Climate change is a long-term change in weather patterns over periods of time and is one of this century’s most serious problems. The Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) points to human activity as one of the major causes of global warming. Business as usual may lead to a disastrous transformation of the planet, and recent scientific findings emphasize the growing urgency of reducing greenhouse gas emissions (Meinshausen et al. 2009).
At the same time, the lack of access to energy and the consequent restrictions to development remain major challenges in developing countries. About 1.3 billion people still live without electricity, mainly in Africa and South Asia (World Bank 2009a). Furthermore, rising costs associated with these huge demands for energy from domestic to industrial sectors have urged new ways of seeking energy supply.
The challenge of transforming entire economies is enormous, especially if a country is as fossil- fuel-based and emission-intensive as South Africa. However, as it is already facing climate change impacts in an increasingly carbon-constrained world, South Africa must drastically reduce its greenhouse gas emission intensity soon. The South African electricity sector is a vital part of the economy and at the same time contributes most to the emission problem. Transforming this sector is therefore urgently needed, but will be difficult. First steps have been taken to enhance energy efficiency and promote renewable energy, but they have failed to have any large-scale effects.
South Africa is already being affected by global climate change, and the impacts will intensify in the coming decades. However, it is also a contributor to global greenhouse gas emissions. In 2005, it was responsible for about 1.1 per cent of global emissions and about 40 per cent of emissions in sub-Saharan Africa (WRI 2009). At an average of 8.8 tonnes CO2e per person in 2000, the per capita emission rate was above the global average of 6.7 tonnes and almost twice as high as the sub-Saharan average of 4.5 tonnes. It almost equalled the average per capita emissions of 10.2 tonnes in the European Union.
As incomes rise and the South African government continues its attempts to provide universal access to electricity, emissions intensity is expected to increase, at least if the current carbon intensity of electricity production is maintained. At about 850g CO2/kWh, the South African average is nearly twice as high as in the industrialized countries. CO2 consequently accounts for the largest proportion of total greenhouse gas emissions in the country (about 80 per cent), and it stems mainly from electricity production (WRI 2009).
Investment in renewable energy and energy efficiency is important to reduce the negative economic, social and environmental impacts of energy production and consumption.
South Africa has some experience with renewable energy, though largely limited to traditional biomass and off-grid applications. Renewables make a negligible contribution to bulk electricity supply.
Government is beginning to set targets for renewable energy in the short-to-medium term. More ambitious long-term targets are feasible, aiming at 15% renewable electricity by 2020. To achieve such targets, a choice needs to be made between different policy instruments, drawing on experience in industrialized countries—FITs, renewables obligations and portfolio standards.
Adapting these instruments to local conditions means taking into account affordability of tariffs, budget and institutional constraints, limited green markets and the need to extend access. In the South African context, it seems more desirable to directly set a quantity and to limit government expenditure on renewables. Government’s primary role should be to set the target, and to let the emerging renewable industry find the most cost effective way of meeting it. A portfolio standard, possibly combined with elements of tendering, is therefore the recommended policy option.