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]]> http://www.greencon.co.za/blog/2010/11/we-have-a-choice/feed/ 0 http://www.greencon.co.za/blog/2010/04/those-helpful-volcanoes/ http://www.greencon.co.za/blog/2010/04/those-helpful-volcanoes/#comments Wed, 21 Apr 2010 02:47:26 +0000 admin http://www.greencon.co.za/blog/?p=967

The installation of flue gas desulphurisation (FGD) technology at the Medupi coal-fired power station, the construction of which will be part funded by a $3,75-billion loan from the World Bank, has been confirmed as a loan-package condition.

The technology, which will reduce sulphur-dioxide emissions, would have to be retrofitted, owing to the fact that it had not been included in the plant’s original design. This would add to the project’s capital cost, and its water consumption.

The bank published its ‘Project Appraisal’ document for the controversial loan on Tuesday, which shows that Eskom will need to develop, adopt and thereafter implement a FGD programme across each of the plant’s six power generation units by no later than June 30, 2013.

It is also stipulated that FGD equipment for the first generation unit must commence on the later of either the sixth anniversary of the commissioning date, or by March 31, 2018. The FGD equipment for all six generation units would need to be installed and be fully operational by no later than December 31, 2021.

The FGD installation between 2018 and 2021 will be aligned to the scheduled operational maintenance programme of the Medupi units, which would be taken off-line for routine maintenance after six years of operation.

The bank notes that the sulphur content of the coal to be used at Medupi, which is calculated at 1,4% by weight, together with the large scale of the plant, some 4 800 MW, meant that sulphur-dioxide emissions could have a “significant adverse environmental impact”.

Therefore, sulphur-dioxide emissions would have to be removed using a “wet FGD” solution, or a gypsum process, using limestone located at Kraalhoek and Dwaalboom, some 180 km from the Lephalale site.

The process would increase the plant’s water consumption and the World Bank has, thus, flagged for possible concern the fact that sufficient water might not be available in time for the commissioning of the last three units or the FGD equipment.

“Progress on the project to supply the required amount of water is on schedule. Nevertheless, the Bank has requested evidence from the Department of Water Affairs to Eskom, committing to timely water supply,” the document states.

The water allocation is dependent on the availability of water from the Mokolo and Crocodile Water Augmentation project, which is not expected to become available until 2014 at the earliest.

The FGD system is expected to add at least $150/kW to the final capital cost, while yearly water consumption, including FGD, will rise to 12-million m³.

The total cost of Medupi is estimated at about $12,1-billion.

SEOUL (Reuters) – South Korea’s LG Group will invest 20 trillion won ($17.90 billion) through 2020 to develop environmentally-friendly businesses and reduce emissions by 40 percent against 2009 levels, unit LG Corp said on Monday.

The group is South Korea’s fifth-largest by assets and led by LG Electronics, LG Display and LG Chem. It will split the investment between green research and development and facilities to cut 50 million metric tones of greenhouse gas emissions per year by 2020, a statement from LG Corp said.

The investment aims to expand its production of energy-efficient products and renewable energy businesses such as fuel cells and rechargeable batteries for electric vehicles, bringing revenue from such sectors to 10 percent of the group’s total revenue in 2020, the statement said.

South Korea, Asia’s fourth-largest economy heavily dependent on oil and gas imports, set a voluntary 2020 emissions reduction target last year to a 30 percent reduction from its forecast under a business as usual scenario.

The government said last July said it would invest 107 trillion won, or 2 percent of its annual GDP, in environment-related industries over the next five years.

Samsung Electronics has also said it would invest 5.4 trillion won in green research and development and facilities to make the world’s largest memory chip maker a leading eco-friendly company by 2013.

(Reporting by Cho Mee-young; Editing by Jonathan Hopfner)

The South African government indicated on Wednesday that the proposed $3,75-billion World Bank loan for Eskom was a component of a larger $6-billion “funding window” with the bank, and that an additional $1,25-billion could flow to the State-owned power utility specifically for emission-reduction projects. This funding would be over and above the initial Eskom package, which was due to be voted upon in Washington DC on Thursday.

In a briefing note issued the day before the vote, the National Treasury reiterated that the Eskom application had been premised on the “fundamental belief that developing countries must be allowed to develop their energy security” in the “most cost effective and sustainable matter”.

