SA needs holistic view on energy

SALIEM FAKIER: COMMENT Aug 05 2009 06:00

At first impression, if somebody were to ask who is in charge of South Africa's energy policy the answer they'd get would probably be Eskom, or perhaps the department of energy.

This may be followed by other lesser-known state and quasi-state players such as the Central Energy Fund, the National Electricity Regulator of South Africa, PetroSA, the Pebble Bed Modular Reactor Company and so on.

One can add a whole raft of private players into the mix, such as independent power producers, mining and oil companies and many others.

They speak to both state-led and market-driven systems coexisting together, not always congenially or always seeing eye to eye. And not always going in the same direction.

The picture speaks of fragmentation and special interests driving a lopsided rather than a holistic view on energy security and the policy gaps potentially allowing key decisions about alternative energy options to fall through the cracks.

If supply is the only equation in the debate on energy thinking then South Africa's energy security, going into the future, will at best be wobbly, unsustainable and vulnerable.

Energy security is becoming central to the way in which both developed and emerging economies are beginning to understand their future.

Increasingly, state-to-state intervention in energy security is becoming the norm rather than the exception. Even in countries where markets once ruled there is a rethink.

The supply and demand sides have to be aligned. The market-based approach to energy should follow the lead of a public-led policy framework and we need to be more assertive of our national interest than we are at present, both within the domestic market and in our dealings with foreign countries. There is no room for policy complacency.

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What are the factors that should be taken into account when thinking about our energy security?

Electricity generation is not the only part of this equation but certainly fuel options for mobility, energy efficiency, a shift to less energy-intensive industries, greater reliance on clean domestic sources of energy and changes in consumer behaviour are essential elements of a holistic energy security policy.
Issues of climate change are beginning to drive clean energy policy options and innovation. This brings us to the debate about whether nuclear energy versus renewables are better clean-energy options, debates about biofuels versus electric cars and so on. We need to have these debates and perhaps we cannot have one energy option as a single answer.
We can't ignore resource scarcity and peak oil and gas scenarios. Energy resources are becoming scarce, either because the natural resource is being depleted because of demand or there is artificial scarcity as more and more available resources are concentrated in the hands of fewer and fewer private and state-owned companies.
About 70% of the world's oil is already controlled by state-owned companies.
Access is already a political football between Europe and Russia, with Europe feeling under siege because it is dependent on Russian sources of gas. Europe is working on alternative sources and pipeline routes but securing this access comes at great cost to the states and their citizens.
We should not be naive about geopolitical rivalry and how this affects the energy market and the sourcing of strategic resources around the globe, especially in Africa. South Africa's approach is mild, maybe even complacent and we are being quickly outsmarted by other emerging economies in our own backyard.
State-led initiatives do not necessarily entail the displacement of private partners but rather that the state should play a greater role in asserting the national objective and interest and get private players to follow the national initiative. The problem is that the private markets sometimes see energy issues simply as market opportunities and not as a national security issue. These interests can be in conflict.
A national energy-security paradigm should come from locating South Africa strategically as a keen player in the global clean-energy market. We should use the advantages of abundant sunlight to kick-start a solar industrial base or cluster. Our ambitions are too low.
China is already sending a signal to the world that it wants to be a dominant player in the renewable energy market. China has a highly protected renewable-energy market favouring domestic firms.
The state should lead the way in the transition to a clean-energy economy in the way it thinks about the new-build programme, designs its procurement policies and the influence it has over suppliers. It would, for instance, be churlish to ask citizens to save energy if the state did not lead by example.

State-owned development and investment banks can also facilitate greater uptake of certain types of renewables through soft-loan schemes to boost market potential and increase economies of scale.

The state should expand the scope of tax rebates so that autonomous participation is increased and more decentralised models of energy generation are promoted so we don’t rely only on a single utility.

It would be perilous to have only a market-driven energy security plan without the state to facilitate the linkages between different strands that impact on energy security.

These strands would have to include some national security and control over key natural resources, for instance, our coal mines and uranium reserves deserve consideration, a clearer view between energy security and foreign relations needs to be developed, there should be co-operation between private and public approaches to energy access and security and we should kick-start industry development around clean energy solutions using the domestic market as the foundation.

There is considerable work to be done but as we have new brooms sweeping the political corridors we should take the opportunity to take stock and reflect on the future of our energy security. Are we sure we have done enough?

Saliem Fakir is the head of the Living Planet Unit, WWF-South Africa. The views expressed are the personal opinion of the author and do not reflect the views of the WWF

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