Eskom on clean coal initiatives & technologies; Mining Affected Communities on their challenges- with Minister

Meeting report

The Chairperson welcomed Members, the Department of Mineral Resources and Energy (DMRE), representatives from Mining Affected Communities United in Action (MACUA), Women Affected by Mining United in Action (WAMUA), and Eskom.

Mr M Wolmarans (ANC) apologised as he would be joining the meeting later at 10:00. The Minister of Mineral Resources and Energy, Mr Gwede Mantashe, apologised as he would be leaving the meeting earlier at 11:00.

The Chairperson stated that the Committee received word from the Speaker’s office that there were issues raised in relation to the sector – in particular, mining – where the Committee represented the communities. The Committee welcomed these issues and was committed to tackling them. He recognised that Parliamentary procedures can be very technical and said that the Committee accepts and appreciates that members of the public may not understand at times how these procedures operate.

There had been a number of issues raised but the Chairperson believed that MACUA and WAMUA should not be limited to simply discussing those issues given that it was their first meeting with the Committee.

MACUA / WAMUA Presentation: Nothing About Us Without Us

Mr Paps Lethoko took the Committee and Department through the above presentation.

Currently, there are 40 MACUA branches, 13 WAMUA branches and nine youth branches across the country. 6 000 people have signed up to become members and over 50 000 signatures have been collected in support of free, prior and informed consent [of affected communities before permission is granted for mining].

In response to failed attempts at communicating with Parliament and the Committee, MACUA / WAMUA went to court on two separate occasions for the purpose of claiming rights which they believe they should have been granted.

Research conducted by MACUA / WAMUA showed that:

-Mining companies allocate 0.9% of mining revenue to Social and Labour Plans (SLP), with 70% of this allocation failing to reach communities affected by mining.

-In 73% of the communities affected by mining, no individual in the household was either currently employed or previously employed by the mine.

-91% of the affected communities were not even aware of what an SLP was.

-40% of women indicated that jobs were only accessible through sexual favours.

-From the R221 billion net profit accumulated by the South African mining industry from 2007 to 2018, R7.5 billion was earmarked for community development, but only R1.58 billion reached its intended beneficiaries during this period.

The rest of the presentation detailed the ten principles outlined in their Peoples Mining Charter which MACUA / WAMUA hoped to achieve in South Africa one day.

(View the presentation for further detail.)

Discussion

Ms Ntokozo Ngcwabe, Deputy Director-General (DDG): Mineral Policy and Promotion, DMRE, commented first on the issue that was raised regarding communities not having seen what an SLP looks like. The Department acknowledged this fact and had already done something about it – in the 2018 Mining Charter, the Department made it a requirement for mining companies to publish their approved SLPs. Regarding the Department developing a separate legislative framework for artisanal miners, all MACUA / WAMUA members had been consulted by the Department in 2020, during the Department’s drafting of the artisanal mining policy. The Department intends to consult the affected communities on the policy, but parallel to this it wants to gazette it in order to solicit inputs from all interested and affected parties.

Mr Tseliso Maqubela, DDG: Petroleum and Petroleum Products Regulation, DMRE, stated that the Department implements the law as it finds it – at the moment the Mineral and Petroleum Resources Development Act (MPRDA) places the state as the custodian of the mineral and petroleum resources of the country. In doing so, the Department ensures that there is sufficient public consultation, with processes for consultation present in both the law and the regulations. The efficacy of some of the consultations is perhaps an area the Department can evaluate. However, decision-making, in law, rests with the Minister.

In terms of the MPRDA, there is a requirement for the Regional Manager to publicise an application. In response, interested and affected parties have 30 days to submit their comments. The Regional Mining, Development and Environmental Committee (RMDEC) oversees any objections that arise from community members or any other affected persons. The MPRDA requires that a right holder must give notice to a landowner before any mining activity commences. There are also provisions for consultation in terms of the National Environmental Management Act (NEMA).

The Department had been approached by MACUA / WAMUA to conduct training on SLPs, and training was scheduled in response – one such session was scheduled for 19 March 2021.