It also indicated that it had not yet decided whether it would draw on the remaining $1-billion of the $6-billion on offer, saying only that this capital could be directed towards large infrastructure developments in the country.

The South African government would, however, resubmit a $250-million application to the World Bank-administered Clean Technology Fund (CTF) to help kick-start renewable energy programmes in the country.

The immediate focus, however, was on securing the International Bank for Reconstruction and Development (IBRD) loan for Eskom, which had drawn opposition from some environmental groups and politicians.

It was far from clear on Wednesday, whether some governments, including the US and the UK, would vote in favour of the Eskom loan, owing to the fact that the bulk of the proceeds ($3,05-billion) would flow to the 4 800-MW Medupi coal-fired power project, which is being developed in Limpopo province.

World Bank President Robert Zoellick defended the loan package in a letter to a group of US lawmakers who raised questions about the bank’s support for the coal project.

US Congressman Barney Frank and US Senators John Kerry and Patrick Leahy have reportedly sought assurances from the bank that Eskom will extend electricity to the poor; that the use of renewable energy will be increased; and that Eskom will retrofit its facilities with additional environmental safeguards.

In its note, the National Treasury insisted that Medupi had already been factored into its Copenhagen Accord commitments, while the project was employing “supercritical technology” that was akin to what would be pursued in developed economies. It also indicated that renewable energy would be pursued under the country’s long-term integrated resource plan and that government was still targeting to achieve universal electrification by 2014. Poor households, the National Treasury pointed out, already received free basic electricity of 50 kWh a month.

“Coal is still the least-cost, most viable, and technically feasible option for meeting the base-load power needs required by Africa’s largest economy,” Zoellick said in his letter, adding that the bank was balancing the development benefits of project with other environmental objectives.

“South Africa represents one-third of sub-Saharan Africa’s economy, so slowdowns precipitated by lack of energy will ripple throughout the continent,” Zoellick wrote.

A New York Times article indicated that international public financial institutions have invested $37-billion to help finance 88 coal plants over the past 15 years, many in Asia, quoting a 2009 report by the Environmental Defense Fund (EDF).

The EDF calculated that future annual carbon dioxide (CO₂) emissions from the financing of ongoing coal-generating capacity and additions would be some 791-million tons yearly – the equivalent to the emissions of France, the Netherlands, Belgium, Switzerland and Ireland combined, or 90% of the annual emissions of Germany, the European Union’s single largest source of CO₂.

WHAT ABOUT CHANCELLOR HOUSE?

The National Treasury also partly addressed concerns raised by South African opposition parties about the fact that some of the proceeds of the loan could flow directly into the coffers of the governing African National Congress (ANC), owing to the fact that Chancellor House (an ANC company) had a shareholding in Hitachi Africa, which is supplying Medupi with boilers.

“Regarding the Chancellor House-Hitachi contract, government is mindful of some of the concerns raised in this regard.

“Government is, and will continue to engage with all concerned stakeholders on this important question with a view to having a constructive dialogue.

“We will ensure that we have a transparent framework to deal with matters such as these,” the National Treasury said in its note.

Earlier, Energy Minister Dipuo Peters said that all enquiries with regard to Chancellor House, and whether it should be invested in Hitachi, should be directed to the Treasurer-General of the ANC, Mathews Phosa. However, she, like government, did not see the shareholding as an impediment to the granting of the World Bank loan.

But a report by Sake24 indicated that the World Bank, which supported the loan, was also sensitive to the matter. It quoted senior spokesperson Sarwat Hussain as saying that the planned loan would not be awarded to any contract in which Hitachi was involved.

The World Bank’s own review of the proposed loan and the underlying project indicated that some $3,05-billion would be directed to the Medupi project for the supply and installation of civil construction contracts for “the power plant and associated transmission lines”.

A further $260-million of the IBRD loan would be directed towards supporting the development and the 100-MW Sere wind farm and the 100-MW Upington concentrating solar power project, while $440-million would directed towards the Majuba Rail project.

Reuters) – South African power utility Eskom said on Wednesday the country would need to invest up to 110 billion rand in coal mining by 2020 and dig at least 40 new coal mines in that time.

State-owned Eskom said Africa’s biggest economy, which is in the grip of a power shortage, will need to produce 374 million tonnes of coal by 2018 to meet growing demand.

