At the Shell Energy Dialogue held on November 3, chaired by Lerato Mbele, Shell’s Rupert Taylor, Advosol’s Anton van Wyk, UCT’s Professor Kevin Bennett and Brian Statham of Energy Access Africa debated whether natural gas is an option for South Africa.
Brian Statham: We have to find the correct mix of a variety of energy options. You can’t walk away from coal, so coal will be part of it unless we don’t have it in abundance … and we have to make a strategic decision as to what extent we will be prepared to be dependent upon imported energy reserves. Then, we have to put wind, solar, hydropower — which we have very little of but there is a lot of in Central Africa — and of course nuclear all in the mix. It’s not the solution, but it’s certainly an option that we should look at and see what part it can play.
Kevin Bennett: It is a high greenhouse gas-emitting energy source. If you want to look at low carbon economies, you have to look at hydro, you have to look at nuclear, you have to look at renewables, not gas. Suddenly, people are saying: “Well, there might be some gas in the Karoo”, but it is going to be expensive to exploit and, even if we do, we are not going to cut out carbon emissions. I think we also need to get something out right up front. Carbon emission is not the biggest problem in this country. We have huge unemployment, we have huge issues of social and economic upliftment. The total amount of carbon that the whole of Africa puts out is 6%. If America and China and the other big users of carbon are to make a difference, rather than force us to use expensive options, they should concentrate on things like health, education and social upliftment.
Anton van Wyk: We have to look at it from an economic point of view. There are various options to generate energy, some more cost-effective than others. If you look at coal, it’s cheap, but there are a lot of CO2 emissions. On the other hand, solar is expensive. The price is about R2 a kilowatt hour, whereas coal is, let’s call it, 50c a kilowatt hour. Our economy cannot afford running directly to solar or any of those technologies without negatively influencing our gross domestic product. We need to grow our GDP and reduce our emissions. To grow GDP we need to look at a mix of energy sources and gas is an important component of that. Coal too.
Rupert Taylor: I agree with Brian.I think it is a question of fitting in with the other options. I see it as one of a number, each with different attributes. Gas is good in terms of air quality, in terms of sulphur pollution. Of course, compared with coal, it’s good in terms of the carbon footprint — half to a third. It would be wonderful if there was enough gas in the country to make a significant contribution to the growth that is projected for the country and gas has one other differentiating factor: it can be applied to uses other than large-scale power generation and it can be moved by alternate means to remote communities to provide lower emission power there.
Lerato Mbele: There is the suggestion that natural gas would emit about 50% to 70% less carbon dioxide than other sources. So, if you were to combine natural gas production with carbon capture and storage, it would be a viable, cost-effective and environmentally friendly solution for South Africa.
BS: Well, Lerato, it’s a whole vexed question of carbon capture and storage. If we have viable carbon capture and storage — and I believe we will because if we look at India, if we look at China, they have massive coal reserves, they are desperate to be able to use them and we will find a way of using them in a more benign way than we do today. If that becomes viable, then the same applies to us, our coal reserves become part of the mix of carbon capture and storage and they take on a whole new dimension as well, pretty much aligned with what Kevin was saying. We have to be careful not to focus all of our attention on doing the best for energy and neglecting the social transformation imperatives that face our country, because if we don’t get those things in balance, we may have clean energy, but we are going to have a disaster on our hands.
LM: Alright, the South African government has committed itself to a poverty-alleviation agenda, but it has also committed itself to targets for renewables and cleaner energy within the next 20 years. Should we be investing in solar energy technology, wind or go the natural gas route — or nuclear?
AW: My view is that those alternatives, solar, wind and so on, they are expensive. In other words, they are going to reduce our GDP. Reduction of GDP means a reduction in employment. Just going for options like solar and not having something in between is going to be devastating for the country.
RT: Carbon capture and storage, indeed, has very low carbon emissions. I think you referred to 90%. You need to investigate what options there are for carbon capture and storage and the costs associated. And, indeed, can it be added to gas or to coal to reduce CO2 emissions?
KB: In regard to carbon capture and storage, we have all the carbon captured already. Sasol produces more carbon than most small countries. Fifteen million tonnes is pumped into the atmosphere every year from Secunda. We don’t have to sequester it, we don’t have to worry about power stations trying to separate the carbon from the gases, which is really expensive and no one has done it. Even the Norwegians, who are spending a fortune on developing a — or nuclear?
AW: My view is that those alternatives, solar, wind and so on, they are expensive. In other words, they are going to reduce our GDP. Reduction of GDP means a reduction in employment. Just going for options like solar and not having something in between is going to be devastating for the country.
RT: Carbon capture and storage, indeed, has very low carbon emissions. I think you referred to 90%. You need to investigate what options there are for carbon capture and storage and the costs associated. And, indeed, can it be added to gas or to coal to reduce CO2 emissions?
