Draft Integrated Resource Plan 2018: public hearings

Meeting report

The Chairperson welcomed everyone to the public hearings on the draft Integrated Resource Plan 2018 (IRP). He invited the submissions from stakeholders and indicated the Committee would take positions after hearing all submissions from the public.

COSATU submission

Mr Matthew Parks, Parliamentary Coordinator, COSATU, welcomed Members’ interest and intervention in such a critical matter and deplored repeated delays in government consultation with workers on IRP and Integrated Energy Plan (IEP) at Nedlac. COSATU was concerned about a number of structural problems in relation to IRPs, such as: major omissions; lack of bold proposals to put Eskom on sound economic model to ensure its survival; IRP admission that 2030 model needs further studies; and outdated Rand Dollar exchange rates. The silence on governance crises especially with Eskom was also cause for concern. Billions were lost to looting through state capture but there appears to be no clear plans to recover stolen money. Further, the impact of decade-long massive tariff hikes on consumers and economy was worrying. The calls of Eskom Chair and Finance Minister to retrench 17 000 to 30 000 workers despite the Presidential Jobs Summit commitment to no state retrenchments was equally worrying.

COSATU therefore proposed that there be a comprehensive forensic audit of all of Eskom’s expenditure and those implicated must be charged, arrested, tried, convicted and sentenced and their assets frozen and confiscated. The IRP must be revised to include a serious business model that will stabilise and save Eskom, and the entity must be instructed by government that it cannot increase its debt levels from R400 to R600 billion. Eskom must also be instructed by government that there will be no retrenchments. If there was a need to reduce the head count, then management vacancies could be frozen. COSATU further proposed a sustainable business model linked to the industrial policy action plan (IPAP) and based upon increasing electricity production, and boosting exports to SADC and Africa. This shift would also include integration of biofuel, cogeneration and methane gas, especially for the agricultural sector. Principally, there has to be clear commitments: not to retrench workers but in fact to increase energy jobs by expanding energy production and exports; to renegotiate IPP contracts to reduce the price at which Eskom must buy and sell electricity; and to amend Eskom’s mandate to allow the entity to own and produce renewable energy.

In a nutshell, COSATU rejected the IRP and identified the need for its overhaul with parliamentary oversight. The overhauled IRP needed to: halt looting and recover stolen money; have a clear sustainable business model; reduce Eskom debt levels; and facilitate a just transition to protect jobs and the environment.

Discussion

Mr J Esterhuizen (IFP) noted the COSATU recommendation that there be no retrenchments at Eskom. He agreed that the exorbitant performance bonuses paid to the Eskom board was blatant criminality. However, the reality was that Eskom is completely top heavy and some of the positions had to be scrapped.  

Mr Parks said Eskom is a large organisation which could not just be let loose. Workers must not pay for the sins of management and politicians. Retrenchments would not solve the challenges at Eskom. The real solution would be to have a sustainable business model with its core aspects as follows: halting the bleeding and looting; renegotiating IPP tariff levels; and addressing the scourge of corruption. He noted that the Eskom headcount was currently less than what it was in 1994.

Submission by Mr Lamberth

Mr Paul Lamberth, Petroleum Engineer, in submission, asked whether the IRP, although affiliating with the Energy Mix, does comply with the Energy Policy gazetted in 1998, the Integrated Energy Plan (IEP) revised in 2016, and if was in-line with the 2030 National Development Plan (NDP). The general approach of policy was to recognise challenges, identify causes, find solutions, and implement them based on a plan. To date, every aspect of social and economic intent was being redressed as government sets out on a path of growth, equality, and prosperity. This requires new and decisive thinking more specifically in the energy sector.

With the IRP being a decision-making process concerned with the acquisition of least-cost energy resources, taking into account the need to maintain adequate, reliable, safe, and environmentally sound energy services, coal should continue to play a role in electricity generation. However, investments must be made in new and more efficient technologies. Clean coal options such as underground coal gasification must be promoted. Stranded coal reserves, such as the Springbok Flats and others, could also be included. He added that power generation from nuclear ought to play a role in the provision of new clean base-load generation. However, given the long lead-times associated with planning and construction, the New Nuclear Build Program must start now.

