Energy_policies_for_sustainable_developm.pdf - Energy...

Unformatted text preview: Energy policies for sustainable development in South Africa’s residential and electricity sectors Implications for mitigating climate change by HARALD WINKLER Thesis presented for the Degree of DOCTOR OF PHILOSOPHY in the Energy Research Centre UNIVERSITY OF CAPE TOWN June 2006 i TABLE OF CONTENTS ABSTRACT ...............................................................................................................................................VI ACKNOWLEDGEMENTS ......................................................................................................................... VIII ABBREVIATIONS, ACRONYMS AND UNITS ..................................................................................................X PART I: INTRODUCTION TO ENERGY, SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE ....................................................................................................................................................1 1. INTRODUCTION .............................................................................................................................1 1.1 1.2 1.3 1.4 2. ENERGY, SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE IN SOUTH AFRICA......................1 RESEARCH QUESTION...................................................................................................................3 METHODOLOGY ...........................................................................................................................3 OUTLINE OF THE THESIS...............................................................................................................8 SUSTAINABLE DEVELOPMENT, ENERGY AND CLIMATE CHANGE ..............................9 2.1 2.2 2.3 2.4 WORKING DEFINITION OF SUSTAINABLE DEVELOPMENT ..............................................................9 ENERGY FOR SUSTAINABLE DEVELOPMENT IN SOUTH AFRICA ..................................................12 SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE ...............................................................13 MAKING ENERGY DEVELOPMENT PATHS MORE SUSTAINABLE AS AN APPROACH TO CLIMATE CHANGE MITIGATION ..............................................................................................................................18 2.5 CONCLUSION .............................................................................................................................21 PART II: ISSUES AND CONTEXT.......................................................................................................22 3. DEVELOPMENT OBJECTIVES..................................................................................................22 3.1 3.2 3.3 3.4 3.5 3.6 3.7 4. THE BROADER CONTEXT: SOUTH AFRICA’S DEVELOPMENT OBJECTIVES ...................................22 THE POLICY ENVIRONMENT IN THE ENERGY SECTOR..................................................................25 ROLE OF ELECTRICITY IN DEVELOPMENT ...................................................................................30 ECONOMIC AND INSTITUTIONAL ASPECTS ..................................................................................40 SOCIAL DIMENSIONS AND THE RESIDENTIAL SECTOR .................................................................46 ENVIRONMENTAL IMPACTS ........................................................................................................50 CONCLUSIONS: COMPARING AND ASSESSING .............................................................................55 POLICY OPTIONS IN THE ELECTRICITY AND RESIDENTIAL SECTOR ......................58 4.1 4.2 4.3 4.4 4.5 4.6 FURTHER EXTENDING AFFORDABLE ACCESS TO ELECTRICITY....................................................59 ENERGY GOVERNANCE – TO PRIVATISE OR NOT ? ......................................................................64 MANAGING ENERGY-RELATED ENVIRONMENTAL IMPACTS ........................................................66 ECONOMIC DEVELOPMENT AND INSTRUMENTS ..........................................................................70 SECURING ELECTRICITY SUPPLY THROUGH DIVERSITY ..............................................................80 CONCLUSION .............................................................................................................................90 PART III: MODELING ENERGY POLICIES.....................................................................................91 5. TOOLS FOR MODELING ENERGY POLICIES.......................................................................91 5.1 5.2 5.3 5.4 5.5 6. PURPOSE OF MODELING IN THIS THESIS ......................................................................................91 DEVELOPING POLICY CASES FOR ENERGY FUTURES ...................................................................91 MODELING TOOLS......................................................................................................................92 CRITICAL ANALYSIS OF MODELING TOOLS FOR ENERGY POLICIES ..............................................94 CONCLUSION .............................................................................................................................97 MODELING ENERGY POLICIES...............................................................................................98 6.1 6.2 6.3 6.4 6.5 6.6 6.7 FOCUS OF POLICY MODELING .....................................................................................................99 DRIVERS OF FUTURE TRENDS AND KEY ASSUMPTIONS ............................................................. 