Transcript Carbon Tax Impact on a South African Multi

ITTCC
Thought Leadership in
Climate Change
Transforming our Energy System
3. Reduce Carbon Intensity
1. Reduce Poverty, Inequity & Unemployment
Policy Duplication/Incoherance
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•
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2. Reduce Energy Intensity
Bubble Size is Capita/GDP i.e. an Indicator of Poverty, Inequity and Unemployment
Carbon Budgeting
Carbon Tax
Capping CO2 Emissions in IRP
150
100
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
Annual CO2 emissions (MT/a)
IRP
Carbon mitigation
350
300
250
200
Constant Emissions
Moderate Decline
Advanced Decline
50
0
…resulting in an implicit carbon price for the
Impact of IRP 2010-2030
consumers
Impact of environment levy
3
12.4
13.7 13.9 13.9 14.1 13.8 14.3 13.6
12.3
10.2
Increased electricity
tariff from policies
ZARc/kWh
7.2
2.0
2.0
2.5
2.8
3.1
1.9
1.9
1.9
2013
4.6
1.9
1.9
1.8
15
1.8
21
0
21
2013
27
7
31
10
33
13
21
21
20
15
1.8
1.7
1.6
1.5
20
134
Implicit carbon
price2 from policies
ZAR/tCO2e
11.2 10.6
30
20
58
20
1.4
1.4
1.3
1.2
25
1.2
2030
148 150 151 152 149 155 147
133
110
121 115
90
115 128 132 133 136 134 140 132 119 107
102
20
20
78
50
1.4
20
20
19
17
17
15
25
15
15
14
13
13
2030
1 Assume full environmental levy is passed on to the customers. Cost per kWh will decrease over time as share of fossil
fuels in the production mix is dilluted
2 Implicit carbon price is calculated as the carbon price per ton that would give the same cost effect for consumers,
assuming base case generation mix
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SOURCE: IRP 2010-2030; Eskom
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Carbon Tax Impact on a South African Multi-National
Bubble size is EBITDA
1400
1200
1000
800
Tax
Africa
Americas North
600
Americas South
Australasia
400
Europe
200
0
0%
-200
SOURCE: CRU
10%
20%
30%
40%
50%
% of EBITDA
60%
70%
80%
90%
100%
If we build too fast and too much
Prices run away!
We must contain the price path or face “stranded investments”!
Sources: IRP2010, Eskom, Frost & Sullivan, EIUG
A Collapse in Industrial Demand will Create a Price
Tipping Point
Source: Eskom and The U.S. Energy Information Administration (EIA)
Current prices already impair Competitiveness
and Jobs Eskom's MYPD3 Application will exacerbate the problem
RSA
Silicon
RSA
Ferro Chrome
Si Manganese
A survey of energy intensive users,
indicate that electricity portion of
total input costs, has on average
increased from 9 -18% between
2007 -2012.
RSA
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Already High Electricity Prices are contributing to
Flight of South African Industry Jobs!
World Chrome Ore resources
Market share for FeCr production
Others Turkey China
1%
1%
4%
60%
India
9%
Zimbabwe
10%
50%
40%
14%
0%
South Africa
China
ROW
2015f
1
2014f
Gold
2013f
72%
2012f
1
2011f
Chromium
10%
2010e
80%
2009
1
2008
Manganese
2007
88%
2006
1
2005
PGM's
20%
2004
RSA % share of known total
global reserves
2003
World Rank in
reserves
Commodity
30%
2002
South Africa
65%
2001
Kazakhstan
10%
Foundry Industry is shrinking –
SA will struggle to reach the goals of the New Growth Path
Source: National Foundry Technology Network
Recent Plant closures:
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2010- Eclipse West Plant- 500 jobs lost
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2010- Eclipse East Plant partial closure
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2011- Eclipse Dimbaza in EC- 350 jobs lost
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2011 Krynie Brothers in Gauteng – 22 jobs lost
•
2011 Belmec in EC– 70 jobs lost
•
2011 Alfa Foundries Springs – 60 jobs lost
•
2012 Crown Cast closed its doors – 130 jobs lost
Residential tariffs breaching affordability USA vs. RSA average residential prices US c/kWh
USDc
/kWh
Source: : EIA, Eskom, Meter-it
Thank You
Company database: top 30 companies (scope 1 and 2)
Scope 1 and 2 emissions
Mt CO2e
Eskom
224.7
Sasol
71.2
Anglo American
17.1
African Rainbow
2.7
Scope 1
Lafarge SA
2.4
Scope 2
Mondi Group
2.2
ArcelorMittal SA
16.3
Lonmin
1.6
BHP Billiton
16.2
Group Five
1.0
Tongaat Hulett
1.0
Palabora Mining
0.9
Xstrata
9.4
Merafe Resources
8.5
Gold Fields Limited
5.9
Omnia Holdings
0.8
PPC
5.8
Pick ’n Pay
0.7
Rio Tinto
4.5
Tiger Brands
0.7
Sappi (Pty) Ltd
4.3
DRD Gold Limited
0.7
Harmony Gold
3.5
SABMiller
0.7
Anglogold Ashanti
3.4
Murray & Roberts
0.6
Impala Platinum
3.4
Northam Platinum
0.6
Exxaro Resources
2.7
Aquarius Platinum
0.6
SOURCE:
Firm disclosed emissions estimates based on Carbon Disclosure
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Company database: top 30 companies (scope 1 only)
Scope 1 emissions
Mt CO2e
Eskom
224.7
Sasol
62.0
ArcelorMittal SA
11.9
PPC
5.3
Tongaat Hulett
0.7
Impala Platinum
0.6
Palabora Mining
0.6
Exxaro Resources
0.5
Anglo American
3.7
Omnia Holdings
0.5
Xstrata
3.5
Tiger Brands
0.5
BHP Billiton
3.4
Aveng Limited
0.4
Merafe Resources
3.2
Murray & Roberts
0.4
Rio Tinto
3.0
SABMiller
0.3
Sappi
2.8
AECI Ltd Ord
0.3
Oceana
0.2
Pick ’n Pay
0.2
Lafarge SA
African Rainbow
2.2
1.8
Mondi Group
1.1
Optimum Coal
0.1
Gold Fields Limited
1.0
Anglogold Ashanti
0.1
Group Five
0.8
Hulamin Limited
0.1
SOURCE:
Firm disclosed emissions estimates based on Carbon Disclosure
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1
Government is planning to de-carbonize the power sector through the targets in
IRP 2010, reducing coal share of total capacity below 50%
Installed capacity by technology until 2030
GW
…
Coal as percentage of total
90
Other1
Hydro
77
Wind
65
Solar PV
Solar CSP
55
Nuclear
45
Gas OCGT
Gas CCGT
81
74
72
54
46
2010
2015
2020
2025
2030
Coal
1 Includes pumped hydro storage, diesel, and cogeneration
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SOURCE: IRP 2010-2030; Eskom
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