As papers are being served on the Minister of Mineral Resources and the Director General, the PetroleumAgency South Africa, and the Minister of Forestry, Fisheries and Environment by Interested and Affected Parties to suspend Shell’s seismic survey, nationwide protests along the coastline continue, a boycott of Shell ensues, the tally of over 300 000 signatures objecting to the seismic surveys keeps building, a major corporation ( Discovery Insure) distances itself from Shell and the country unites against harms done in the name of unneeded fossil fuels – it is safe to say the Oceans Not Oil movement is stepping up.
Whilst human chains wound their way around Shell outlets, and Youth4 Marine Protected Areas handed over moratoria to Energy Depts, the Portfolio Committee held public hearings to hear comments on the latest amendments to the Gas Bill (2001). Below you’ll find Oceans Not Oil’s verbal submission and also of interest in the video you’ll hear Mr Niel Axford of South Durban Basin give a wonderful delivery making clear the health and safety ramifications of living near gas infrastructure. It seems government have not been listening to the residents of South Durban who live with constant leaks, poor quality flaring and explosions and have offered them no mitigation.
“The world has become a significantly different place since the first tabling of this Bill twenty years ago, and energy ideas and decisions made then are necessarily under urgent review. This morning the already out-dated, and contentious promise of a fossil-gas-to-power future for South Africa needs to be weighed against the prospect of developing governance strategies and policies to deliver rapid and deep mitigation now.
Which leads us to our first question: What provision is being applied for fast-tracking gas development?
SUSTAINABILITY ASSUMPTION NEEDS SCIENTIFIC PEER REVIEW
The assumption that this the Bill can provide environmentally sustainable development needs to be supported by evidence.
The perception of gas climate compatibility was derived from the fact that gas burns cleaner than coal, generating roughly half of the carbon emissions. Recent peer reviewed scientific studies from the Natural Resources Defence Council (NRDC) (December, 2020 find that the climate benefit of Liquified Natural Gas compared to coal is only modest at best[i], since the enormous volumes of methane[ii]leakage inherent in producing the gas, and along the supply chain – at drilling sites, compressor stations, pipelines, and liquefaction facilities- and the energy required to liquefy the gas, transport it, and re-gasify it upon arrival ultimately presents a significant threat to the climate. [iii]
The unabated use of Fossil gas is incompatible with achieving the climate-neutrality objective by 2050. Its use will have to be reduced by over 70 % of current use in 2021. Studies show further development of gas infrastructure is incompatible with the Intergovernmental Panel on Climate Change (IPPC) target of keeping global increases in temperature below 2°C[iv]. This all begs the question of the employment outlook, a just transition, economics and plain logic in the South African context. South Africa has already warmed at around twice the rate of global warming.[v]
The National Gas Pipeline will be flared every 187 kms (National Department Of Environmental Affairs’ (DEA) Strategic Environmental Assessment (Sea) For A Phased Gas Pipeline Network And Expansion Of The Electricity Grid Infrastructure In South Africa, 2018) and studies show that leaks to pipelines are par for the course[vi], affecting communities and global warming, since what escapes is methane, which traps 84 times more heat per mass unit that CO2, over a 20 year period[vii]. Over 60% of the methane emissions are fugitive, the rest are from vented or combusted emissions.[viii]
In May 2021, the International Energy Agency (IEA) published a high-profile report [ix] that detailed the pathway to achieving net-zero carbon emissions by 2050, and in the report the agency concluded that expanding fossil fuel exploration and use must end:
“No new natural gas fields are needed in the [Net Zero Emissions scenario] beyond those already under development,” the IEA said. “Also not needed are many of the liquefied natural gas (LNG) liquefaction facilities currently under construction or at the planning stage.” The agency went on to add that the volume of LNG traded needs to fall sharply going forward.
The legacy of gas infrastructure build is massive – about 40 to 50 years of environmental and socioeconomic impacts. 68% of South Africa’s emissions come from fossil-fuel combustion with fugitive emissions from oil and natural gas contributing to 9% and 7 % of the total emissions respectively.
Given that this Act has the potential to cause severe and irreversible harm to the public or the environment [see the harms listed at f.) viii below], and given the studies cited herein, the operation and transmission of gas cannot be deemed sustainable. We suggest the removal of the word ‘sustainable’ from the Act [The Explanatory note; Amendment of section 2 of Act 48 of 2001 ; 2 (a) (aA) and (aB)] completely.
FINANCIAL IMPLICATIONS FOR THE STATE
The memorandum of the Objects of The Gas Amendment Bill states that,
“Bill will not have any organisational and personnel implications for the Department and does not create further financial liabilities to the State.”
