Opinion Piece

Richard Worthington: Supply-side to trump energy service needs at upcoming Energy Indaba

Despite declining prospects and increasing costs of finance, there is a denial that strategic choices must be made between energy supply opportunities and complete disregard that such choices should be informed by energy service needs.

The Presidency has announced and invited media to the Energy Indaba, first mentioned by Minister David Mahlobo on 21 November while addressing Parliament, to take place on 7 and 8 December. Clearly the Department of Energy has budget to be used up – presumably under the provision for official energy planning processes due to be concluded this financial year, although no actual plans, for the energy sector as a whole or the electricity sub-sector, have been released for stakeholder engagement.

Looking at a “confidential draft” programme that appeared online on the morning of 5 December (there has been no agenda from the department) one could imagine that the last 20 years never happened – that the 1998 White Paper on Energy Policy and its commitment to integrated energy planning has yet to be adopted, much less the Energy Act of 2008 making this a statutory requirement.

Key features of the new policy, developed through a three-year consultative process, included making energy services the primary focus and bringing a demand-side perspective to planning. The Executive Summary stated: “Policy must facilitate optimal energy consumption and production to meet social needs”, after having noted: “The South African energy sector has historically tended to promote policies, which predominantly address supply side issues.”

The ’98 White Paper is not without internal tensions and ambiguity, but it is unequivocal in calling for government to exercise its agency through a more holistic and inclusive approach to energy development decisions: “To cope with multiple causal linkages, energy policy analysis usually commences with the demand side by means of the process entitled ‘integrated energy planning’.”

The “confidential draft” Indaba 2017 programme makes no mention of or provision for integration. After the opening ceremony, with an hour for the president’s keynote address, the whole event is structured around supply-side options. Most of the time is to be spent in parallel breakaway sessions on the following seven themes: coal; renewables and energy efficiency; gas; liquid fuels; nuclear; technology and transformation; funding. The final session is for reportbacks by designated commission rapporteurs.

It looks like the ministry may have hired a commercial eventing company to develop this draft, as both content and structure seem designed for the promotion of technologies and business interests, while ignoring the big picture of our energy system development and causal linkages between the supply sub-sectors. Of all the participants named, beyond one academic, there seems to a fairly even split between government officials and businesspeople, despite the media advisory statement: “The indaba will be attended by all energy stakeholders including academics, and civil society.”

In writing in 2014 about the IEP process, which was officially launched in 2012, I warned of a “Tyranny of Realism”, whereby propositions and opportunities are vetted against what the energy incumbency – the so-called “key stakeholders” – deem to be “realistic”, thereby blocking anything more than incremental change, when government should be driving transformation. Three years later government seems to be even more deferential to the status quo and less willing to address path dependence, externalised costs or the energy service needs of the poor majority.

The supply-side focus allows the fossil fuel industries to be very well represented in the draft programme, which includes an input on liquid fuels focusing on exploration, though intriguingly there is no mention of the Central Energy Fund, or PetroSA. Eskom also does not appear and the only State-owned Enterprises that do are NECSA (the Nuclear Energy Corporation), the PIC (Public Investment Corporation) and the IDC (Industrial Development Corporation).

Minister David Mahlobo was clear in Parliament that he regards new nuclear power for South Africa as manifest destiny, where the notes record him saying it is not a matter of choice, but rather of endowments. When he mentioned the indaba, he suggested that it would provide for some degree of debate regarding nuclear power procurement, but indicated that this should be limited to questions of scale and timing. He also insisted that overall policy would not change.

It is rather ironic that a logo for the National Development Plan features on the “Indaba” notice and invitation, since the NDP explicitly mandates transformation of the energy sector, including the observation (made in 2011): “In 20 years, South Africa’s energy system will look very different: coal will contribute much less to primary energy needs… Electric vehicles will be widely used…” The NDP also highlights the need for achieving inter-departmental engagement in Integrated Energy Planning, but no other departments appear on the indaba programme.

The indaba seems set to follow the trend for government’s various commitments to responsible and forward-looking planning to be over-shadowed by opportunistic deal-making in sub-sectoral silos. This is a far cry from the 1998 White Paper: “The general approach to policy formulation is to recognise problems; to identify causes and solutions; to analyse their implications and make choices, and to implement, monitor and evaluate the effects of policy.”

The current approach is: We want it all.

Despite declining prospects and increasing costs of finance, there is a denial that strategic choices must be made between energy supply opportunities, and complete disregard that such choices should be informed by energy service needs. South Africa does not need and cannot afford to have it all, especially if we want to localise manufacturing in some key energy industries, which requires directing a critical mass of investment, but does not require mega-projects.

Multi-criteria decision-making processes, as are mandated for integrated energy planning, could be designed to enable choices to be made decisively in the public interest. This applies not only to the primary energy sources chosen for generating electricity and for producing liquid fuels, but also to the share of these and other energy carriers in final energy consumption (the end-use energy mix) and how this should change for sustainable development.

It is not clear why the Minister of Energy is convening an energy indaba that has no place for the deliberation of the big cross-cutting questions and the strategic choices that need to be made. What does seem clear from the limited information available is that it is not a contribution to integrated planning, or to understanding the challenges of transformation that such planning should address. DM

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