Title: The National Energy Bill
1The National Energy Bill
- The DME briefing
- National Council of Provinces
- Select Committee on Economic and Foreign Affairs
- 2 September 2008
2The team from Department
- Nhlanhla Gumede
- DDG Hydrocarbons Energy Planning
- Zombango Nondabula
- Energy Officer Petroleum Regulation
- Elias Modiba
- Energy Officer - Energy Planning
- Tembile Vilo
- Director Generals office
- Kwazi Mhlongo
- Director Generals office
3Long title
- To ensure that diverse energy resources are
available, in sustainable quantities and at
affordable prices, to the South African economy
in support of economic growth and poverty
alleviation, taking into account environmental
management requirements, and interactions amongst
economic sectors to provide for energy modelling
and planning, increased generation and
consumption of renewable energies, contingency
energy supply, holding of strategic energy
feedstocks and carriers, adequate investment in,
appropriate upkeep of and access to energy
infrastructure to provide measures for the
furnishing of certain data and information
regarding energy demand, supply and generation
to establish an institution to be responsible for
promotion of efficient generation and consumption
of energy and energy research and to provide for
matters connected therewith.
4Objects of the Act (cont)
- 2. The objects of this Act are to
- (a) ensure uninterrupted supply of energy to the
Republic - (b) promote diversity of supply of energy and its
sources - (c) facilitate effective management of energy
demand and its conservation - (d) promote energy research
- (e) promote appropriate standards and
specifications for the equipment, systems and
processes used for producing, supplying and
consuming energy - (f) ensure collection of data and information
relating to energy supply, transportation and
demand - (g) provide for optimal supply, transformation,
transportation, storage and demand of energy that
are planned, organised and implemented in
accordance with a balanced consideration of
security of supply, economics, consumer
protection and a sustainable development
5Objects of the Act (cont)
- 2. The objects of this Act are to
- (h) provide for certain safety, health and
environment matters that pertain to energy - (i) facilitate energy access for improvement of
the quality of life of the people of Republic - (j) commercialise energy related technologies
- (k) ensure effective planning for energy supply,
transportation and consumption and - (l) contribute to sustainable development of
South Africas economy.
6Energy policy formulationHow do we evaluate the
impact of our policies
7Energy policy formulationPolicy impacts depend
on where you sit
Source Sadelec Report, 2003
8BackgroundSome facts
Source National Treasury, 2007
9Some of us would argue that we do not have an
electricity but an energy challenge
Addressing these peaks through electricity is a
very expensive option
Source Eskom Holdings Limited Annual Report 2007
10BackgroundSome facts
Source Grain SA, 2008
11BackgroundSome facts
Source Energy Information Administration
Conference, 2008
12BackgroundSome facts
Source Energy Information Administration
Conference, 2008
13An alternate end of oil view
Source Energy Information Administration
Conference, 2008
14Peak oil view with lower recovery factors
Source Energy Information Administration
Conference, 2008
15Peak oil view with lower initial-in-place
estimates
Source Energy Information Administration
Conference, 2008
16The Bill background
- Was first developed in 2003 to cover all EWP not
covered that far - Cabinet approved public consultation in 2004
- Widely consulted in 2004
- Withdrawn in 2006 to effect certain changes
- Key focus now is energy security
- Constructive engagements at Nedlac
- All stakeholder comments considered
17White Paper on Energy Policy, 1998 (EWP)
- Bill based on the EWP of 1998
- Some assumptions underpinning the EWP - no longer
valid - Assumed that energy security can be achieved
through greater diversification and flexibility
of supply - Asserted that the energy sector relied on
market-based pricing - Placed greater emphasis on commercialisation and
competition - However acknowledged that competitive energy
markets need sophisticated regulatory regimes - Assumed that government will promote investment
into energy sector rather than use energy to
drive investment in other sectors of the economy - Also assumed that there will be a healthy balance
