The need for electrification may outweigh the environmental factors, but there is a trade- off between economics and the social costs. Madeleine Wackernagel reports
South Africa pays a high price for its cheap electricity, according to a new report published by the Industrial Strategy Project, a Cosatu-linked think-tank.
Clive van Horen of the Energy and Development Research Centre at the University of Cape Town, who conducted the study, says South Africans are already paying the price in terms of the impact on the environment and the population’s health.
“We cannot afford to carry on ignoring these external costs,” says Van Horen. “Nor can we go around raising the price of electricity willy-nilly. There has to be a trade-off between economics and the social costs.”
Eskom is the fifth-largest electricity utility in the world, and power costs in this country are the second-lowest; only New Zealand is cheaper. On this basis, Van Horen believes the South African experience bears comparison with developed countries, rather than the less sophisticated industries of Mexico, Brazil or Malaysia, which are similar middle-income developing countries.
And by that standard, South African electricity is absurdly cheap. Prices in Germany and Japan are up to three times higher. But is this a reasonable comparison when most of the population has no electricity at all and electrification should be the top priority?
Dr Steve Lennon, research manager at Eskom, believes the external costs of not having electricity outweigh the environmental factors. Not that Eskom is ignoring the impact its emissions have on the atmosphere or people’s health.
Indeed, most of its power stations burn low- sulphur coal, complying with international standards of acceptable pollution levels. And Eskom’s second environmental performance report, released today (friday), will show an overall improvement in standards, says Lennon.
Environmental standards and concerns have changed dramatically in the past 20 years; the next generation of power sources will reflect these factors, says Lennon. Eskom is already looking at the options of hydro-power, clean coal technologies and natural gas sources off Mozambique and Namibia.
But for now, says Lennon, the priority is getting electricity to as many people as possible. The cost of retrofitting a power station with scrubbers to cut down on emissions would add 30% to the price; Lennon believes it would be more effective to use that money on electrification.
Bringing electricity to the townships and rural areas does not necessarily eliminate the pollution cost, says Van Horen. Coal and firewood are still the favoured energy source in many areas.
Van Horen believes Eskom cannot afford to clean up its power stations and continue with electrification at the same time.
As more people fall victim to the effects of emissions, the social cost to society as a whole outweighs the benefits. He calculates the health effects of air pollution at about 4% of average electricity tariffs, excluding the long-term costs of acidification on buildings, crops and forests. Reducing emissions would cut the health cost by about 70%.
But Lennon insists South African standards are not out of line with international experience and to compare us with first world countries is unrealistic. Australia, for instance, has not a single plant fitted with scrubbing equipment; retrofitting one power plant in Britain cost 500-million.
John Loewen, an analyst at Ivor Jones Roy, agrees: “Eskom cannot afford a clean-up exercise at this stage. Right now the money is better spent elsewhere. And raising the price of electricity to pay for it is also not viable; the poorest would be hit hardest.”