Let us venture into a political no-go zone and say that, at some point in the not too distant future, there is a bitter pill that we will need to swallow — and we are getting just a foretaste with the current energy crisis. In a nutshell, our global growth-based economic model is fundamentally unsustainable.
This is not a new idea — it dates back to the early 1970s. At that time there was much debate around energy and sustainability, coupled with a search for alternatives. One seminal work published in 1972 was The Limits to Growth, commissioned by The Club of Rome.
It was a prophetic piece based on early computer modelling that linked population growth, energy consumption, natural resource usage, food production, industrial output and life expectancy. The authors, an eminent group of highly respected scientists from the Systems Analysis Lab at Massachusetts Institute of Technology, developed a number of future scenarios based on optimistic as well as pessimistic assumptions.
The work was a warning to governments and decision-makers to start changing course because the Earth’s resources could not indefinitely sustain the patterns of growth that are a consequence of our current economic paradigm. The report has been dismissed by mainstream economists because of its Malthusian undertone — which modern agriculture had “disproved”. Yet it is the underlying logic of the report that ought to give us much to contemplate in a sober and rational manner.
Understanding the consequences of a growth-based model holds the key to our understanding of the current energy crisis. How did we go from a situation of having a huge surplus of electricity to the current situation where the entire country faces regular blackouts and some of our key economic sectors are threatened with an unpredictable and rocky road ahead?
Mines have been forced to shut down as their electricity supplies cannot be guaranteed, while energy-hungry aluminium smelters continue to operate so we can have our beer dispensed in cans. Worldwide, aluminium smelters consume 2% of the world’s electricity.
There are many factors that contribute to the current crisis. We are familiar with the fact that Eskom, the state-owned electricity utility, has been warning of a power crunch for about 10 years now, of the fact that government wouldn’t invest in new power plants, of denial by ministers and other government officials, of haemorrhaging of skills from Eskom, of rain-soaked coal, of allegations of bad planning and incompetence.
But though all these factors may contribute to the problem, they don’t give us a picture of the systemic issues. They are all indicators of how complex the whole system is and consequently how difficult it is to predict how this will play itself out. Perhaps the scale of the electricity issue can best be explained by understanding exponential growth and its implications.
Exponential growth refers to a situation in which there is compound growth. For example, our current economic strategy is aimed at achieving 6% growth over a long period of time. This has been determined by looking at the rate at which we need to be creating employment, by our increase in population, by levels of poverty and the need to alleviate it and a range of other factors.
A constant 6% growth rate means we will be doubling the size of our economy in roughly 11 years. Yes, at this rate we will double our economy. What is it we will be doubling? We will double our GDP. This means we will double what we produce. In order to double what we produce we will need to double what goes into what we produce. This includes raw materials and, crucially, energy. On this growth path, in the next 11 years we are going to need to double the amount of energy we are now consuming.
Let’s go into this in a little more depth. Each doubling cycle (11 years, in our case, at 6% growth) is greater than the sum of all previous doubling cycles combined. Let us put this another way. In the next 11 years we will consume more than we have done in our entire history. So in order to double the size of our economy, at 6% growth in 11 years, we will require more resources than we have required during our entire history, including electricity.
Every time we double — that is, when we go from 1 to 2, from 2 to 4, from 4 to 8, from 8 to 16 and so forth — the last doubling cycle is greater than the sum of all the previous cycles. Thus, 16 is greater than 8+4+2+1 which is equal to 15. This is an irrefutable mathematical calculation. This is how very large quantities can be generated in relatively short periods of time from relatively low rates of growth. This is not a fantasy.
This might go some way to explaining why Eskom has been unable to keep up with electricity demand, why we keep experiencing power cuts on such a wide scale and why the scale of the cuts is likely to widen. It also gives us a clue to the scale of the issue we face.
So let’s get this right. If Eskom is going to meet demand, it is going to have to generate more electricity than it has in our entire history during the course of the next 11 years in order to maintain our current growth path. What is it going to take to achieve this and is this a path we want to go down? Where will the resources come from? Where is the coal, uranium, the skilled and unskilled labour going to come from? Who is going to be training the engineers and artisans required?
According to its 2007 annual report, Eskom’s timeframe for new capacity shows that it plans to double its capacity to 80 000MW by 2024, in other words in 16 years’ time. This assumes an annual growth rate of 3,64%. To do this Eskom is going to have to burn nearly as much coal as we have burned in our entire history. This is a frightening thought, given that per capita we are among the world’s worst polluters.
The current power failures provide us with unique opportunities. Firstly, they are a huge wake-up call. We are being offered a glimpse of the limits of our current models and an opportunity to change course to a more sustainable path. We are also seeing the consequences of these limits. Mines and factories are being forced to shut down during outages. The cost to the economy is huge. Costs to industry vary, with some estimates in the order of R1-billion a day. Large numbers of people have their livelihoods threatened and confidence in the country’s economy as an investment destination is being questioned.
The upside is that it provides Eskom and the government with the opportunity to take energy conservation and efficiency, as well as renewable energy sources, more seriously. We have for decades been very wasteful with energy and this must change — for reasons of depletion as well as carbon emissions and climate change mitigation.
The era of very cheap electricity in South Africa is now over. Consumers will face price hikes of between 14% and 20% a year for at least the next few years. This will encourage necessary conservation and efficiency measures, but will be especially hard on poorer consumers. Thus the government will come under pressure to increase its expenditure on social support programmes and grants.
What has happened, has happened, and cannot be changed. We are faced with the choice of which route to follow going forward. The questions we need to ask are: Will our solutions make us more or less dependent on fossil fuels? Will they take us closer to sustainability or further from it? Are we seeking long-term solutions or quick fixes? What price will we pay in the future if we make the wrong choices now?
Our current situation
Eskom provides 95% of the country’s electricity. Of this, about 90% is generated in coal-fired power stations and 6% by two pressurised water reactors at the Koeberg nuclear power station near Cape Town. There is a small contribution from hydroelectricity and a negligible contribution from solar and wind power.
Centralising electrical power in the hands of one utility makes us very vulnerable to its weaknesses. This is a classic case of poor national risk management.
Many people have started to make their own arrangements and are buying generators. The problem is that there are no national guidelines. Installing an emergency generator which uses diesel or petrol only creates further dependence on an equally vulnerable fossil fuel. Decentralising the production of power enables many people to find solutions to their own energy needs.
Do we build more power stations fired by “dirty”, finite resources (coal) or do we begin to use the clean solar or wind energy supply?
Coal-fired power stations have high capital costs and coal is a finite resource and could reach its global production peak by 2025.
Solar and wind power stations also have high capital costs but, once complete, their energy feedstock is free. Eskom is planning the construction of a 100MW solar power station. This represents 0,3% of our current usage.
Exponential growth is sure to bring with it exponential resource depletion. We have to understand that long-term sustainability and growth are mutually exclusive.
Simon Ratcliffe is an energy and sustainability consultant and chairperson of the Association for the Study of Peak Oil South Africa (Aspo South Africa). Jeremy Wakeford is an economist specialising in energy and sustainable development and research director of Aspo South Africa