The Minister stated that the Department had been engaging with MACUA / WAMUA and was always prepared to talk to them. The Minister had visited communities in nine major mining regions. In all of those meetings, MACUA was present, with WAMUA present in some of them. MACUA was present during the Mining Charter summit, where the community provision – which states that all new mining licenses function as a form of development – was discussed. Communities can assist in development by thinking of the optimal structure for SLPs. Previously, MACUA / WAMUA took to the newspapers to slander him (the Minister) but he said he was not bothered by it and called it an occupational hazard. The Department will continue to issue licenses to deserving parties where due process is followed.

The Chairperson contemplated whether some of the issues raised by MACUA / WAMUA might transcend the responsibilities of the Committee and require intervention from Parliament. He then invited Members to comment.

Mr K Mileham (DA) commented that the presentation highlighted a number of things that the Department can learn from and use to improve processes going forward. He requested clarity regarding whether, in relation to the section 59 provision of the Constitution – which speaks to public participation in the legislative process of Parliament – MACUA / WAMUA was alleging that during the development of the MPRDA and later the Mining Charter, there was no public participation at all, or whether they did not participate in it. Regarding the SLPs of mining companies, he asked MACUA / WAMUA to advise the Committee whether MACUA / WAMUA has any input whatsoever into these plans and whether there was any consultation taking place at a grassroots level between the mining companies and the local communities. If so, what is the nature of the consultation? He also requested clarity regarding what was meant by the demand for compensation for loss of livelihoods in terms of their Peoples Mining Charter – what livelihoods are being lost by the development of mines?

Ms P Madokwe (EFF) observed that it appeared as if there was serious disjuncture between the policies and processes which the DMRE implemented, versus what was actually happening on the ground. She recalled the story of a shooting which had occurred at the beginning of 2021 during which people in their 60s and 70s were shot at in response to an ongoing court process – a mining company had been asked to stop mining, but this did not happen, so the community followed different processes, including those involving the DMRE, but still there was no intervention and the community confronted the company and its security detail directly. This incident shows the need for much more extensive conversations between the DMRE, communities, mining unions and mining companies, and for timeframes for these conversations to be put in place. There is also a separation in terms of who gets to speak on mining activities, evident in the fact that alternative bodies such as the Alternative Mining Indaba were created by those who felt that they should have a voice on issues concerning mining but did not have access to platforms where they could raise their voices.

Ms V Malinga (ANC) asked what was needed from the Committee following demands by MACUA / WAMUA for the Committee to hold the DMRE accountable. She also requested updates regarding the incident highlighted by Ms Madokwe. Regarding the issue of women having to give sexual favours in order to be given jobs, she found it difficult as a parliamentarian to believe in the existence of this issue without any evidence in the form of cases. On the issue of SLPs, the DMRE should be more involved because this issue is a very touchy subject – one example being the communities in Northam feeling excluded from the SLP in that region. She agreed with the Minister that the community should advise the Department on how to better implement SLPs

Mr S Kula (ANC) commented that, if he understood correctly, MAKUA / WAMUA did not suggest that they had not been consulted on policy development in the mining sector when they spoke on section 59 – they wanted to emphasise the responsibilities of this Committee and of Parliament in light of this constitutional provision. He asked about the accuracy of the many statistics mentioned by MAKUA / WAMUA in their presentation and whether these statistics were verifiable. The statistic on the percentage of women who indicated that jobs were only available through sexual favours is very worrisome. Most of the time, young women are the ones most affected by this phenomenon. In such instances, MACUA / WAMUA must play a critical role in encouraging women to report these cases. On the issue of SLPs, he requested that the Department comment on the estimated R5.9 billion that should have been spent on the affected communities. The Mining Charter requires SLPs to be publicised, but is the money intended for these plans actually spent on them? Mr Kula said that, despite the Minister stating his indifference to the slander by MACUA / WAMUA, the Committee discourages these kinds of personal attacks on ministers or senior employees in government as it compromises interactions with these parties moving forward.

There was a minor dispute between Mr Meshack Mbangula, National Coordinator of MACUA, and the Chairperson over the time allocated to MACUA / WAMUA in comparison to Eskom, but this was quickly resolved.

Mr Mbangula commented on the issue of licenses that are being issued without correctly following due process or NEMA. In order to issue a license, the DMRE must ensure that the prospective mine follows the processes of the SLPs and that the affected communities are consulted with. The DMRE should also monitor the contents of the SLPs and whether they comply with legislative requirements.

