Transcript Chamber Colloquium 13 February 2014

Chamber Colloquium
13 February 2014
THE DEPARTMENT OF ENERGY AND THE GREEN ECONOMY
PROPOSED POLICIES, PLANS OR PROJECTS RELATED TO THE
GREEN ECONOMY
Mr. Muzi W. Mkhize
Chief Director : Hydrocarbons Policy
E-mail: [email protected]
Tel: 012 406 7570/1
Scope
The Department of Energy’s proposed policies,
plans or projects related to the Green Economy
with specific reference to the chemical sector,
but with particular focus on the Petroleum and
Petroleum Products Regulations.
Presentation Outline
• Introduction
– Global Issues
– RSA situation
• Main Initiatives
–
–
–
–
–
–
–
EEDSM
Integrated Energy Planning
Coal-related interventions
Fuel switching – natural gas
Fuel switching – liquefied petroleum gas
Liquid fuels specifications and standards
Biofuels
• Comments, Q&A
Global Energy Challenge
Affordability
Security
Sustainability
–
National and regional systems have to be put in place to tackle this energy dilemma.
–
Energy remains the lifeblood of the economy (all human activity).
–
Energy security entails security of supply, security of demand and the requisite infrastructure.
Water-Energy-Environment Nexus
Energy
Water
Environment
Efforts that ignore this Nexus are doomed to fail. On 30-Jan-13, National Geographic reported:
• By far the largest strain on future water resources from the energy system, according to IEA's
forecast, would be due to two lesser noted, but profound trends in the energy world: soaring
coal-fired electricity, and the ramping up of biofuels production.
• The amount of fresh water consumed for world energy production is on track to double within the
next 25 years.
World Development Report 2008: 63% of total global greenhouse gas emissions contributed by
energy generation, handling and use.
RSA’s Energy Profile
• South Africa is a coal based economy
– Over 95% of electricity is generated from coal, which has high CO2
emissions.
– Current RSA primary energy mix: Coal ~65.7%, crude oil ~21.6%,
biomass ~7.7%, Gas ~2.8%, nuclear ~1.9%) and hydro ~0.2%
– ~150,000 bpd oil equivalent Coal-to-Liquids (CTL) plant in Secunda
and ~37 GW of coal fired electricity generation capacity
• South African energy supply is characterized by unequal access
to modern energy such as electricity and LPG.
• Low income households lack access to affordable, safe and
cleaner energy sources for cooking and space heating.
• Energy shortages in recent years - emphasis on the need for
increased energy supply and a robust energy supply regime
• Constrained domestic supply – importation of liquid fuels
Suppressed demand and global inequalities (E.g. Despite new international efforts, ~1.3
billion people are without electricity. The need for electricity in emerging economies drives
a 70% increase in worldwide demand, with renewables accounting for half of new global
capacity) globally present challenges like increasing energy prices as one alleviates
poverty.
PESTEL – Focus Areas
Resource
Reserves –
assessment &
optimal
management
Political will
& stability - Geopolitics
Institutional
strengthening
Climate change
(mitigation &
adaptation)
Integrated
(Energy)
Planning
Oil and Gas
PESTEL
Addressing past
imbalances
Energy Security
Poverty
Alleviation
International
Cooperation
Regulatory
Certainty
Human Capital
Development
Regional &
Continental
Integration &
Cooperation
White Paper on Energy Policy
• The White Paper on Energy Policy of 1998 is the blueprint policy
document for the South African energy sector. It seeks to, amongst
others:
–
–
–
–
–
Ensure security of energy supply through diversification (broadening the
energy mix);
Increase access to affordable energy services;
Stimulate / improve economic development;
Improve the management of energy-related environmental, health and
safety issues; and
Enhance energy governance..
• It consequently advocates:
–
–
–
–
Clean Coal Technologies
Optimal generation, handling and use of energy resources.
Biofuels production
Broadening and optimisation of the energy mix, inclusive of fuel switching
[increased use of Natural Gas and Liquefied Petroleum Gas (LPG)]
– Energy Efficiency and Demand Side Management (EEDSM) Programme
EEDSM
• Energy Efficiency and Demand Side Management
(EEDSM) Programme
– On electricity, in conjunction with municipalities, and
liquid fuels (fuel saving tips)
– Collaboration with other Govt departments;
particularly with DoT (Transport Master Plan), DTI Industrial Policy Action Plan (IPAP)
– Recognition that energy resources are finite
– Reduction in energy balance - more energy put in to
get a unit of energy out
Some are principles ingrained in DoE’s policy formulation.
