest retailed in electricity and gas. It deals in renewables, coal, gas, renewables, not networks. They confirmed what I’d heard from the Business Council, that reporting under the CPM is work, but do-able for larger business (although a materiality limit that excludes having to report a ‘barbie’ or braai, would be welcome). And I’ve never come across a company with a research report series, which gets converted in journal articles. Some deep thinking from Tim Nelson and others in this company – and they’ve earned a reputation for sound advice when they do make policy recommendations.
Electricity demand in Australia is falling – to the extent that no new baseload is needed, and it expectations seem to be that this might persist for some time. Yet while the energy component of electricity prices have declined, network costs (due to investment in maintenance, some say over-investment) has seen overall prices increase. So you might think there’s no need for demand-side management? Far from it. The AEMC has published a fascinating Power of Choice review. Just two ideas from a rich document – that there might be competition in installing smart meters (although it’s unclear whether with displays) and that customers could access wholesale prices without retailers. The latter may involve new agents in ‘demand side participation’, and /or mechanism in the National Electricity Market (NEM). The AEMC suggests that customers should have a choice to make demand resources (DR) to the wholesale market in a similar way to peak generators. As an AEMC explanatory note puts it, “the DR [demand resource] consumer is required to continue to pay the retailer this same counterfactual volume at its retail contract price”. A report by NERA Economic Consulting gives some further detail on a mechanism would give consumers an option to respond to wholesale market prices when those are higher than the value of electricity use, but still have a retail tariff product to manage price volatility. If consumers curtail demand when prices are high, they could then pay baseline demand (rather than actual). Clearly methodologies for energy demand baselines are a crucial area to be determined.
Compliance, reviews and the Climate Change Authority
I’ve mentioned the inspiring teams at the Clean Energy Regulator already – by the way an institution that seem likely to survive the election, regardless of outcome. One other highlight from that discussion – how compliance can work at domestic level. The For non-compliance with the renewable energy target, there is a 130% penalty, payable within 5 days. Rather different to a 30% in the Kyoto compliance mechanism – over the next five years (or now eight).
The Climate Change Authority has a mandate to review the renewable energy target, emissions caps and targets (due in Feb 2014), the economic implications of the CPM, and Australia’s contribution to the global mitigation effort. The Authority is a statutory body established by the 2011 Climate Change Authority Act , and its functions include reviews mandated under other laws – on Clean Energy, Carbon Credits, the National Greenhouse and Energy Reporting Act and Renewable Energy legislation. In addition to these strongly mandated reviews, the CCA can be requested by the Minister to review other matters, conduct research and more. It is required to observe principles of economic efficiency, environmental effectiveness, equity, public interest, impact on households, business, workers and communities, the global response, and consistency with foreign and trade policy (section 12 of the Act). With a Secretariat of 25, a diverse and independent Board, and Anthea Harris at the helm, this is another institution we might consider establishing. We might, of course, also look at models elsewhere, such as the Brazilian Panel on Climate Change. Back to the CCA, it will targets annually, so they are always set five years ahead; so that annual reviews produce a rolling 50year target. Hopefully enough certainty for business people and politicians.
The CCA will also look at the circumstances or conditions set for Australia to move to 15% or 25% below 2000 by 2020. Not least in this is the Aussie sense of what their “fair share” is, so there’s ample room for discussion with BASIC experts who looked at equitable access to sustainable development and dividing burdens or a global carbon budget. My sense from the negotiations has been that the conditions for 15% have been met, and that the DCCEE seems to know this – although there is no official study (which is also understandable).
Climate change is communicated by a Climate Commission established by government. Some commissioners are scientists; another, Gerry Hueston, was President of BP for a long while, and is now engaging stakeholders on climate change.
One distinct impression was an impressive set of institutions. Another was that this may be a mixed blessing – though I qualify this immediately by my very lmited understanding, from all of one week’s experience. It did seem in some exchanges that institutions had very specific mandates (a good thing, as in focused) but also a narrow interpretation (not great for integration or fundamentally changing a system). Having multiple institutions creates many boundary issues, with my sense being that institutions are cautious not to imping on others’ turf. That’s a common enough pattern, and we can certainly tell stories of boundary issues among SA authorities (or within University departments, for that matter), but not one that enables bold action.
Universities and NGOs
That’s before all the work done in universities and by NGOs. I gave talks at the Australian National University in Canberra – at CCEP – and another at the University of Melbourne. The discussions were too rich and varied to summarise – so just a highlight. Andrew McIntosh taught me not to apply my distinctions between conservative (pro-market) and progressive (regulation), but between polluter pays (Green, Labour?) and beneficiary pays (Coalition). Frank Jotzo at ANU’s Centre for Climate Economics and Policy convened great discussions, and mentioned the intriguing idea of a combined mitigation – finance obligation for developed countries (am waiting for the paper, Frank!). The Melbourne Energy Institute’s seminar series cohosted a talk with the Grattan Institute, and was much better attended than any I’ve ever seen at home. My talk in Sydney was at Baker & McKenzie, a major law firm with a carbon market practice from which we can learn – and will, since they’ve established an office in Jo’burg. For me, several old contacts were renewed, and many new ones made – and at least some of those will hope will lead to future collaboration.
There is still much more that I learned on this trip, but this blog post is already too long.
 The trip was enabled by the Department of Climate Change and Energy Efficiency’s special climate visitor programme, my visit was from 3-10 February 2013.
 The current government is a minority, combining Labour, Greens and independents; the opposition Coalition combines the Liberal and Country Parties.