MACUA / WAMUA calls their research ‘social audits’ – they travel to all provinces, whether affected by mining or not, and compile reports. These reports are at hand and can be distributed. During the visits to the provinces, MACUA / WAMUA examined SLPs and how these plans affected the community. It was discovered that communities were rarely given any consultation by the mines – the mines sometimes consulted traditional leaders but even these traditional leaders did not consult with the community. Traditional leaders would sign for the use of the land by the mines and people would be forcefully removed from their homes. The operation of mines would sometimes result in a community’s water source being contaminated as the heavy chemicals used by the mines would spill into the river or stream.

On the issue of sexual favours, MACUA / WAMUA had repeatedly requested that the DMRE monitor the implementation of SLPs and ensure cases of women needing to give sexual favours [in return for jobs] are reported, and monitor the unreported cases where women are too afraid to report because of the phenomenon not being taken seriously.

Mr Mbangula lamented the fact that the DMRE conducted a study on artisanal miners in Kenya and believed that this study should have been conducted in South Africa, given our country’s growing unemployment rate. He also lamented the manner in which public hearings are held – large, complex documents are handed out and MACUA / WAMUA as well as the public are required to formulate opinions within a small timeframe and often, these hearings are held in remote areas where there are very few inhabitants. MACUA / WAMUA also wanted to be present during the early stages of the drafting of the Mining Charter and not simply give their input after it had already been drafted.

Mr Lethoko commented that communities are stressed by the fact that the DMRE seems to be promoting large-scale mining instead of regulating it. SLPs are documents aimed at developing communities when a mine begins to operate in the area. Another document, an Environmental Management Plan (EMP), is also not being implemented or even distributed. Parallel to these documents, an Environmental Impact Assessment (EIA) must be conducted in an affected community, but this is also not done at times. MACUA / WAMUA deems it irrational that the DMRE leaves mines to be monitored by the mining companies themselves in terms of enforcing compliance with the various regulations mentioned. MACUA / WAMUA was also left in the dark regarding the process whereby an affected community was rehabilitated after the closing of a mine.

He commented that parliamentarians speak from the point of view of being in Parliament, without the experience of having actually lived in a mining affected area. MACUA / WAMUA cannot report every case of a women alleging that they are being asked for sexual favours, due to a lack of resources and given that the South African Police Service (SAPS) is struggling with backlog. Since 1994, the majority of mining areas have turned into ghost towns, with those that are still surviving struggling with issues such as sinkholes.

Ms Mokete Khoda, Limpopo Coordinator MACUA / WAMUA, stated that in many communities, the government may not have the capacity to undertake the due diligence required for a smooth transition in the ownership of the land and to ensure robust, continuous monitoring. There were other comments that she wanted to make but she was having troubles with her network.

The Minister extended an offer to MACUA / WAMUA for further consultation with the DMRE and for a longer opportunity to speak than was given to them in the present meeting. This was not a commitment that the Department would grant their every request. In response to the issue raised by MACUA / WAMUA regarding the development of the Mining Charter, he explained that the Charter had been developed internally.

He said that the Department facilitated the discussion between the mine and the community in Nonono, which is what re-established stability in the region. He also highlighted that engagement does not entail going to an operating mine and trying to halt operations.

The Department engages in continuous consultation with various sectors of society and there are often multiple meetings held per day. Public participation is an imperative, and consultation regarding SLPs does occur. The Department is subjected to oversight by the Committee to ensure that this remains the case.

The issue of SLPs is a pertinent one. One aspect of SLPs which is not often discussed is that of organised communities wanting to take all the money of the SLP for themselves.

The issue of women in the mining sector is long-standing. Previously, women were not allowed to work in the mines at all, but today there are an estimated 53 000 women working in the mines. This is a low percentage in comparison to the number of men, but the number of women is continuously growing. Regarding sexual favours – it is a crime. The Department can intervene to an extent, but the responsibility lies with the SAPS to punish those responsible.

Regarding the artisanal mining study, it is only possible to learn from those who are already experienced in the field and have made mistakes. He said that Zama Zama mining is not a mining activity, but a criminal one.

He concluded by advising MACUA / WAMUA to continue engaging with the Department, but also to recruit more members as they cannot be considered a representative body in their current state. The Department will still engage with them, but MACUA / WAMUA must appreciate that they are not the only entity bringing together mining affected communities.