Integrated Energy Planning
• Improved and integrated energy planning
– The convergence and intertwined requirement of energy
resources
•
•
•
–
–
–
–
E.g. Open Cycle Gas Turbines (OCGTs) - Gourikwa and Ankerlig that operate on diesel in the absence natural gas.
Ensuring security of energy supply through diversification –
optimal energy mix
Horses for courses approach
The National Development Plan
Integrated Resource Plan (IRP) 2010 and revision thereof
Integrated Energy Plan (IEP)
20 Year Liquid Fuels Infrastructure Road Map (20YLFIRM)
Various plans impact one another and continual refinement of plans is
required. They are informed by our natural resource endowment.
Interlinking: energy plans and other national plans - New Growth Path;
Industrial Policy Action Plan; Ports, marine and land transport plans;
National Development Plan; etc.
Integrates Resource Plan (IRP) 2010
o South Africa requires ~43,000MW of new electricity generation capacity by 2030.
o The envisaged new electricity generation capacity is shared roughly as follows:
Coal-related Interventions
• Participation in the Interdepartmental Coal Task
Team led by DMR
• South African Coal Roadmap
• Clean Coal Technologies
– Carbon Capture Utilisation and Storage (CCUS)
• CCS Roadmap approved by Cabinet in 2012.
– Participation in various multilateral bodies (e.g. CSLF and
GCCSI, IEA)
• Underground Coal Gasification investigations by
Eskom
Coal used for electricity generation (~37GW capacity of coal fired power
station s) and ~150,000 bpd oil equivalent of coal-to-liquids (CTL) production
capacity in Secunda.
Fuel Switching – Natural Gas
• Recent developments in respect of unconventional gas (shale gas in particular)
both locally and internationally
–
Very rough estimate of SA’s technically recoverable shale gas resources by the USA’s
Energy Information Administration: ~485 trillion cubic feet (tcf) - a potential game
changer as a potentially stable, alternative energy source for power generation that is:
•
•
•
40% more energy efficient; and
emits about half the CO2 of coal.
Increased use of gas is underpinned by, amongst others:
–
–
–
Lower CO2 and NOx emissions compared to other fossil fuels;
Global gas market landscape changes, which tend to reduce prices and ease the
transportation of this commodity across the globe (i.e., technological
developments i.r.o. LNG and CNG); and
Flexibility – Electricity generation, direct thermal use, production of liquid fuels
• Key interventions:
–
Amendment of the Gas Act, 2001 (Act 58 of 2001)
•
–
Development of the Gas Utilisation Master Plan
•
–
Draft Gas Amendment Bill, 2013 being discussed at NEDLAC
Consultant appointed and commenced with project development.
Gas Trade Agreements with Mocambique and Namibia administered by a Gas
Commission with the respective countries.
•
A compressor station commissioned at Komati in 2010 to enable an increase of 20% in the gas
flow rate to ~147 million GJ per annum
•
•
•
IPP OCGTs: Durban (near Shakaskraal) ~670 MW & PE (Coega IDZ) ~335 MW
~2,400 MW CCGT power plant planned
PetroSA’s 45,000 bpd oil equivalent capacity gas-to-liquids (GTL).
Fuel Switching – Liquefied Petroleum Gas (LPG)
•
LPG is composed primarily of propane and butane, while natural gas is composed of
the lighter methane and ethane. LPG, vaporised and at atmospheric pressure, has a
higher calorific value (94 MJ/m3 equivalent to 26.1kWh/m3) than natural gas (methane)
(38 MJ/m3 equivalent to 10.6 kWh/m3
–
–
–
–
–
–
•
Government has identified LPG as an alternative energy carrier of choice for household
thermal needs. Main constraints:
–
–
–
•
Emits ~50% less CO2 emissions than coal and ~20% less than heating oil
Improves both indoor and outdoor air quality by substantially reducing pollutants which are
hazardous to health, such as SOx, NOx and particulate matter
Produced during the refining of petroleum (crude oil), or extracted from petroleum or natural
gas streams as they emerge from the ground
~3% of a typical barrel of crude oil is refined into LPG although as much as 40% of it could be
converted into LPG.