between the interest of capital and national
objectives - Experiences in other competitive markets have
shown that markets work well in a situation of
over capacity - In 1998, RSA had over capacity in all areas of
energy - In drafting the Bill, validity of the assumptions
underpinning the policy was a concern
18Interface with other legislation
- Energy Bill interfaces with a number of pieces of
legislations
19National Energy Bill in perspective
- Whilst most of existing legislation are about the
past and present, the National Energy Bill is
about future
Key Energy Legislations
Other Energy legislation
Energy Bill
- Governance redress
- Competition and industry structure issues
- Economic issues (mainly prices and tariffs)
- Standards specifications
- Quality of supply
- Health Safety
- Social and national objectives
- Industry structuring restructuring
- Securing our energy future
- Data information
- Modelling planning
- Future fuels
- Sustainable access
- Maintaining affordability
- Energy research
- Climate change
- Security of supply
20Energy Security Framework
- Energy Bill aims to address all energy security
issues
Foreign policy
Local production
Reserve margins
Climate change (mitigation adaptation)
Energy infrastructure planning
Energy security
Standards specifications
Role of state in productive sectors
Demand management
Energy Research
Diversity of supply
Macro-economic framework
Import Export policies
21The essence of the Bill
- The National Energy Bill essentially about
- Provision of energy data and information
- Energy modelling and integrated energy planning
- Energy development
- Alternative and future energy
- Efficient production use
- Coordinated research on carriers technologies
- Security of supply (both carriers feedstock)
- State participation in key energy infrastructure
planning and development
22General guiding principles
- The Energy Bill does not seek to replace existing
institutions but to strengthen them - Energy is the lifeblood of energy economy
- Economic decisions made w/o consideration of
energy availability and price are problematic - Focuses on issues intended to strengthen energy
security - Seeks to complement data collection and
facilitate sharing
23Source Energy Geopolitics, Professor Michael J.
Economides,
24Energy Bill energy data modelling 1998 White
Paper on Energy policy
- P19
- For various reasons South Africa has very limited
energy data and, furthermore, very limited
capacity to perform this sort of policy analysis - P81
- Informed decision making, at all levels, is only
possible when suitable and credible statistics
and information are available
25Energy Bill energy data modelling 1998 White
Paper on Energy policy
- P84
- Government will ensure that the necessary
resources are made available to establish
structures and systems, and put in place
legislation to facilitate the specification,
collection, acquisition, storage, maintenance and
supply of energy data, and energy-related data,
according to the requirements of integrated
energy planning and international standards.
Government will facilitate the establishment of
information databases. - Government will provide information to the public
at a reasonable price. The provision of this
information will not compromise the commercial
position of parties supplying data to government.
26Energy Bill Energy planning 1998 White Paper
on Energy policy
- EWP84
- The data should be collected, stored and reported
in accordance with international specifications
and standards to facilitate easy comparison,
integration and exchange - Data should be collected regularly and the
database kept up to date - EWP90
- The Department of Minerals and Energy will
include explicit environmental considerations
into studies regarding energy suppliers and
users, and will integrate these results through
Integrated Energy Planning
27Data collection, integrated energy modelling
planning
- Provision of high-quality, energy information, in
manner that promotes sound policymaking,
efficient markets and public understanding, to - Cabinet Ministers
- National, provincial local governments
- Markets (for efficient market operation)
- Public (communication)
Planning An integrated planning approach to
ensure that all the constituting elements are
addressed in a coordinated manner
Modelling An integrated energy modeling
capability which would be instrumental in the
development of energy plans and evaluation of
options that are proposed by policy-makers