The Chairperson told MACUA / WAMUA that in future engagements, it was not advisable to have altercations with those to whom you are trying to plead your case, as it leads to nothing. He stated that, when engaging with the Committee, they should remember that the Committee does not have interests of their own – it is tasked to listen and engage, and those engaging with the Committee should try to raise their issues in a manner that is clear and comprehensible.

He requested confirmation within two weeks as to the date of the meeting between the DMRE and MACUA / WAMUA, and that MACUA / WAMUA indicate which issues raised in their presentation should be considered by this Committee and which should be considered by Parliament, such as cases of sexual harassment.

He stated that a meeting with MACUA / WAMUA and the Committee would be scheduled, where the issues indicated by MACUA / WAMUA would be dealt with. The Committee also promised to try and include the Select Committee on Land Reform, Environment, Mineral Resources and Energy in this meeting.

Eskom briefing

Prof Malegapuru Makgoba, Board Chairman, Eskom provided a brief introduction on the Eskom delegation present in the meeting and how the briefing would take place.

Presentation: Clean Coal Technologies (CCT)

The background to the presentation was detailed by Mr André de Ruyter, Eskom: Group Chief Executive (GCE), where he highlighted some of the issues and implications of using coal-fired power stations, as well as Eskom’s plan for the future. He also stated the order of the presenters for the presentation – Ms Deidre Herbst, Eskom's environmental manager; Mr Naushaad Haripersad, Eskom’s acting senior manager of plant performance and optimisation; Dr Jovita Juodaityte, Chief Scientist at Eskom and then Ms Fulufhelo Makananise, Senior Engineer, Eskom.

The delegates mentioned above then took the Committee through the presentation. (View the presentation on the PMG web page for technical details)

Key issues and impacts

-Primary energy costs contribute almost 60% of Eskom’s operating expenses, which is predominantly related to coal costs.

-The Paris Agreement on climate change requires Eskom to reduce Greenhouse Gas (GHG) emissions by up to 42% by 2025.

-South Africa is a water-scarce country which requires Eskom and citizens to optimise water usage.

-Full compliance by Eskom with minimum emission standards will cost more than R300 billion.

Clean Coal Technologies (CCT) Research Portfolio

There are three areas where Clean Coal Technologies are being researched:

1-Control of Oxides of Sulphur and Nitrogen (Sox and NOx), Mercury (Hg) and Particulates (and Multi-pollutants)

2-Carbon Abatement

3-Plant Performance Optimisation

These technologies are tracked by adhering to an open-market assessment to conduct the technology evaluation process.

1-Control of Oxides of SOx and NOx, Mercury and Particulates:

• CFB FGD (Circulating Fluidised Bed Flue Gas Desulphurisation) Demonstration at Kendal Power Station

Technology benefits:

-Low water use

-Operational flexibility

-Multi-pollutant control capability

-Low CAPEX

-Range of lime quality

• Dual Flue Gas Conditioning Demonstration

Technology benefits:

-Low CAPEX

-Outage duration

-Roll-out period

-Enhanced ESP (electrostatic participators) performance

2-Carbon Abatement:

• Carbon Capture, Transportation, Utilisation and Storage

-The South African Centre for Carbon Capture and Storage’s (SACCCS) milestone of the Pilot Carbon Dioxide Storage Project (PCSP) involves the injection, storage and monitoring of 10 000-50 000 t CO₂ with the aims of demonstrating CO₂ handling, injection, storage and monitoring in South African geology.

the recent evaluation done by the International Energy Agency (IEA), transportation using pipeline costs between two and six US dollars per tonne for 250 kilometres, which is highly cost prohibitive.

-Further development in these areas particularly relating to long-range transport and additional storage sites and options would play a major role in the project development site selection.

• Fuel Substitution: IEA Bioenergy Task 32 and BAPEPSA (Biomass Action Plan for Electricity Generation in South Africa)

Technology benefits:

-It is a dispatchable, renewable option that does require and investment of backup power

-High-capacity factors

-Lower CAPEX compared to other carbon abatement technologies or even some renewable technologies

-Cheaper than newly built Biomass plants

• Fuel Substitution: Torrefied Biomass co-firing at Arnot

Technology benefits:

-Carbon abatement

-Diversification of the energy mix

-Sustainable electricity for all and poverty alleviation

-SOC (State Owned Company) collaboration

3-Plant Performance Optimisation:

• Low Fuel Ignitors: Plasma Ignition and Mini Oil Guns

Technology benefits:

-Cost savings

-Fast return on investment

-Flexibility

-Fuel flexibility

• Thermal Efficiency and Resource Utilisation

-Gx has reduced FO (fuel oil) consumption for ten consecutive months relative to F2020 (year to date reduction by 77,764 tons).