Mr Lamberth pointed out that natural gas presents the most significant potential for energy supply being the lowest least-cost resource. The use of natural gas in the electricity sector positions it as a viable option of the energy mix - 2026. Therefore local exploration to assess the magnitude of recoverable Shale Gas must be pursued in line with relevant regulations now. A substantiated fact was that there is Natural Gas in the Karoo Basin and the resource requires exploration and the establishment of usable reserve. Shale Gas could be exploited without harm to the environment. Biomass/gas must also play a role in the provision of electricity close to the source. Renewable Energy (RE) such as Solar PV, CSP with storage, and Wind present excellent opportunities to diversify electricity. However, RE is mostly asynchronous and was the least efficient (excluding hydro). Therefore, base-load support is required so as to ensure grid stability. Until these and other challenges are mitigated, sun and wind will remain “a nice to have”. In a nutshell, the energy security is a pre-requisite for achieving economic growth. The development of South Africa’s electricity infrastructure could contribute towards ensuring economic growth and development as envisaged in the 2030 National Development Plan.

Discussion

Ms T Mahambehlala (ANC) asked for Mr Lamberth’s views on the nuclear build programme; given all the confusion in the public domain. Why did he believe government must speed up its implementation?

Mr Lamberth said there was need to find an alternative energy source after the depletion of fossil fuels. Sadly, windmills and solar panels were not going to be an effective alternative to meet future energy requirements. Nuclear energy was a viable alternative as it could be produced safely and cost effectively. There were many examples globally on how to maintain reactors and manage the risks successfully.  

Mr Esterhuizen said nuclear might very well be a reliable and clean source of energy, but it is unaffordable. Costs associated with decommissioning and safe storage were too high. Renewable energy was a more viable alternative for South Africa at this stage.  

The Chairperson pointed out that the public must not be intimidated into silence. There had to be rationale and informed discussions and people must not be shot down for their views.

Truth in Energy Campaign submission

Mr Leon Louw, Truth in Energy Campaign, said the draft IRP envisages economic sabotage as it sought to abandon what South Africa has (coal, uranium, thorium) and import what the country does not (technology, minerals, hydro). This could be called ‘criminal’; certainly unpatriotic. He emphasised the need for a rationally balanced energy mix without pre-conceived biases and identified the need for properly conducted SEIA (Social-Economic Impact Assessment). South Africa has a unique resource endowment such that coal, uranium and thorium reserves could last for centuries. On the other hand, ‘renewables’ tech resources are minimal. Minimal wind, hydro. Global long-term energy realities point to inevitability of nuclear dominance. Nuclear is the cleanest, greenest, safest, most unlimited and reliable, and cheapest energy source. Therefore, it must rationally be substantial in the long-term mix. Government must not believe the fake news generated by anti-nuclear sentiment. Nuclear must be delinked from corruption and South Africans deserve to know the truth. The prevailing anti-nuclear propaganda was being funded by vested interests and contrary to global long-term energy realities. Notably, the renewables integration had not been fully costed (internalised costs versus imposed externalities) and relied on preconceived conclusions. Also, the environmental impacts had not been fully quantified.

Discussion

The Chairperson wanted to know the costs associated with the various energy alternatives. He pointed out that the nuclear energy debate has been shrouded with speculations and unsubstantiated claims. The discussions had to be frank and objective. He asked for views about the ‘no coal, no nuclear’ proclamation by some stakeholders.

