SUSTAINABLE ENERGY NEWS on EMAIL (SENSE) No: 54, Feb. 2009

SUSTAINABLE ENERGY NEWS on EMAIL (SENSE)
Number 54: Feb. 2009

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Welcome! SENSE is a service of the Sustainable Energy and Climate Change Project (SECCP) of Earthlife Africa Johannesburg (ELA Jhb).

SENSE is a regular publication, edited by Tristen Taylor. We welcome any feedback and submissions. Also, let us know if you wish to get more information from ELA Jhb, or know someone else who should be receiving SENSE. Please note that the material in SENSE does not necessarily reflect the positions or policies of Earthlife Africa Jhb and/or the SECCP.

Contacts:
Tel:        +27 11 339-3662
Email:        seccp@earthlife.org.za

To download a PDF copy of this SENSE edition, go to:
sense-54-feb-2009-final

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CONTENTS

1. Editorial
2. SECCP News: Goodbye Nuclear-1 and Hope You Don’t Come Back, Sasol’s Dubious CDM Project, Refitting NERSA
3. SA Sustainable Energy News: Solar Economics, REFIT Roundup
4. SA Unsustainable Energy: Eskom’s New Build Costs Get Fatter, Gearing up for a New CTL Plant, Eskom’s Nuclear Evictions, Areva Spin, Oil-refining in South Africa
5. Energy Policy & Analysis: Cheap Oil, CO2lonialism, The Green Budget?
6. African Energy News: Trading Carbon in Africa, Big Oil likes Angola over Nigeria, World Bank Gives Advice

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1. Editorial

Just when the energy sector seemed destined to remain in the madhouse, sanity broke through. Since the last edition of SENSE (Nov. 2008), the South African energy sector has seen two important realignments; the first is the abandonment of Nuclear-1 for at least ten years, and the second is Nersa’s proposed Renewable Energy Feed-in Tariff (REFIT).

Holy sulphurous smokestacks! Just what are they putting into the water over at Megawatt Park and Regulator HQ? Whatever it is, they should pipe it directly to the Department of Minerals and Energy.

Taking an optimistic view of these two events, this might mark the beginning of a paradigm shift within the sector and the start of a brighter tomorrow. Abandoning nuclear power will not only avoid the risk of turning chunks of the Eastern and Western Cape into the halls of the living dead, but will also ‘liberate’ huge sums of money for investment in clean energy and the transition to a just and low-carbon economy.

NERSA proposed a REFIT in Dec. 2008 and held public hearings on the matter in Feb. 2009. A feed-in tariff would be the most revolutionary event to hit the electricity sector since The Electricity Act of 1922; not only would there be a decentralisation of generating plants and increased job creation, it would be a major step towards transitioning away from fossil fuels. This is a most welcome measure.

However, as highlighted in this edition of SENSE, both of these events could go horribly wrong. There are signs, from Areva’s spin to Eskom’s eviction of people living on possible nuclear sites, that the abandonment of Nuclear-1 is only a matter of delay until the world credit market finds some liquidity. Then, it’ll be, grab some junk bonds and the odd uranium shipment and forward to the glorious sunset of humankind.

The proposed REFIT is lumbered with several problems–contract length and type, level of tariffs, exclusion of solar PV–that will have to be corrected. In numerous written submissions and a host of public submissions from various quarters, NERSA was made aware of these (and other) shortcomings. Now we wait for those wise elves to ponder on REFIT and revise the proposed tariff scheme. They could get it wrong.

A whole another type of wrong is making its way through the Industrial Development Corporation (IDC). In conjunction with the price-fixers over at Sasol, the IDC is considering investing (to the tune of R100 billion) in a new South African coal-to-liquids plant.

This is appalling. Coal-to-liquids technology produces huge amounts of CO2, and, in terms of climate change mitigation plans both locally and globally, this is akin to trying to put out a burning house with petrol instead of water.

Lastly, there’s Peak Oil. With the oil price plummeting from US$140 to US$40 a barrel, it may be reasonable to question Peak Oil theory. But only if examined in isolation. Looking back over 2008, we can see a drastic escalation of oil prices (driven by supply/demand factors and pure speculation) followed with global economic meltdown. While the blame has been laid at the feet of dodgy Wall Street types doing dubious derivative deals, the oil factor has been overlooked.

Peak Oil theory has predicted that when oil prices rise too high (as will occur when supply cannot match demand due to limited oil resources), economic shockwaves will result. This is exactly what happened. When the global economy expands (after this depression passes), demand for petroleum will increase beyond production capacity. As production capacity is limited by geological factors–i.e. the amount of obtainable oil in the ground–growth in petroleum demand will outstrip supply and prices will climb again.

Anyone care to guess what the economic response to another rise in oil prices will be?

Tristen Taylor
Energy Policy Officer
Earthlife Africa Jhb
25th of Feb. 2009

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