28Modelling vs. Planning
Modelling
Planning
- Should be descriptive and avoids policy advocacy
- Modeling should, as a basis for the development
of energy plans, be undertaken in such a way as
to use - prevailing policy,
- legislative arrangements,
- proven or almost proven technology or industry
structural conditions
- Is essentially prescriptive, and advocates for
certain policy approaches. - Involves deliberate policy choices, which may go
beyond empirical evidence - Should be about handling of sometimes conflicting
objectives
29Demand driven energy planning
30Energy Bill Energy planning 1998 White Paper
on Energy policy
- EWP6
- To cope with multiple causal linkages, energy
policy analysis usually commences with the demand
side by means of the process entitled-
integrated energy planning. This recognises
that energy is not an end-good but is rather
consumed as a means to an end. Policy must
facilitate optimal energy consumption and
production to meet social needs. This requires
consumer choice and the operation of market
forces. - Integrated energy planning suffers from the same
drawbacks as other ideal models. It requires a
great deal of data and analysis to implement, of
which South Africa has a scarcity. Nonetheless,
this white paper identifies integrated energy
planning as the most suitable base for planning
purposes and also addresses the issue of data
scarcity
31Energy Bill Energy planning 1998 White Paper
on Energy policy
- EWP82 clearly articulates the IEP Integrated
energy planning (IEP) is a process which entails
the following technical functions - interpreting the requirements of national
economic, social and environmental policies for
the energy sector - analysing energy needs in terms of how their
fulfilment will contribute towards attaining
national economic and social goals - analysing the potential of energy supply systems
and demand side management to meet current and
potential future energy needs. This would include
analyses of individual supply sub-sectors and the
linkages between sub-sectors - analysing energy sector linkages to the
macro-economy - analysing the potential effects on the energy
sector of global and technological developments - evaluating the effects of legislative,
institutional and industry structure arrangements
on energy supply and demand - specifying, sourcing and presenting data on
energy supply and demand, energy sector
institutions, and linkages with economic and
social factors in order to provide a statistical
description of the energy sectors historic
evolution and current impact on economic and
social development
32Energy Bill Energy planning 1998 White Paper
on Energy policy
- EWP82
- Government will facilitate the provision of the
necessary resources to establish IEP structures
and systems to develop energy policy - The Department of Minerals and Energy will ensure
that an integrated resource planning approach is
adopted for large investment decisions by energy
suppliers and service providers, in terms of
which comprehensive evaluations of the economic,
social and environmental implications of all
feasible supply and demand side investments will
have to be undertaken. - In the electricity sectors case, the National
Electricity Regulator will only license new
facilities upon the satisfactory completion of an
integrated resource plan
33Energy Bill Energy planning 1998 White Paper
on Energy policy
- EWP84
- Not only is good data required for the energy
policy process but it is fundamental to the
implementation of integrated energy planning. To
facilitate integrated energy planning a database
needs to be maintained covering at least the
following areas - energy resources
- energy production from indigenous resources
(mining, renewables, oil and gas) - international energy trade (imports and exports)
- energy transformation (production of liquid fuels
and electricity from other sources) - storage, transport and distribution of energy
- national energy trade (wholesale and retail)
- investment in plant and infrastructure associated
with the above areas - disaggregated energy usage, expressed in energy
and cost terms - energy efficiency
- energy related environmental emissions
- average sectoral energy prices and taxes
- institutions linked to all the above areas
- similar data from regional and international
sources
34Energy Modelling System (NIEMS)
35Proposed energy modelling
- Represents energy supply, conversion, and demand