103 THE BASE CASE ........................................................................................................................ 112 OVERVIEW OF POLICY CASES ................................................................................................... 120 RESIDENTIAL ENERGY POLICIES .............................................................................................. 121 ELECTRICITY SUPPLY OPTIONS................................................................................................. 132 CONCLUSION ........................................................................................................................... 142 ii 7. DISCUSSION AND INTERPRETATION OF RESULTS ........................................................ 143 7.1 7.2 7.3 RESIDENTIAL ENERGY POLICIES ............................................................................................... 143 ELECTRICITY SUPPLY OPTIONS................................................................................................. 156 CONCLUSION ........................................................................................................................... 165 PART IV: SUSTAINABLE DEVELOPMENT, ENERGY AND CLIMATE CHANGE POLICIES .................................................................................................................................................................. 166 8. EVALUATING ENERGY POLICIES AGAINST INDICATORS OF SUSTAINABLE DEVELOPMENT................................................................................................................................... 166 8.1 8.2 8.3 8.4 8.5 INDICATORS OF SUSTAINABLE DEVELOPMENT ......................................................................... 166 ECONOMIC ............................................................................................................................... 169 ENVIRONMENTAL .................................................................................................................... 177 SOCIAL .................................................................................................................................... 184 COMPARISONS AND CONCLUSIONS .......................................................................................... 191 PART IV: ENERGY FOR SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE........ 200 9. POLICY ANALYSIS..................................................................................................................... 200 9.1 9.2 ENERGY POLICIES TO MAKE DEVELOPMENT MORE SUSTAINABLE ............................................ 200 IMPLICATIONS OF SUSTAINABLE ENERGY DEVELOPMENT PATHS FOR CLIMATE CHANGE MITIGATION POLICY .............................................................................................................................. 218 9.3 CONCLUSION ........................................................................................................................... 226 10. CONCLUSION.......................................................................................................................... 228 APPENDICES.......................................................................................................................................... 233 REFERENCES ......................................................................................................................................... 236 iii List of Tables TABLE 3.1: SOUTH AFRICAN ENERGY POLICY PRIORITIES AND PROGRESS ...................................................29 TABLE 3.2: LICENSED CAPACITY, MAXIMUM POWER, PEAK DEMAND AND CALCULATED ‘EXCESS CAPACITY’ FOR ESKOM, SELECTED YEARS ............................................................................................................37 TABLE 3.3: NET ELECTRICITY SENT OUT (MWH) BY FUEL ..........................................................................39 TABLE 3.4: ELECTRICITY INTENSIVE SECTORS OF THE SA ECONOMY ..........................................................44 TABLE 3.5: ESTIMATED ELECTRIFICATION LEVELS OF RURAL AND URBAN HOUSEHOLD BY INCOME QUINTILE ...........................................................................................................................................................48 TABLE 3.6: EMISSION FROM ESKOM POWER STATIONS, 2001 ......................................................................52 