Energize Inbox, September 2014

September 5th, 2014, Published in Articles: Energize

 

This month’s letters include a response to recent articles regarding nuclear’s apparent clash with the IRP, and the coming carbon tax. Send your letters to: energize@ee.co.za

Our winning letter:

re: Nuclear conundrum clashes with the IRP: Clarity required on drivers of policy decision

Sir

Unfortunately there is no basis to hope for “a step towards a more publicly-inclusive policy development process” in the pronouncements of the Minister of Energy.  We already have a process provided for in the National Energy Act of 2008: Integrated Energy Planning (IEP), which is required to include public consultation. The second IEP is currently underway and government has repeatedly stated that the next iteration of IRP for the electricity supply industry (subsequent to IRP 2010) will be based on the IEP, in which officials have promised an energy development road map (though the Draft 2012 IEP Report refers to “policy recommendations”).

Any declaration of major items being non-negotiable for our future energy development pathway step heavily upon this legally mandated process, launched at the IEP Colloquium of 2012 and due to deliver a final report to Cabinet – for approval for further deliberations including in NEDLAC – by the end of 2014. The target for completion was extended from an initial June target, inter alia as officials were taking on board the extensive public comments received in writing and at the series of provincial workshops run by the DOE last year, but it is a major deliverable of the DOE Strategic Plan for this financial year.

Failure by the Minister to even acknowledge this process certainly does give weight to your question:  “What truly is going on in terms of energy policy development in South Africa, and how are important decisions regarding the evolution of the energy landscape actually being made?”.  According to Energy Policy of 1998, given effect in the Act of 2008, this should take place through the IEP process. While it is commendable for the minister to take seek advice from a set of advisors, which absolutely should be inclusive, there is no assurance of any transparency or accountability of the advisors which may be selected or of the deliberations they may participate in and little prospect of the advice on offer being shared with the public.

If a more publicly-inclusive policy development process is what we want for rigorous and responsible decision-making on evolution of the energy system – inclusive of the electricity supply industry and particularly regarding pivotal investment decisions – then we should be demanding this of the IEP process.

Richard Worthington

 

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re: Carbon taxes are coming: Best we prepare for them

Sir

The nub of the article (Energize, July 2014) is that we will eventually be forced to impose a carbon tax to protect our trade, so let’s do it now. But is this really such a bright idea?

I once got ahead of the pack in a cross country and wondered why no one was behind me. That was when I discovered that it can be quite lonely when you take a wrong turn. The same applies to any country rushing ahead to substantially reduce carbon emissions. It is equivalent to committing economic Hara-kiri by rendering exports uncompetitive. Even the wealthiest nations on earth realise that the cost of electricity critically affects the price of their exports.

Realisation of this simple fact is one of the reasons why they are wealthy and why they baulk at imposing carbon restrictions. This is even truer of nations with fragile economies that are struggling to fund much needed development. South Africa is already beset by high labour costs and low productivity. Add high electricity costs to that mix and we are sunk. Already power production is soaking up a large chunk of our GNP and investors are being scared off by the critical shortage of base load that is keeping us on the brink.

Yet despite this critical need for cheap and reliable power, we have allowed ourselves to be diverted into spending large amounts of money that we can ill afford on over-ambitious and very expensive solar and wind projects. Oh, there are the usual smoke and mirrors claims that it is very cheap and that the private sector is funding it anyway. This totally ignores the fact that we are still tied in to guaranteed and very expensive buy-in prices for every kWh that they generate.

Worse still, these technologies provide hardly any of the base load that is so desperately needed during diurnal peak demand periods. In effect we are simply doubling up (more like trebling) out capital costs since nearly everything that is installed has to be backed up by stations that can deliver real base load. Far from keeping our costs low, we have plunged ahead of the field and made extravagant and unattainable promises to cut carbon emissions. But in their rush to briefly bask in the limelight at the COP talks our politicians seem to have forgotten that the promises we made are conditional on the developed nations subsidising our renewable technologies. Since that unlikely event has not happened, we are off the hook.

Moreover, the principle was established (or at least strongly contended) that the poorer nations should not be expected to stunt their development by reducing carbon emissions. Hence, we have every reason to lag behind, rather than foolishly try to take the lead. In fact, to protect our flagging exports and mindful of the urgency to meet the aspirations of the masses of our unemployed and poor, we should make sure that we are dragged in kicking and screaming at the end. And we have the natural resources to keep that up for a very long time.

There is also the very real danger that capitulating now will become a self-fulfilling prophesy by strengthening the hand of would-be carbon traders. It would also make us the meek servants of a Treasury greedy for more tax to support its profligate son.

The writer ponders whether we should we adopt a carbon tax or “Cap and Trade”. Perhaps the common denominator is “Cap in Hand”? As taxpayers we have been cowed into holding SARS and Treasury in awe and meekly comply lest we offend Big Brother and bring a hostile audit down on our heads. But while Treasury undoubtedly have the power to enforce laws they do not have the technical expertise to pontificate on a carbon tax. There is no need to fold to them. They are the servants of the people and we the people can lobby against unwise (or even dishonest) taxes. (After all, who seriously expects that the carbon tax to be used to reduce carbon?) Legislation is not cast in stone – it can, and sometimes should, be changed. Implementation has already been delayed a year – why not indefinitely? Or at the very least make the tax a very small token one.

Chris Herold

 

 

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