KB: In regard to carbon capture and storage, we have all the carbon captured already. Sasol produces more carbon than most small countries. Fifteen million tonnes is pumped into the atmosphere every year from Secunda. We don’t have to sequester it, we don’t have to worry about power stations trying to separate the carbon from the gases, which is really expensive and no one has done it. Even the Norwegians, who are spending a fortune on developing a carbon-capture technique. It is actually working only in areas in which they are extracting gas or oil pumping back CO2. Carbon capture and storage is fine as long as you leave it to Sasol, but don’t try to push it on to power generation, it’s a waste of time in this country at this stage.
LM : Waste of time and money?
BS: I don’t believe it’s a waste of time and money, that’s something else, but I want to pick up another point in terms of the role of renewables in this country. We make the big mistake of thinking that everybody has to be connected either to the electricity grid or to a pipeline or something and that is a real challenge for us because our population is reasonably dispersed and its density is low. It’s not only true for us, it’s true for our whole continent, and we really need to look at finding an application for off-grid energy supplies. That’s where we can start looking at small silos, small PV, small wind and I mean small. Stop looking at these mega things and look at systems that will suit village-size applications.
LM: If somebody was to go to the government right now and say: “This is the best option for you”, what kind of investment would it need to start thinking about?
RT: The natural gas infrastructure is relatively mature here, with one or two exceptions. Though if you foresee new natural gas infrastructure from the Orange Basin or the Karoo or CBM, a significant amount of development will be encouraged and infrastructure such as pipelines or other means of transporting power or gas, and there needs to be a framework that encourages that , so that is a key step.
KB: I think if we are suddenly going to find a whole bunch of natural gas, the obvious thing is either power generation or industrial use. We have lost the infrastructure. We aren’t like Europe, in which everybody has gas piped into their homes, and to expect the cost to be absorbed by creating that infrastructure is unrealistic. What is quite interesting is that the natural gas would be very interesting to independent power producers because qualified power stations are messy. You have to dig the coal out, you have to air it, you have to burn it, you have big ash things. With gas, you can come in there, pipe it into your power station and produce electricity. If we are going to develop gas and there is something in the Karoo, or import it, I think it’s going to be industry or power generation that is going to jump on the band wagon.
LM: In terms of natural gas contributing to the start of a new industry in South Africa and a new framework for jobs, there is a very compelling argument here. Should industry take the lead or should government set the framework and also make the primary investment?
RT: Well, industry needs either the gas or the power to be moved to it, so there will be an infrastructure requirement because South Africa is a large country. In general, where the gas is, where it may be, is far from its industrial uses. There may be the odd exception, but it will need encouragement and it can be via pipelines, it can be moved via local power generation, it may even be moved in smaller quantities by liquefying gas and putting it on a truck or a train to rural communities where it may be used to generate local power or other uses. So it’s a versatile fuel.
AW: As we know South African is not a gas-rich country. We’ve got Namibia, with potential gas resources, we’ve got some gas resources in the sea, we have Angola, we have possibly some colbate methane in Zimbabwe and obviously Mozambique as well. We need to look at the South African picture and there are power lines and grids in place already where South Africa is supplying energy to those countries. Maybe we can use a lot of the same infrastructure and just reverse into South Africa.
LM: South Africa supplies about 45% of the electricity requirement of its neighbouring states. If we were to start introducing natural gas into the equation, how would that improve efficiency and energy security?
AW: The interesting thing is that we are exporting electricity to countries that have abandoned gas supplies. The infrastructure is already there, so there would be high efficiencies in using it and those high efficiencies would relate to an improved economy in South Africa. I think the answer is relatively simple in terms of efficiency.
KB: The biggest problem, I think, independent power producers face is that we are in a country in which there are people who are still very low down on the economic triangle and, therefore, to expect somebody to come into this country, build a power station and make a decent profit, at the same time that the government is saying we have got to help people, it’s a very difficult thing. That, I think, is what the IPP problem has always been so far: on the one hand we want profit, on the other we want to make sure we don’t exploit our population.
LM: Looking at the government proposal through the integrated resource plan, what’s your evaluation of whether or not it is being bold enough or whether it could start thinking outside the box a bit more?
BS: I think government is being overly optimistic in terms of the introduction of renewables into the mix because when you start putting renewables into the energy mix, you have also got to look at how you are going to manage the grid. There are a whole lot of other issues that flow from the decision to put a high percentage of wind or solar into the mix because they are not normally under dispatch control. In the case of natural gas, you can actually determine when you want it on and when you want it off and you can regulate it into the current system. We are not looking at the knock-on effect through the entire energy chain of the very, very optimistic renewable targets.