TABLE 3.7: ENERGY SECTOR CARBON DIOXIDE EMISSIONS INTENSITY AND PER CAPITA IN 2002 AND CUMULATIVE EMISSIONS 1950-2000...................................................................................................52 TABLE 3.8: ENERGY AND ELECTRICITY CONSUMPTION, 2000......................................................................55 TABLE 3.9: ELECTRIFICATION RATES IN 2000 .............................................................................................56 TABLE 3.10: NATIONAL ENERGY INTENSITIES BETWEEN 1993 AND 2000....................................................56 TABLE 4.1: MEAN HOUSEHOLD EXPENDITURE ON ELECTRICITY AND OTHER FUELS AND ENERGY AS A PERCENTAGE OF TOTAL HOUSEHOLD EXPENDITURE............................................................................61 TABLE 4.2: EXTERNALITIES ASSOCIATED WITH ELECTRICITY SUPPLY BY CLASS .........................................66 TABLE 4.3: SUMMARY OF EXTERNAL COSTS OF ESKOM COST-FIRED ELECTRICITY GENERATION PER UNIT (1999 RANDS) ....................................................................................................................................69 TABLE 4.4: POTENTIAL FUTURE SAVINGS FROM ENERGY EFFICIENCY AND DEMAND SIDE MANAGEMENT (CUMULATIVE CAPACITY EQUIVALENT IN MW) .................................................................................75 TABLE 4.5: INTERNATIONAL COST DATA FOR RENEWABLE ENERGY TECHNOLOGIES ...................................82 TABLE 4.6: ESTIMATES OF THEORETICAL POTENTIAL FOR RENEWABLE ENERGY SOURCES IN SOUTH AFRICA ...........................................................................................................................................................82 TABLE 4.7: TOOLS THAT GOVERNMENTS CAN USE TO PROMOTE RENEWABLE ELECTRICITY ........................83 TABLE 4.8: OPTIONS FOR NEW ELECTRICITY SUPPLY...................................................................................87 TABLE 6.1: ACTION IMPACT MATRIX SCOPING THE IMPACT OF POLICY INTERVENTIONS ON DEVELOPMENT GOALS .............................................................................................................................................. 100 TABLE 6.2: SA POPULATION PROJECTIONS FROM VARIOUS SOURCES, MILLIONS ....................................... 106 TABLE 6.3: NUMBER AND SHARE OF HOUSEHOLDS, ESTIMATED FOR 2001 AND PROJECTED FOR 2025 ...... 108 TABLE 6.4: FUEL PRICES BY FUEL AND FOR SELECTED YEARS ................................................................... 110 TABLE 6.5: COST DEFLATORS BASED ON GROSS VALUE ADDED ............................................................... 111 TABLE 6.6: TOTAL PRIMARY ENERGY SUPPLY BY FUEL GROUP IN BASE CASE............................................ 113 TABLE 6.7: ENERGY DEMAND BY HOUSEHOLD TYPE AND END USE FOR SELECTED YEARS......................... 119 TABLE 6.8: SUMMARY OF POLICY CASES IN RESIDENTIAL AND ELECTRICITY SUPPLY SECTORS ................. 120 TABLE 6.9: INCOME AND EXPENDITURE IN URBAN AND NON-URBAN AREAS IN 2000 MARKET VALUES, GROUPED BY 1995 QUINTILE............................................................................................................. 122 TABLE 6.10: NUMBERS AND SHARES OF RURAL AND URBAN HOUSEHOLDS, ELECTRIFIED AND NOT .......... 123 TABLE 6.11: SIX HOUSEHOLD TYPES, WITH TOTAL NUMBERS IN 2000, SHARES AND ASSUMPTIONS .......... 123 TABLE 6.12: ENERGY DEMAND BY HOUSEHOLD TYPE FOR EACH END USE ................................................. 126 TABLE 6.13: KEY CHARACTERISTICS OF ENERGY TECHNOLOGIES IN THE RESIDENTIAL SECTOR................ 127 TABLE 6.14: CHARACTERISTICS OF ELECTRICITY SUPPLY TECHNOLOGIES IN POLICY CASES ..................... 133 TABLE 6.15: TECHNICALLY FEASIBLE POTENTIAL FOR RENEWABLE ENERGY BY TECHNOLOGY ................ 135 TABLE 6.16: CURRENT CAPACITY, INCREASES AND PROGRESS RATIOS FOR RE TECHNOLOGIES ................ 137 TABLE 7.1: OVERVIEW OF RESULTS FOR RESIDENTIAL ENERGY POLICIES .................................................. 143 TABLE 7.2: REDUCTION IN MONTHLY EXPENDITURE ON ELECTRICITY WITH EFFICIENT HOUSES BY HOUSEHOLD TYPE ............................................................................................................................. 145 TABLE 7.3: ENERGY SAVED AND COSTS FOR CLEANER WATER HEATING ................................................... 149 TABLE 7.4: FUEL CONSUMPTION IN THE RESIDENTIAL SECTOR ACROSS POLICY CASES, 2014 AND 2025.... 154 TABLE 7.5: ENERGY CONSUMPTION BY END USE FOR HOUSEHOLD TYPES, 2025........................................ 155 TABLE 7.6: SHARE OF HOUSEHOLDS WITH ACCESS TO ELECTRICITY IN 2025 FOR ALL POLICY CASES ........ 158 TABLE 8.1: INDICATORS OF SUSTAINABLE DEVELOPMENT FOR ENERGY POLICIES ..................................... 168 TABLE 8.2: TOTAL ENERGY SYSTEM COSTS ACROSS RESIDENTIAL POLICIES.............................................. 170 TABLE 8.3: TOTAL COST OF ENERGY SYSTEM FOR ELECTRICITY SUPPLY OPTIONS ..................................... 