-New build stations are ~10% more thermally efficient than the oldest stations in the coal fleet, with thermal efficiency highest in winter due to dry coal and low ambient temperatures.

• HORIZON 2020 Projects,

Given South Africa’s agreements with the European Union (EU) Eskom was able to access the results of HORIZON 2020 projects MATChING and CapWa-Pro through the EU Framework Programme for Research and Innovation.

• Implementation of Dry Cooling Technology

Eskom moved from wet cooling to dry cooling technology on plants since the 1970’s at Grootvlei and plants constructed in the 1980’s including Koeberg once through sea cooled technology.

Underground Coal Gasification (UCG)

• Current status

-The commercial and financial viability of this technology has not been assessed – this needs to be completed before further funds can be spent on UCG.

-Eskom has not entered into many overall partnerships, and specifically of R&D (research and development) to commercial technologies – UCG is one of the first in the current era.

-Partnerships of R&D projects have additional complexity due to development risk allocation, and IP management in a shared partnership entity.

-Eskom and its Research, Testing & Development (RT&D) business unit need to benchmark processes, experience and learnings for strategic partnerships within a Special Purpose Vehicle/Joint Venture (SPV/JV), particularly with the development, ownership and management of IP (intellectual property) against both R&D and commercial needs.

-To date, there has been an investment of R1.4 billion over 18 years in the development of UCG. The option of leverage and the opportunity of alternatives in terms of an SPV/JV partnership and the full decommissioning are all being considered in parallel.

Emission Retrofit Programme

-Full compliance would cost up to R300 billion – this is not affordable and would result in a 7-10% increase in the electricity tariff.

-In 2014, Eskom developed a plan to have a phased approach.

-The Fabric Filter Plants and Electrostatic Participators would cost between R2-6 billion per power station.

-Low NOx burners would cost between R1-2 billion per power station.

-Flue Gas Desulphurisation would cost between R30-40 billion per power station.

-Many of the projects are progressing – the Camden Low NOx burners have been completed, with Kendal currently retrofitting ESPs on units five and six.

Summary – Technology Comparison: CCT Capability to Meet MES (minimum emission standards)

-The final slide of the presentation provides a qualitative technology comparison. It is important to note that the solutions and timelines offered by Clean Coal Technologies to meet the Minimum Emission Standard are predicated on the state of existing plants being improved to near design conditions, in conjunction with resources and processes that must be followed.

(see presentation for further detail.)

Discussion

Mr M Mahlaule (ANC) commented that the citizens of the USA have experienced four years of their country being run through Twitter. This made the world realise that Twitter can be an important tool with which messages can be communicated, whether policy related or not. He raised this point in response to Mr Haripersad stating during the presentation that Eskom was investigating the latest available technologies. He referred to a Twitter post made by Elon Musk where he offered to donate $100 million towards a prize for the best carbon capture technology. One response to the post stood out – a South African stating that the technology he sought already existed near Musk’s birthplace, Pretoria. Mr Mahlaule asked whether Eskom was aware of the above claim made on Twitter and whether they planned to investigate and verify the existence of this technology. He stated that the R300 billion was a huge amount of money for Eskom to procure but recognised that the current environmental situation was unacceptable. What was the possibility of securing investors to assist in procuring the R300 billion? Are any companies/entities willing to provide emission remediation as a service to Eskom, or are any companies/entities currently providing such a service to Eskom? In terms of the list of technologies that were presented, which would be the most efficient in solving South Africa’s water scarcity? Has Eskom considered available local modular technologies for desulphurisation that could be used by plants, and if not, why? Given that all desulphurisation solutions considered by Eskom have a high upfront CAPEX – Mr Mahlaule estimated this to be around $20 billion, which Eskom itself would have to fund – would Eskom consider OPEX-based desulphurisation technology if someone presented this technology to them? It was stated that the CFB is cost effective. If this is the case, how would it impact on the R300 billion mentioned earlier in the presentation? Has anyone willing and able to fund the R300 billion been identified? Given the exploratory nature of Eskom’s work on carbon abatement, does the R300 billion presented for emissions remediation at the opening of the presentation include carbon abatement, or does it focus on other toxic emissions? Mr Mahlaule said he had done some research during Eskom’s presentation and discovered that biomass pollutes more than coal. Why is Eskom considering biomass technologies when other G20 countries have already discounted these technologies?