in a unified, but modular system - Detailed structural and process models in most
energy sectors - Typically a bottom up approach of model
formulation - Models real consumer, supplier and equipment
behaviour
36Residential and Commercial Demand Modules
- Track changes to building stock and equipment
appliance stock by type and region - Rely on data from residential and commercial
energy surveys - Choose new or replacement equipment for each
energy service based on cost and performance
characteristics and modelled economic behaviour - Technology characteristics to reflect future cost
reductions and performance improvements, and
mandated efficiency standards and building
regulations
37Buildings (Residential/Commercial) Sector
Projections
- Sector energy consumption
- By fuel type (electricity, coal, gas, etc)
- End-use (heat, lighting, cooking, etc),
- Building/housing type
- Region
- Households and floor space
- New construction, surviving, building type
- Energy consumption intensity (use per square
foot) - Delivered (site), electricity losses, total
(primary) - Sector carbon emissions by fuel type
- Average residential equipment stock efficiency
- By end-use
- By fuel type (commercial),
- By equipment (residential)
- Stock (residential)
38Residential End Use Services
- Heating
- Cooling
- Water Heating
- Refrigeration
- Freezers
- Cooking
- Clothes Drying
- Clothes Washing
- Coffee Makers
- Handheld Rechargeables
- Lighting
- Dishwashers
- Televisions
- PCs
- Furnace Fans
- Spas
- Security Systems
- Home Audio
- Microwaves
- Ceiling Fans
39Commercial End Use Services
- Heating
- Cooling
- Water Heating
- Ventilation
- Refrigeration
- Cooking
- Lighting
- Office Equipment (PCs)
- Office Equipment (non-PCs)
- Other
40Industrial Demand Module
- Industry sector decomposed into manufacturing
industries, agriculture, construction and mining - Energy use estimated by major process steps or
end uses based on major technology bundles - Energy intensity for each bundle declines based
on time, rate of capacity additions, and energy
prices - Motor stock model included for manufacturing
industries - Combined heat and power (CHP) technology adoption
simulated - Fuel switching, recycling, and byproducts included
41Transportation Demand Module
- Distinct approaches for light-duty vehicles,
trucks, rail, shipping and air travel. - Energy use in light-duty vehicles
- Vehicle-miles traveled estimated based on cost of
driving, income, and demographics - Tracks light-duty vehicle stocks by type and age
- Fuel-saving technologies selected for cost
effectiveness and compliance with fuel economy
standards - Alternative-fuel and advanced technology vehicle
sales are a function of technology attributes,
costs, and fuel prices - Freight truck and air are also vintaged stock
models - Commercial, medium, and heavy trucks
- Regional, narrow, and wide body aircraft
42NIEMS Macroeconomic Activity Module
- Could use Global Insight Macro Model
- Links all energy variables within the GI model to
NIEMS energy variables - Global Insight model has 26 energy variables
- Uses Input/Output model with dynamic
specification for industrial output - Global Insight model has 60 industrial sectors
- We would require an employment model
- We could calibrate existing similar models to
suit South Africa
43NIEMS Macroeconomic Activity Module
- Regional Model
- Forecasts regional product, wages and salaries,
disposable income, consumer prices, population
and housing activity - Uses Census projections for population and
national concepts to estimate regional results - Regional commercial floor space model estimates
floor space stock and additions for floor space
types - Major explanatory variables include income,
interest rates, population by region
44Cap on CO2 Emissions
- Emissions accounting included in NIEMS design
- Each solution generates and accounts for GHGs and
other emissions - Embedded cap and trade system
- Marginal abatement cost for other GHGs to
simulate reductions under economy-wide policies - All other environmental issues are determined in
each module
45Energy efficiency EWP 98
- EWP deals energy efficiency in detail
- P10
- It is estimated that greater energy efficiency
could save between 10 and 20 of current
consumption. Government needs to facilitate
increased energy efficiency. Obstacles include - inappropriate economic signals
- lack of awareness, information and skills
- lack of efficient technologies
- high economic return criteria and
- high capital costs.