With current projects in place and taking closures of old mines into account, South Africa is expected to produce 385 million tonnes by the same time, creating a safety margin of only 3 percent, Eskom’s coal specialist Johan Dempers said.

“We will need 40 mines to be opened requiring a large number of mining rights to be awarded in a short period of time…we will need between 90-110 billion rand to be invested in coal mines by 2020,” he told a coal, carbon and energy conference in Johannesburg.

Demand would be driven by higher private and commercial consumption, a rise in exports to meet growing demand, both from Europe and Asia, and the need to feed coal into coal-to-liquids (CTL) plants planned by petrochemicals group Sasol.

Dempers said that by 2018 Eskom itself would require 200 million tonnes of the coal to supply all its power stations, including two currently under construction and another two power stations the utility said it would need by then.

The two new plants, Medupi and Kusile, will provide 4,800 MW of electricity each, and are due to come on stream in 2015 and 2016 respectively.

Dempers, Eskom’s Chief Geologist, said the company was studying three potential sites for a third plant, expected to produce around 5,000 MW.

The utility, in cooperation with other government and industry stakeholders, has launched a study to provide an updated assessment of coal reserves in South Africa and the Southern African Development Community (SADC) region.
He said the last study, done in 1987, estimated recoverable reserves in South Africa alone at 55.3 billion tonnes.
“We expect that within 22 months from now we will be able to produce the final report,” he said. 

Well if you consider that Eskom is one of the highest polluters per capita in the world, it doesn’t look as if its going to get ant better. 

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Sasol’s numerous brushes with competition authorities have entrenched its reputation for monopolistic tendencies in markets for the liquid fuels and chemicals it produces from coal and gas.

State-owned Eskom has garnered less attention from competition authorities than its privatised counterpart, possibly because the electricity supply sector that the utility monopolises has its own watchdog, the National Energy Regulator of SA.

But if the ambit of our anti-trust regulators were to extend from pricing and control to environmental integrity, Eskom and Sasol might be considered the duopoly of the nation’s carbon polluting industries.
The novel reference to the pair as a duopoly came this week from delegates at the government’s climate change summit.The description is apt. Emissions from the combustion of fossil fuels for energy provision account for about 73 percent of the nation’s total carbon emissions, with coal-addicted Eskom responsible for the biggest chunk and Sasol following as the biggest private sector emitter.

Mike Goldblatt, an economist specialising in environmental and natural resource economics, believes no other country faces such a duopoly. It has implications for any attempts to create market mechanisms to reduce greenhouse gas emissions.The National Treasury has begun investigating what form of carbon taxes may be appropriate for South Africa, possibly in conjunction with an emissions trading scheme that caps emissions and creates a market for trading in emission reductions.

The combined size of Eskom and Sasol poses the danger that a regulatory system is built around them, taking less cognisance of smaller participants with nevertheless significant emissions. In addition, the bargaining power wielded by the duo as a result of their size could determine whether a carbon tax is imposed on them.
A research paper on carbon taxes published in February by the University of Cape Town’s Energy Research Centre (ERC) says European experiences with carbon taxes suggest that requests for exemptions from a general carbon tax should be anticipated here. But the paper points out that if most emissions from coal are exempt, then the tax is likely to become ineffective.

Another recent ERC paper on emissions trading as a policy option highlights the difficulties of ensuring that sufficient liquidity exists in a cap-and-trade system, given Sasol’s and Eskom’s dominance.Regulating emissions at the point of combustion may not be appropriate, much like regulating the upstream providers of coal, oil and natural gas, of which there are a limited number of entities, the paper says.

One option, Goldblatt suggests, is to separate Eskom and Sasol into several carbon trading units, each with its own cap.This is just a hint of the many complex issues surrounding carbon taxes and emissions trading schemes.In the near future, vested interests are sure to vigorously lobby government arms in an attempt to influence policy. A climate change policy is due to be released by the end of 2009 with regulatory, legislative and fiscal details fleshed out by 2012.
The point was made at the summit on Wednesday that whatever policy package is chosen, its outcome needs to result in a lower emissions trajectory, rather than merely create a derivative market in carbon.The policy will paint a clearer picture of the government’s resolve to translate its long-term intent to move towards a zero-carbon economy into immediate action.

Short and medium-term commitments are the real indicators of whether there is political will to deal with the transition from a fossil fuel economy to cleaner energy.

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