Mr Mileham asked how Eskom planned to fund the mission control that it is required to implement given its current financial situation. He struggled to believe that, in order to accumulate the R300 billion, there would only be a 7% increase in electricity tariffs. How does an additional R300 billion capital expenditure equate to a 7% increase, and if it does not, what are the cost implications for consumers? Taking into account Eskom’s current financial situation, what is the likelihood of Emission Retrofit Projects actually occurring in the near future, especially given that, for example, Medupi still lacks a Flue Gas Desulphurisation unit despite this being a criterion of the original World Bank loan? On a broader and more general perspective, is clean coal a cost-effective solution against other generation technologies? On a number of slides, Eskom mentioned demo plants where different technologies were being tested. Are any of those plants operational, and if so, may they be shown to the Committee? Eskom mentioned that work had been done to retrofit Camden and Grootvlei power stations, with both of these stations due for almost immediate decommissioning – Grootvlei in 2021 and Camden in 2024. Why is Eskom investing in power plants that it is looking to decommission in the short term? Regarding the graph on slide 11, the 2020 monthly average fuel oil consumption was still much higher than the monthly average fuel oil consumption in the five years prior. How is that a positive and why is that number so much higher? Why did it jump so significantly?

Ms Madokwe said she inferred that the use of Clean Coal Technology was in response to the issue of the negative impact which coal-fired power stations have on the environment, as well as to the issue of climate change. This is a long-standing issue. Why is Eskom only looking at other technologies now? On the issue of water scarcity and Eskom being unable to execute certain initiatives as a result, why are people not encouraged to implement, as lifestyle changes, certain restrictions which were implemented during the water crisis and during instances of severe power shortages? Why does Eskom wait for moments of crisis to ask citizens to adjust their livelihoods? Regarding transformation, what proportion of the people that form part of the Eskom research programme are HDSA (Historically Disadvantaged South Africans), women, local, youth or suffering with a disability? Whenever initiatives are started, considering the history of South Africa and the fact that South Africa is still considered one of the most unequal societies, it would make sense to place these people – who were or are still disadvantaged – at the core of the initiatives. What initiatives are there to recruit the abovementioned people? Given that the energy crisis which South Africa currently faces, is it possible to wait 18 years on new technology that is still being researched? Which initiatives are in place that would ensure South Africa abides by international environmental requirements stating that GHG emissions must be reduced by 42% by 2025?

Responses by Eskom

Mr de Ruyter thanked Mr Mahlaule for the information on the carbon capture project at the University of Pretoria. He stated that Eskom was not aware of it and will investigate and evaluate the project.

Regarding the issue on whether Eskom could minimise the capital outlay by requesting that private investors build some of the emission mitigation plants for Eskom and charge them an OPEX fee – as well as whether this technology is available – Mr de Ruyter stated that, on a net present value (NPV) basis, Eskom spending the money upfront and then recovering that capital expenditure over time (either through a contribution from National Treasury or an increase in the tariff) is essentially the same as requesting a private investor to make an upfront investment and then recovering the capital investment as well as the operating costs over time. While it may be true that the private sector could be more efficient in operating these plants, a private investor would in all probability seek to be rewarded with a profit element on top of their capital investment. There would be a cash flow benefit in the short term, however. Eskom is open to exploring both options and will implement the option which is in the best interests of the South African electricity consumer, subject to regulatory input and direction from its shareholder.

Regarding the CFB, indications show that it will be a fully commercialised and proven concept, but according to Eskom’s assessment, it is unlikely to have a significant impact on the overall cost of mitigating emissions.

The cost of carbon abatement was not included in the estimated R300 billion – this is something that Eskom must consider as they implement their new technology.