- Government commits itself to facilitate greater
energy efficiency
46Energy efficiency EWP 98
- P14
- Government will create an energy efficiency
consciousness and will encourage energy
efficiency in commerce and industry. Government
will establish energy efficiency norms and
standards for commercial buildings and industrial
equipment, and voluntary guidelines for the
thermal performance of housing. A domestic
appliance-labelling programme may also be
introduced. Publicity campaigns will be
undertaken to ensure that appliance purchasers
are aware of the purpose of appliance labels
47Energy efficiency EWP 98
- P15
- Government's capacity to implement energy
efficiency programmes is currently limited - Government will investigate the establishment of
appropriate institutional infrastructure and
capacity for the implementation of energy
efficiency strategies (p29) - The functions of such an institution are outlined
- Targets for industrial and commercial energy
efficiency improvements will be set and monitored - P27
- energy-efficiency targets will be established and
programmes will be mounted to conserve energy
48Energy efficiency EWP87
- Government's capacity to undertake the energy
efficiency programmes described herein is rather
limited. Other countries in similar circumstances
have found the establishment of an agency to be
an effective means of providing the necessary
capacity and flexibility to implement such
programmes. The functions of such an agency could
include - building consumer awareness of energy utilisation
and cost-saving measures - demonstrating to consumers the benefits of energy
efficiency measures through audits,
demonstrations, sectoral analyses and other
activities - building the capacity to implement targeted
energy efficiency programmes - training people in energy efficiency methods
- identifying and facilitating the removal of
barriers to energy efficiency - Government will further investigate the
establishment of appropriate institutional
infrastructure and capacity for the
implementation of energy efficiency strategies
49Energy research EWP 98
- P15 Government expects energy suppliers and the
private sector to carry out appropriate research - P28
- Stimulate energy research and development
partnerships between local role players and
international agencies - Facilitate the development of a research strategy
to improve energy research and development - P29 Develop and implement an appropriate system
to co-ordinate energy research - P64 promote research, technology development and
technology transfer to stimulate the optimal
development of the countrys oil and gas
resources - P94
- Energy research is currently supported by
government, government agencies, parastatals and
the private sector - The Department of Minerals and Energy manages a
limited non - nuclear research programme
50EWP and Energy Research
- P96
- Government will consider the development of a
system to prioritise national research funding
into the three main research categories in order
to address the medium to long-term research needs
in the energy sector. This will consist of an
integrated, multi-year, national, needs-driven,
energy research strategy, developed from time to
time by an experienced team of experts appointed
by the Minister. This strategy will identify
medium and long-term priority programmes and
themes - Extensive energy-related research is taking place
in other countries, the results of which may be
of value in South Africa. These developments are
monitored by researchers, energy industries,
energy consumers and others
51Renewable energy EWP
- P7 The research and development of alternative
and renewable energy sources is also being
promoted - P14
- Government believes that renewables can in many
cases provide the least cost energy service,
particularly when social and environmental costs
are included - Government will also promote appropriate
standards, guidelines and codes of practice for
renewable energy and will establish suitable
renewable energy information systems - P29 Investigate an environmental levy on energy
sales to fund the development of renewable
energy, energy efficiency and sustainable energy
activities
52Renewable energy EWP
- P79 Government policy on renewable energy is
thus concerned with meeting the following
challenges - ensuring that economically feasible technologies
and applications are implemented - ensuring that an equitable level of national
resources is invested in renewable technologies,
given their potential and compared to investments
in other energy supply options and - addressing constraints on the development of the
renewable industry - P80
- Government will provide focused support for the
development, demonstration and implementation of
renewable energy sources for both small and
large-scale applications - Government will support renewable energy
technologies for application in specific markets
on the basis of researched priorities
53Renewable energy EWP
- P81
- Government will establish suitable information
systems of renewable energy statistics, where
justifiable, and will assist with the
dissemination thereof - The capacity of the Department of Minerals and
Energy is presently being improved in order to
cater for the need to implement the proposed
renewable energy policies and programmes
54Security of supply and EWP
- P27
- Objective 5 - Securing supply through diversity
- P55
- Concerns are, however, being raised in some
countries about the impact of competition on
equity and environmental goals and the ability of
a competitive market to ensure sustained
investment and security of supply at low prices
in the long term - Security of supply not well captured in the EWP
55Security of supply
- The Bill allows the Minister to, for the purposes
of ensuring security of supply, direct any
state-owned entity - to acquire, maintain, monitor and manage national
strategic energy feedstocks and carriers in
accordance with the relevant published security
of supply strategies or policies - to
- undertake security of supply measures
- provide for adequate investment in energy
infrastructure - invest in critical energy infrastructure
- ensure upkeep of all critical energy
infrastructure
56Thank You