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Eskom tariffs increased by 300% in last 10 years, says expert

Mar 03 2019 08:01
Melanie Gosling, Fin24

South Africa has reached a point where electricity generated from new wind and solar power plants is 200% cheaper than electricity generated by Eskom's Medupi and Kusile coal powered plants.

This is according to Jesse Burton from UCT’s Energy Research Centre, who told delegates at a symposium on a just transition away from coal that the two coal plants still under construction had bankrupted Eskom and put all those who depended on the utility at risk.

Electricity tariffs had increased by 300% in the last 10 years.

The National Energy Regulator of SA (Nersa) is expected to make an announcement on Thursday in relation to tarriffs.

“The debt trap caused by Medupi and Kusile has led to a crisis at Eskom. Tariff increases have closed other mines and factories all over the country. In this context, South Africa needs a just transition that protects fossil fuel workers from a disorderly transition away from coal,” she said.

Burton, who organised the symposium in Cape Town on Wednesday with several international partners, said the country needed a new development pathway in which labour intensive sectors could grow and build a more resilient economy and inclusive society.

“Eskom, the coal sector, and environmental and social justice have become one of the most important themes in South Africa today.”

There was consensus among delegates that the global demand for coal was shrinking, and that demand was likely to decline further in the 2020s. This was the result of several factors, particularly the rapid drop in the global price of wind and solar power, which made coal power uncompetitive.

Oliver Sartor of the Institute for Sustainable Development and International Relations in France said in addition several major economies were reducing coal because of climate policies, while China was capping coal plants because of extensive air, soil and water pollution and the massive impact on human health.

Alvin Lin from the Natural Resources Defense Council in the US said estimates were that air pollution in China had caused between 400 000 to 700 000 premature deaths. This had led China to develop an Air Pollution Action Plan in 2013 that set coal reduction targets.

“China has some of the worst air pollution of air, soil, water. It has had a huge impact on environmental health and human health.” China’s coal use had risen from one billion tons in 1990 to 4.2bn tons in 2013, when consumption peaked. By 2016 it had fallen by 10%.

China had 5.3 million jobs in the coal sector in 2013, which had fallen to 4 million by 2016.

But there were now 4.4 million jobs in the renewable energy sector, which had overtaken coal as a job creator. Jeff Waller of the Rocky Mountain Institute said the key driver for the reduction in coal in the US had been “less about policies and more about economics”.

“Especially gas fracking technologies that unlocked gas reserves so the natural gas price has fallen dramatically, and electricity prices have fallen with that, making it harder for coal plants to compete,” Waller said. In 2007 there were 606 coal power plants in the US that had fallen to 359 by 2017.

In the same time period, the price of wind power had fallen by 67% and solar by 86%. Delegates gave examples of how some coal-mining regions had managed the transition away from the coal sector, all of which were in developed countries - Germany, Spain, Australia and Canada – and all of which involved large amounts of money.

Some offered early retirement to miners at the age of 44. While delegates stressed there was no blueprint for managing a just transition away from coal because each country was unique, they all said a crucial first step was extensive dialogue with all those who would be affected by the move away from coal. A delegate who works for the UK government, who did not want her name mentioned as she said she did not represent UK government policy, had this advice for South Africa: “Don’t do it like us. We pretty much left the coal communities and they are pretty much some of the most deprived in the UK.”

She said the pit closures in the UK in the 1970s and 80s had had nothing to do with climate policy, but had been purely about economics, as it had then been cheaper to import coal than to mine it in the UK.

“The trauma of that period still exists today. There has been no justice. I can’t emphasis enough how much coal is still in the psyche of the working class.”

At its height there had been 1.2 million coal miners in the UK, and whole villages had been built on coal in Wales, Scotland and the north of England. She said the incident where police had attacked protesting miners at the Orgreave coal mine in the UK in 1984 was still a major issue 35 years later with former miners calling for “justice and in inquiry”. 

eskom  |  medupi  |  kusile  |  power station
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