In response to Mr Mahlaule’s comment on biomass polluting more than coal, Mr de Ruyter stated that the benefit which Eskom sees in the use of torrefied biomass relates to the fact that it effectively has a circular carbon capture that can be implemented if biomass is used – as the biomass grows through a process of photosynthesis, it traps CO₂ from the atmosphere and re-releases it back into the atmosphere. Provided that one can continue planting crops, the cycle can be sustained. However, this process is water-intensive and there are potential additional carbon emissions from the production of fertiliser and the use of agricultural machinery. The cost of cleaner air would be recovered through an increase in the tariff and/or an increase in the equity contributions that Eskom receives from National Treasury. If Eskom fully commits to full compliance with international requirements, the increase in the tariff would be 7-10%, implemented over a ten-year period. This enhances the business case for accelerating the retirement of Eskom’s oldest power stations which are, in some respects, the heaviest polluters as they have not been equipped with emission abatement technology, and Eskom would be unable to recover the cost associated with the investment in abatement technology during the remaining life of the power stations.

This is also a good opportunity for Eskom to consider opportunities to repurpose and repower those power stations using low or no carbon emission technologies such as installing photovoltaic panels on rehabilitated land, as part of their Just Energy Transition Programme.

Eskom must ensure that it does not cause socio economic disruption and destroy scarce jobs in the process of migrating to cleaner energy technologies, as there are many people who are heavily invested in coal mining, both financially, and from the fact that their salaries are earned from the Coal Value Chain in coal mining.

Eskom is in constant discussion with the World Bank on the implementation of FGD at Medupi – at this point, Eskom is still in compliance with the requirements of the loan agreement. Eskom is proceeding with this project and has issued an invitation to the market to provide further information on FGD technologies and how to abate the sulphur emissions at Medupi.

Eskom is also investigating coal beneficiation technology, which seeks to reduce the sulphur-bearing particles, and in so doing, reduce the ultimate amount of sulphur emitted through the stack.

Mr Phillip Dukashe, Group Executive: Generation, Eskom, responded to the question on why there was continued investment in Grootvlei and Camden. He stated that Eskom continued to run these power stations because it needed all the power it could get. Eskom is facing a great challenge in terms of the current electricity demands in South Africa. He explained that no new money is being invested to develop or improve these power stations – they are simply being run and maintained in a manner that satisfies legislative requirements.

He also responded to the question on increased fuel consumption shown on slide 11. This phenomenon was directly linked to poor performance within Eskom’s generation fleet – an increase in power trips meant that the stations had to be lit up continuously, resulting in an increased fuel usage. Unreliable stations required fuel support, and fuel support was also required at stations where coal got wet, as wet coal does not burn reliably.

Mr de Ruyter stated that the question asked by Ms Madokwe was pertinent and at the foundation of the transition to cleaner and greener technologies. South Africa has a very large coal endowment and there is significant investment as a country in the Coal Value Chain.

Eskom recognises that it has an international obligation in terms of the Paris Agreement to reduce its carbon footprint. Accordingly, South Africa and Eskom in particular must find a balance between capital investment, emissions, the availability of coal to feed power stations, the additional generation capacity required to feed South Africa’s growing economy, as well as the opportunity to access new technologies – including renewable energy and natural gas – as the coal-fired fleet reaches retirement age.

This balance must be managed very carefully – hence, government issued the 2019 iteration of the Integrated Resource Plan (IRP), which made explicit provision for the introduction of these new technologies while simultaneously preserving some space for coal.

He conceded that 18 years was a very long time to wait for new technologies to be developed but assured the Committee that steady progress was being made on these development projects. Because Eskom will remain a sizable consumer of coal going forward, it should maintain its efforts to minimise the environmental impact of coal consumption, with the time window for commercialisation of these new technologies in the medium term, and not the ideal short term.

Ms Sumaya Nassiep, General Manager: Research, testing and development, Eskom, responded to the question on transformation in the research and development space. An estimated 109 staff members (40% of the total stall complement) are technical females; of this 40%, 72% are black, Asian and White are 12% each, with 1% being Coloured. Between 30-35% of these technical females are in the Master’s and PhD category – Eskom encourages further study and skills development of all staff. A portion of Eskom’s annual R&D funding goes into their test programme, with another portion going into the Eskom Power Plant Engineering Institute – where a number of Black, Asian and Coloured staff members obtained their Master’s degree or PhD. Over the past four to five years, Eskom had had over 200 engineers and graduates in training. Unfortunate, the bulk of this 200 had to be released, but despite this, Eskom believes that it is having a positive impact on the energy sector R&D for South Africa. Ms Nassiep said the R&D unit was also embarking on a business model where internal technical support services have been considered, and the establishment of black youth-owned and black woman-owned sustainable technical enterprises is currently being considered. Eskom hopes that these enterprises would give some of their staff members the opportunity to become shareholders, while building a sustainable supplier development and localisation chain in the process.