Mr Louw said the country should not put all its eggs in one basket. If the predominant view that coal energy leads to climate change holds; then nuclear energy is the way to go as it is the best form of energy by a wide margin if one believes in global warming. Also, the myth that renewables do not produce any waste is untrue. Solar and wind energy would be by far the most expensive alternative for South Africa. For those not worried about CO2 emissions, the best alternative would be coal. He pointed out that European countries with nuclear in their energy mix have the lowest energy costs, whilst those shifting to renewable energy were experiencing a rise in energy costs. Nuclear is the most affordable option whereas solar and wind are by far the most expensive. The ‘no coal, no nuclear’ proclamation is completely irrational. There is no basis for arguing that there should be neither of the two energy sources.

Alternative Information Development Centre (AIDC) submission

Ms Shumirai Mudavanhu said AIDC was happy to have an IRP that explains the energy plan for South Africa. However, there were a few things it felt need to be addressed. The IRP by now should be providing an urgent plan of shifting from fossil fuels to renewable energy. This would imply or encompass the following: no new coal power plants as not only is coal harmful to the environment through greenhouse gases, but research had proven that it is now much more expensive to produce energy using coal. While on the other hand South Africa as a country has one of the best solar and wind in the world which makes it easier for the building of renewable energy which is cleaner and cheaper. AIDC believed energy is not an end in itself but it speaks to other societal needs which are costs and provision of energy. Hence, taking the cheapest option in this case Renewable Energy will meet people at their point of need energy wise. Phasing out coal should be among the top priorities of the IRP 2018 especially given the fact that climate change demands the ultimate phasing out of greenhouse gas emitters. Coal is slowly becoming a stranded asset such that investments in coal were decreasing.

AIDC identified the need for more clarity on the Just Transition. If the IRP was going to talk about Renewable Energy there is need for more clarity on the Just Transition as follows: the reaffirmation of the option of suitable alternative employment for all workers whose jobs are threatened by the, initially, low carbon but, ultimately, no carbon economy; reskilling as another explicit option for the same affected workers as aforementioned; specific recognition that a major objective of any just transition includes addressing the triple evils of poverty, inequality and unemployment that disfigures society in general; and a guaranteed grant for all workers who cannot be offered acceptable reemployment.

Discussion

Ms Mahambehlala asked if AIDC was aware that South Africa is an energy mixed country. Coal is part of the energy mix and therefore AIDC could not say it should be phased out. Phasing out coal would imply a full blown industrial revolution.

Ms Mudavanhu, in response, pointed out that coal was destroying the very same environment the country was dependent upon and thriving on. Coal energy should be the last resort and a reserve source of energy.

Submissions from community members

The Chairperson opened up the platform to members of the community.

Mr Steenkamp, welcomed the IRP saying it would largely have a positive impact on livelihoods. He asked why coal was being scaled up while the country has a surplus already. The true costs of negative externalities for the energy choices were not being considered, and this was a serious concern. The environment is being damaged and communities residing close to mining areas were being afflicted by many health conditions owing to the toxins produced by the coal plants. Water sources were also being depleted and polluted by these operations. He added that introducing nuclear energy at this stage when the country is still yet to acquire the intellectual capacity and expertise associated with such technologies would imply the outsourcing and importation of skills in the midst of high levels of unemployment in the country.

A community member spoke in Afrikaans [Refer to the audio].

A community member from the North West called for the exclusion of coal from South Africa’s energy mix. Air pollution from big companies was harmful to the health of communities. People should be put first before profits.

A community member from Lephalale, Limpopo, said retaining coal in the energy mix meant communities would pay with their lives owing to the destructive nature of this energy source. Also, climate change was too high a price to pay.

A community member from Soweto suggested that the IRP give emphasis to renewable energies and do away with coal as it was causing untold damage and suffering within coal mining communities. She made reference to the difficult health conditions and social ills that coal mining communities in Mpumalanga are made to put up with. These mines were not even employing people from those communities. Furthermore, electricity tariffs were too high and unaffordable. She deplored that communities’ views were not being taken into consideration in policymaking.

The Chairperson appreciated the submissions and indicated the hearings would continue on Friday. Members’ views will be heard after all submissions from the public are presented before Committee.  

The meeting was adjourned.