used as a fuel for cooking, heating, commercial appliances and vehicle propulsion (autogas)
Typical Volumevaporised gas : Volumeliquefied gas = 250:1
Inadequate domestic production of LPG from refineries
Inadequate LPG import and storage infrastructure
Generally increasing energy costs
Key projects to assist in addressing the main constraints:
–
–
Review of the Regulations regarding the Maximum Retail Price of LPG supplied to Household
Customers
Review of the Maximum Gate Price of LPG Domestic LPG supplied by refineries - constrained
Liquid Fuels Specifications and Standards
•
•
Main piece of legislation: Petroleum Products Act, 1977 (Act No. 120 of 1977), as
amended.
The collaboration of the DoE (then DME), DEAT, SAPIA and NAAMSA led to the
promulgation of the inaugural Regulations regarding Petroleum Products Specifications
and Standards on 23-Jun-06. Now referred to as the Cleaner Fuels 1 Programme (CF1),
equivalent to fuel quality that is compliant with Euro 2 emissions standards:
–
•
•
Introduction of fuels compatible with Euro 4 emission standards by 2010 did not
materialise – foresight?
Discussion Paper was published for public comment on 08-Mar-11 and a stakeholder
workshop deliberated on comments received in Aug-11.
–
•
Entails, amongst others, prohibition of the addition of lead (Pb) to petrol; reduction of sulphur from
3000 ppm to 500 ppm in standard grade diesel; and introduction of biodiesel grades D5 to D100.
Special waivers to promote biofuels proposed.
New Regulations regarding Petroleum Products Specifications and Standards (CF2) to
come into effect in 2017 were promulgated on 31-Jun-12:
–
–
–
–
Main challenge: funding of investments to upgrade refineries to produce CF2 fuels
Rough estimate of required funding: R40 billion
CF2 Fuels compliant with Euro 5 emissions standards
Collaboration through an Interdepartmental Task Team and , in particular DEA (Vehicle Emission
Standards and Factory Emission Standards) and National Treasury (funding – cost recovery
mechanism)
Noted: Resurgence in oil & gas production in some countries
Biofuels
•
The Biofuels Industrial Strategy of the RSA was approved by Cabinet on 05-Dec-07.
–
–
•
•
Green economy related targets: Contribute towards the achievement of the national
renewable energy policy targets; and contribute towards the reduction of greenhouse
gas emissions.
Regulations regarding the Mandatory Blending of Biofuels with Petrol and Diesel (the
“Mandatory Blending Regulations”):
–
–
•
Promulgated on 23-Aug-12 (Gazette No. 9808 Vol.566 of 23 August 2012, Reg No. 35623)
30-Sep-13: The Minister of Energy announced that Mandatory Blending Regulations will come into
effect on 01-Oct-15.
The Minister of Energy also approved the establishment of a Biofuels Implementation
Committee (BIC), comprising the oil and biofuels industries (and Transnet as well as
other parties as and when required) and chaired by the DoE:
–
•
Five-year pilot phase with 2% biofuels penetration (~400 Ml p.a.) into the national liquid fuels pool.
Create a link between the first and second economies, a requirement that entails creating jobs in
under-developed areas.
Seeks to address all matters pertaining to the practicalities of blending biofuels with (mineral) petrol
and diesel.
On 14-Jan-14 the Minister promulgated the Draft Position Paper on the South African
Biofuels Regulatory Framework, for public comment
– Government Gazette No. 37323, Notice 24 of 2014
– Closing date for comments: 10-Feb-14
– Stakeholder Engagement Workshop on 04-Feb-14 and comments received being duly considered.
Challenge: Biofuels industry requires subsidies for financial viability
juxtaposed to benefits such as jobs creation, balance of payments savings,
energy supply security, and economic growth that is fairly stable.
Ngiyabonga kakhulu
Thank you
Ke a leboha
Spasibo
Asante sana
Shukran gazilan
Inkomu
Merci beacoup
Muito obrigado
Ngiyathokoza
Vielen dank!
Ke a leboga
Mucho gracias
Ndiyabulela
Tusen takk
Looking forward to understanding matters relating to skills development and utilisation
of graduate from tertiary institutions to enable Government aspirations. Shouldn’t
graduates should cut their teeth in the industry and not as interns in Govt depts?