The Chairperson stated that, as a Committee responsible for policy formulation which impacts Eskom directly, it must periodically examine the actions of Eskom. The present meeting was not only held for the purpose of holding Eskom to account, but also for the Committee to determine where they could assist and advise Eskom to ensure that Eskom’s operations are smooth and accelerated.

Mr Mileham said he understood the need to maintain the Camden and Grootvlei in order to provide additional electricity. Eskom had indicated that, in the last few years, investments were made in order to install emission control technology at these plants. Would it not have been a better option to invest that money into plants with a longer lifespan ahead of them, rather than plants scheduled for decommission in the very near future? Why did Eskom opt for the former option?

Mr Mahlaule indicated that the technology which he mentioned Eskom should investigate was not located at the University of Pretoria – as thought by Mr de Ruyter – rather, in the Nestlé plant in Hammanskraal. He drew Mr de Ruyter’s attention to the US Environmental Protection Agency stating that the use of biomass lead to deforestation. This was a point of mutual understanding between himself and Mr de Ruyter. He did not understand, however, why Mr de Ruyter and Eskom supported the use of biomass as a source of energy when developed countries in Europe have already discounted it – citing as evidence the criticism of the UK for the continued use its biomass power station, Drax. Mr Mahlaule asked whether, as a developing country, South Africa should not be paying attention to scientific results and responses from developed countries on the issue of biomass. “Should we not take these results seriously and investigate whether the use of biomass is actually beneficial before it is too late?”

He asked what the financial implications would be for Eskom as well as for the country as a whole if Eskom remained in breach of its debt obligations with regards to the emissions schedule?

Mr de Ruyter stated that Eskom must look at the opportunity to recover the cost of investment with regard to environmental abatement, taking into account the remaining life span of a power station. This a discipline that Eskom is increasingly focusing on in order to optimise its capital expenditure – net present values must be calculated for every investment. As a result of an optimised capital expenditure, Eskom was able to save between R3-5 billion in capital expenditure when installing a fabric filter plant at Tutuka, as the focus was shifted to operational parameters.

He again thanked Mr Mahlaule for the precise information on the carbon capture technology, which is to be investigated at the Nestlé plant.

Regarding biomass, it has a niche application and is not able to substantially mitigate Eskom’s carbon footprint. Where there is biomass available that can be torrefied, it would serve as a supplementary field and would never play a meaningful role.

On the issue of a probable default on the World Bank loan, he assured the Committee that the World Bank and Eskom were aligned as to the progress made by Eskom and emphasised that the risk of default was currently under control.

Mr Calib Cassim, Eskom Chief Financial Officer (CFO), explained that if a default were to occur, Eskom would need to repay the loan as it would become due – the total agreement with the World Bank being $3.75 billion.

Mr Jan Oberholzer, Eskom Chief Operating Officer (COO), stated that around five years before, the burners at Camden needed to be replaced. They were replaced with low NOx burners, with the last set replaced in 2020. This maintenance was an investment decision for the purpose of continuing operations at Camden. Similarly, in 2016, the fabric filter plant at Grootvlei needed to be replaced in order to continue operations. No new investments will be made in these old power stations – they will simply receive the necessary maintenance to remain operational until the defined decommission dates.

The Chairperson thanked the Eskom delegation for their presentation and productive interactions.

He hoped that the Committee and Eskom could deal with the issues raised in this meeting and agree on a path forward, noting that this would not be the last meeting with Eskom on these issues of international protocol and policy frameworks.

As the issue of budget proposals and annual performance plans approaches, the issues raised in the meeting should certainly be taken into account when addressing these proposals and compiling these reports.

He concluded on a humorous note, referring to a staff member whose tap in their yard was stolen, urging Members to ensure that all taps outside of their houses were protected.

The meeting was adjourned.