Johannesburg — THOSE who believe the climate change movement is based on false science may be happy that last month's Copenhagen climate summit did not deliver an ambitious and binding deal. Those who work on this premise assume there is nothing to be done to reduce carbon emissions and fix our carbon-intensive energy trajectory. The truth is, much needs to be done, despite the failures in Copenhagen.
A continued dependence on fossil fuels will lead SA down a path with significant risks to our energy security. Even disregarding the threat of climate change, we find compelling reasons to look at a shift from fossil fuel-based energy to renewable energy, together with better management of our energy usage.
This is not new knowledge and Eskom's submission to the National Energy Regulator for the multi-year price determination (MYPD2) provides all the evidence that a new trajectory should be defined outside of coal rather than embedded within it.
The MYPD2 document provides scattered commentary on the coal question which, when pulled together, forms a most illuminating narrative on the problems associated with coal.
So what are the issues?
Eskom owns no coal mines and therefore has little control over its sourcing. Coal supply is dependent on market forces and these are driven by price incentives.
A dependence on the markets puts the issue of an affordable and competitively priced coal supply at risk. Market conditions are changing and growing international demand for coal is putting extreme pressure on world markets for coal supply. The highest bidder gets the best coal and there is great incentive for South African companies to export our best coal rather than to supply domestic needs.
Last year, a report by Susan Olsen pointed to problems around contracting sufficient stockpiles, management of quality, loss of stock, price determination and management of logistical aspects related to coal supply.
The effects were most acutely felt on Eskom's bottom line. The year-end results showed a loss of R9bn - some of it is attributed to greater reliance on supplies of coal from smaller contractors in order to build stockpiles.
Long-term supply agreements are mostly with ageing coal mines, where quality is deteriorating. This poses a significant risk when the demand for better quality coal is on the increase. The Mpumalanga basin is expected to reach maximum production in the next five to 10 years, and even Eskom acknowledges that the best coal reserves have already been depleted.
New mine capacity will need investments of more than R100bn to ensure continued supply of coal and expansion of rail capacity. Private investment in new capacity will be forthcoming only if coal prices are right.
There are also significant externality costs associated with coal mining and power generation.
The fact that in SA we don't have effective rail transport to carry all the coal needed to power the country's coal-fired plants means we are heavily reliant on road transport, which causes costly damage to the roads. Eskom's MYPD2 has asked for R10bn over a five-year period to cover road repairs, a significant cost that will in effect subsidise the coal industry.
Dirty coal means dirty emissions. This will inevitably lead to greater capital expenditure on technology needed to meet the air quality standards introduced in the Air Quality Act of 2004. Most stations do not comply with these standards and becoming compliant will mean additional challenges with regards to water and limestone supply to clean fouled air.
Supercritical turbines increase the efficiency of coal power plants, but it's absurd if we consider that the main reason this is necessary is to deal with future requirements for carbon capture and storage. Whatever efficiency gains are being made through the use of supercritical coal, these gains won't be transferred to consumers. Instead, 15% of energy will be taken up by power plants fitted with carbon capture and storage technology.
The coal-based paradigm seems an absurd long-term proposition given some of the evidence presented by the MYPD2. We need to seriously rethink our coal addiction.
Fakir is head of the Living Planet Unit at WWF SA