172 TABLE 8.4: GWH ELECTRICITY GENERATED BY TECHNOLOGY IN ITS POLICY CASE ................................... 173 TABLE 8.5: COSTS OF ELECTRICITY SUPPLY TECHNOLOGIES PER CAPACITY AND UNIT OF GENERATION .... 173 TABLE 8.6: SHADOW PRICE OF ELECTRICITY FOR POLICY CASES ............................................................... 175 TABLE 8.7: DIVERSITY OF FUEL MIX FROM DOMESTIC SOURCES FOR ELECTRICITY SUPPLY OPTIONS BY 2025 ......................................................................................................................................................... 176 iv TABLE 8.8: LOCAL AIR POLLUTANTS IN RESIDENTIAL POLICY CASES, 2025............................................... 177 TABLE 8.9: GHG EMISSIONS IN RESIDENTIAL POLICIES CASES .................................................................. 178 TABLE 8.10: LOCAL AIR POLLUTANTS IN ELECTRICITY POLICY CASES, 2025............................................. 179 TABLE 8.11: GHG EMISSIONS FOR ELECTRICITY SUPPLY OPTIONS ............................................................ 181 TABLE 8.12: ESTIMATE OF ABATEMENT COST IN POLICY CASES ................................................................ 183 TABLE 8.13: RESIDENTIAL FUEL CONSUMPTION BY POLICY CASE ............................................................. 185 TABLE 8.14: SHADOW PRICES OF ELECTRICITY AND OTHER FUELS ACROSS POLICY CASES ........................ 186 TABLE 8.15: INITIAL INVESTMENT IN TECHNOLOGY IN ITS POLICY CASE ................................................... 187 TABLE 8.16: ELECTRICITY CONSUMPTION BY HOUSEHOLD TYPE............................................................... 188 TABLE 8.17: MONTHLY EXPENDITURE ON ELECTRICITY BY HOUSEHOLD TYPE AND POLICY CASE............. 189 TABLE 8.18: AVERAGE ANNUAL EXPENDITURE PER HOUSEHOLD BY QUINTILE GROUP, PLACE OF RESIDENCE AND TYPE OF DWELLING ................................................................................................................... 190 TABLE 8.19: DERIVED AVERAGE ANNUAL AND MONTHLY EXPENDITURE BY HOUSEHOLD TYPE................ 190 TABLE 8.20: ELECTRICITY BURDEN: SHARE OF MONTHLY HOUSEHOLD EXPENDITURE SPENT ON ELECTRICITY..................................................................................................................................... 191 TABLE 8.21: EVALUATION OF ALL POLICIES ACROSS THREE DIMENSIONS OF SUSTAINABLE DEVELOPMENT ......................................................................................................................................................... 193 TABLE 9.1: SUBSIDY REQUIRED FOR MAKING EFFICIENT HOUSING AS AFFORDABLE FOR POORER AS FOR RICHER HOUSEHOLDS ....................................................................................................................... 204 TABLE 9.2: COST OF SAVED ENERGY FOR SWH AND GEYSER BLANKETS .................................................. 205 TABLE 9.3: ORDER OF MAGNITUDE OF CARBON REVENUES FOR DIFFERENT CARBON PRICES .................... 221 TABLE 10.1: MONTHLY EXPENDITURE ON ELECTRICITY BY HOUSEHOLD TYPE AND POLICY CASE, 2001... 235 List of Figures FIGURE 1.1: METHODOLOGY FOR THE THESIS ...............................................................................................4 FIGURE 2.1: ELEMENTS OF SUSTAINABLE DEVELOPMENT............................................................................10 FIGURE 2.2: COMPARISON OF SRES REFERENCE EMISSIONS SCENARIOS (WITHOUT CLIMATE POLICY) AND ‘POST-SRES’ CLIMATE CHANGE MITIGATION SCENARIOS ...................................................................17 FIGURE 2.3: EMISSIONS PATHS RELATIVE TO DEVELOPMENT LEVEL AND POSSIBILITY OF ‘TUNNELLING’....20 FIGURE 3.1: ENERGY DEMAND, 1992-2000 .................................................................................................32 FIGURE 3.2: SECTORAL CONTRIBUTION TO ECONOMY, 1967-2003 ..............................................................32 FIGURE 3.3: SHARE OF TOTAL PRIMARY ENERGY SUPPLY, 1999 ..................................................................33 FIGURE 3.4: TOTAL SALEABLE PRODUCTION, LOCAL SALES AND EXPORTS OF SOUTH AFRICAN COAL, 1992 TO 2001 ..............................................................................................................................................34 FIGURE 3.5: SHARE OF FINAL ENERGY CONSUMPTION, 2000 .......................................................................35 FIGURE 3.6: PERCENTAGE CHANGES IN ESKOM ELECTRICITY SALES AND CHANGE IN REAL GDP AT MARKET PRICES ................................................................................................................................................35 FIGURE 3.7: ESKOM LICENSED CAPACITY AND PEAK DEMAND (MW)..........................................................37 FIGURE 3.8: MAP OF SA POWER STATIONS BY FUEL AND OWNERSHIP .........................................................38 FIGURE 3.9: ENERGY FLOW THROUGH THE ELECTRICITY SUPPLY INDUSTRY IN SOUTH AFRICA ....
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