This claim needs to be substantiated considering the newly created National Petroleum Company( merged from iGas, Petrosa and the Strategic Fuel Fund(SFF) into one entity) will play a central role in the proposed Gas Master Plan and this Bill, yet none of these SOEs find themselves in a gross-profit-generating situation.
- PetroSA ‘s R7.4 billion Abandonment Liability (provision) needs to be paid by February 2024 and its year-on-year financial losses (R20 + billion) and current debt trajectory are not sustainable.
- iGas is still at a development stage in its projects and requires major capital to be deployed in order to achieve the planned objectives [x]. Its tax losses have been in the region of millions, and the viability of this concern was thus brought into question in the May 2021 Report of the Portfolio Committee. [xi]
- The public bears the cost of the Strategic Fuel Fund’s strategic stock which also holds an environmental liability. The Strategic Fuel Fund’s SFF has reported a 61% drop in revenue (2019), and faces the potential of over R2 billion in losses from litigatory action.[xii]
- The break-even point of combined-cycle infrastructural development will sit well past 2030 and profits will only be seen in the decades after 2050.
This begs the question then of where incentives for closure and transition from gas to renewables will be derived, and what is the logic of development of gas as a transition energy if it is bound to be locked in past 2070?
The sector is unattractive for new investments as the cost- of- financing by financial institutions will be high, given the country’s junk status, as such no new major projects will take- off in the short to medium term. Nedbank will no longer finance new gas exploration projects.
The public will bear the brunt of the decarbonisation challenges the roll out of the Gas Master Plan faces.
DELAYED FINAL INVESTMENT DECISIONS
Gas projects are 30-year-plus projects, customers are unwilling to commit to contracts longer than 10 years and a retreat of bankers from financing new fossil fuel projects has begun[xiii]. New LNG and gas projects have considerable risks of being stranded assets prior to the operating life being complete[xiv].
DISINCLINATION TO TRANSITION
- Substitution of fossil gas for coal has not been addressed by the Bill. Studies[xv] have shown changes in emissions of carbon dioxide (CO2), sulphur dioxide (CH4), a sulphate aerosol precursor (SO2), and blackcarbon particles(BC) resulting from the replacement of coal by fossil gas in the electric utility sector initially produces higher temperatures relative to continued coal use and can last from 1 to 30 years, depending on the sulphur controls assumed. This is followed by a net decrease in temperature relative to continued coal use, resulting from lower emissions of CO2 and blackcarbon BC. The length of this period and the extent of the warming or cooling expected from coal-to-gas substitution is found to depend on key uncertainties and characteristics of the substitutions, especially those related to:
(a) a sulphate aerosol precursor SO2 emissions and consequent sulphate aerosol forcing; and
(b) the relative efficiencies of the power plants involved in the switch.
Fossil fuel switching may therefore continue to take a toll on the environment and society. The CMCC Foundation and RFF-CMCC European Institute on Economics and the Environment (EIEE) and Athens University of Economics and Business have projected a cost of up to 20% of GDP in their investigation into how climate change could impact the GDP of South Africa.
Delayed action on an energy transition away from fossil fuels could maximize adverse impacts to a Just Transition and minimize the opportunities offered by a transformation of the energy sector.[xvi] State promises of the 34% greenhouse gas reduction by 2020 and meeting the 42% Business As Usual emission reduction trajectory by 2025 target, and the transition from coal to renewals by 2030, are hollow and have not materialised.
- The International Energy Agency (IEA) has concluded that if planetary systems are to remain within the two degree limit, no more than one-third of proven reserves of fossil fuels can be consumed prior to 2050.[xvii] Therefore two-thirds of proven reserves of oil, coal, and natural gas, including reserves that corporations have paid billions of dollars for, must be left in the ground to stay within the global carbon budget.[xviii] Neither international law nor domestic law has ever mandated the stranding of assets of that magnitude and needs consideration before the public purse is involved in massive infrastructural build that will take until 2035 to complete.
- Renewable energy is increasingly the cheapest option to generate electricity in most parts of the world, and the cost declines are expected to continue.[xix]
- The basic rationale of an industry built around a relatively small number of massive but highly vulnerable facilities, to climate change and extreme weather events, is now being called into question.[xx]
- Carbon capture technologies are not profitable, potentially unfeasible, and have questionable climate benefits.
- Absence Of Precautionary Principle
- Absence Of Environmental Consideration
- Absence Of Polluter Pays Principle.
