What is the future for fossil fuels in South Africa?

November 9th, 2015, Published in Articles: Energize

 

The Fossil Fuel Foundation held its third electricity conference at the Eskom research and innovation centre in Rosherville, near Johannesburg, recently. The theme of this conference was “Fossil fuels in South Africa – what factors will drive future use?”

The event opened with a presentation by Tshilidzi Ramuedzisi, the chief director of energy planning of the Department of Energy, who said that, because coal is used for the generation of 95% of South Africa’s electricity, any change to the supply or use of coal will have a major effect on electricity generation. For this reason, she said, the DoE wants to increase the mix of energy sources in the production of electricity. The Integrated Resource Plan (IRP) is informed by the country’s Integrated Energy Plan (IEP) which seeks to determine the best way to meet current and future energy service needs in the most efficient and socially beneficial manner. The IEP has eight objectives, she said, which are shown in Fig. 1.

Fig. 1: The IEP’s eight objectives.

Fig. 1: The IEP’s eight objectives.

One of the government’s objectives is job creation and in terms of energy generation according to Ramuedzisi, concentrated solar power (CSP) and nuclear offer the highest number of jobs per GW capacity during construction, and CSP per TWh generated during operation. She said that another objective is reducing emissions and in that regard the DoE sees renewable energy and nuclear as being the cleanest electricity generation methods available.

Fig. 2: Tshilidzi Ramuedzisi, Department of Energy.

Fig. 2: Tshilidzi Ramuedzisi, Department of Energy.

A further nine presentations were made followed by a discussion panel which answered specific questions and effectively summarised the conference presentations.

What is the future of coal?

The integrated resource plan (IRP) calls for the continuation of the use of coal for electricity generation. The fact that the government is building two new coal-fired power stations, even if some of the older ones are decommissioned once these new ones have been completed, shows that coal will remain a primary energy source in South Africa for at least 30 or 40 years.

What about discard coal?

Discard coal can be used by most of Eskom’s power stations, according to Barry MacColl, general manger of Eskom’s research and innovation centre. Discard coal presents the utility with some challenges, but these are not insurmountable in most cases. The price of discard coal from some mines is too high, which makes it less attractive, he said.

What about procurement of coal from small miners?

The government seeks to support small mines, so Eskom is expected to purchase coal from these mines too. The coal sourced from some these small mines is of a lower quality, which can create problems at certain power stations. Another challenge is that these smaller mines often charge higher prices for their coal than the larger mines do. Unfortunately, some of the policies espoused by the government contradict other policies. One example of this is the government’s stated desire to support small coal miners while at the same time talking about the introduction of a carbon tax to discourage to the use of fossil fuels.

Why is policy regarding energy, and coal in particular, not forthcoming from the DoE?

Policy is needed to get things going, but policy design and alignment is difficult and requires centralised, visionary leadership from someone who will not be affected by vested interests. This visionary leader needs to draw up an overriding policy with clear national objectives, such as the alleviation of poverty and addressing inequality, leaving the finer details of the plan to be resolved by the ministers of the various departments responsible for its implementation. This overall policy must include a clear and serious attempt at sustainability of the country’s scarce resources such as water and arable land. The policy – and its outworking – could provide incentives to encourage appropriate behaviour and taxes to discourage waste.

Fig. 3: Presenters from left to right: Shailendra Rajkumar, Sasol; Prof. Philip Lloyd, Cape Peninsula University of Technology; Mandy Rambahros, Eskom; Louise Naude, WWF; Dr. Gary Kendall, Nedbank; Barry MacColl, Eskom; and Rob Jeffrey, Econometrix.

Fig. 3: Presenters from left to right: Shailendra Rajkumar, Sasol; Prof. Philip Lloyd, Cape Peninsula University of Technology; Mandy Rambahros, Eskom; Louise Naude, WWF; Dr. Gary Kendall, Nedbank; Barry MacColl, Eskom; and Rob Jeffrey, Econometrix.

The country needs a unified government with fewer departments which work together to achieve overall objectives for the benefit of the country and its inhabitants. We should stop exporting coal as a commodity because the cost of mining the coal and transporting it to the harbour is higher than the price we can get for it at present. We should rather use the coal we mine to generate electricity, and the electricity we generate to manufacture products which we can export at higher prices.

Should South Africa export its coal?

Xavier Prevost, an independent consultant, said that South Africa has sufficient coal reserves for another 118 years, and worldwide reserves of coal amount to about 17-tillion tonnes. The problem, he said, is not our supply of coal but the cost of mining it. Current commodity prices are so low that it costs more to mine coal than we can sell it for on the open market.

Prevost said the major users of coal in South Africa are Eskom and Sasol, for the production of liquid fuels. Together, these companies consume about 160-million tonnes of coal per year.

Environmental concerns have resulted in coal being viewed as “dirty” and as “the enemy” rather than being an excellent source of energy. This view has decreased the demand for coal, particularly in Europe and the USA, and depressed the market price of the commodity, he said.

How much greenhouse gas (GHG) does South Africa produce?

Sasol’s Shailendra Rajkumar said that South Africa’s CO2 emissions amounted to 518-million tonnes in 2014, down from 563-million the year before, as a result of lower electricity generation by Eskom. He said that the country’s GHG emission figure is likely to remain flat until 2021 because no increase in emissions for Eskom is anticipated. Sasol’s figures show that GHG in South Africa will fall to below 500-million tonnes per annum by 2035, and to below 400-million tonnes per annum by 2050, even with Medupi and Kusile power stations in operation.

What about the older power stations?

The panel agreed that the older power stations, which produce a combined output of about 10 GW, will be replaced by a mix of new generation technologies including nuclear. At this point it is unclear whether any new coal-fired power stations will be built after Medupi and Kusile.

Send your comments to: energize@ee.co.za

 

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