- Absence of a National Mitigation Plan
- Absence of Annual Review
- Absence of Costs Benefit Analysis
- Strategic Environmental Assessment for the Gas Master Plan
FOX GUARDS THE HEN HOUSE
Functions of Energy Regulator that delegate both regulatory and promotion participation requires review to ensure that the Regulator’s prescribed mandates to “act independently of any undue influence or instruction” [NERSA 9 (c)] are not undermined in the interests of expedience or profit by the regulator’s obligations to promote gas development.
OPEN/ BROAD CLAUSES
A number of the clauses in the Bill are too broad or vague and afford the Minister and Energy Regulator practically boundless justification and interpretation and may occasion highly disproportionate results. Vague and ambiguous clauses deprive the applicant, authorities and the public, of notice about what the law requires and serve to undermine compliance.
If the development of a fossil-gas-infrastructure indeed follows the idealized, and rapid deployment assumed in the Bill and IRP models, then any reduction in near- term mitigation caused by the appeal of gas-as-a-bridging-fuel will still lead to an overshoot of the Paris temperature goals (3).
If the many warnings and reservations increasingly voiced about fugitive emissions turn out to be valid, the weakening of near-term mitigation and the failure of future gas-as -transition development will be a prelude to rapid temperature rises reminiscent of the 4°C “business as usual” pathway feared before the Paris Agreement (5).
Facilitating gas infrastructure development and investment is not an insurance policy, but rather an unjust and high-stakes gamble. There is a real risk they will be unable to deliver on the scale of their promise. If the emphasis on equity and risk aversion embodied in the Paris Agreement are to have traction, the promotion of the development of the gas industry should not form the basis of the mitigation agenda. The mitigation agenda should proceed on the premise that they will not work at scale. The implications of failing to do otherwise are a moral hazard par excellence
Our thanks and we look forward to your response.
Oceans Not Oil
- African Conservation Trust
- AfriOceans Conservation Alliance
- Animals Conservation Alliance
- Centre for Environmental Rights
- Conservation Guardians
- Coastal Links (KwaZulu Natal)
- Conservancies KZN
- Earth Life Africa (Durban)
- Eastern Cape Environmental Network
- Embabhaceni Development and Nature Solutions
- Fisherfolk Formations
- FrackFree SA Youth
- Green Thumb Society
- KwaZulu Natal Marine stranding Network
- Legal Resources Centre
- Mayine Azanian Movement
- Masifundise Development Trust
- Sardine Run Association
- Sentinel Ocean Alliance
- South African Youth Climate Change Coalition
- South African Squid Management Industrial Association
- South Durban Community Environmental Alliance
- Sustaining The Wild Coast
- The Bluff Work Experience and Volunteer Program
- Umkomaas Fishing Forum
- Vaal Environmental Justice Alliance
- Vanishing Present Productions
- Shark Warrior Adventures
- Ufudu Flyfishing Safaris
- Parley For The Oceans”
Gas Amendment Bill Public Hearings , Westville Civic Center 27 November 2021
[i] Myhrvold, N. P., & Caldeira, K. (2012). Greenhouse gases, climate change and the transition from coal to low-carbon
electricity. Environmental Research Letters, 7(1), 014019.
[ii] Cusworth, D.H., Duren, R.M., Thorpe, A.K., Olson-Duvall, W., Heckler, J., Chapman, J.W., Eastwood, M.L., Helmlinger, M.C., Green, R.O., Asner, G.P. and Dennison, P.E., (2021). Intermittency of Large Methane Emitters in the Permian Basin. Environmental Science & Technology Letters.
[iii] Swanson, C., Levin, A., Mall, A. (2020) Sailing to Nowhere: Liquefied Natural Gas Is Not an Effective Climate Strategy. Natural Resources Defense Council.
[iv] Masson-Delmotte, T.W.V., Zhai, P., Pörtner, H.O., Roberts, D., Skea, J. and Shukla, P.R., & Connors, S.(2018). IPCC, 2018:
Summary for policymakers. Global warming of, 1.
[v] Engelbrecht F.A., Adegoke J., Bopape M-J, Naidoo, M., Garland R., Thatcher M., McGregor J., Katzfey J., Werner M., Ichoku C. & Gatebe C. (2015). Projections of rapidly rising surface temperatures over Africa under low mitigation. Environmental Research Letters. 10(8),
[vi] Alvarez, R.A., Zavala-Araiza, D., Lyon, D.R., Allen, D.T., Barkley, Z.R., Brandt, A.R., Davis, K.J., Herndon, S.C., Jacob, D.J., Karion, A. and Kort, E.A., (2018). Assessment of methane emissions from the US oil and gas supply chain. Science, 361(6398), pp.186-188.
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[vii] Myhre, G. et al, (2013) Anthropogenic and Natural Radiative Forcing. Chapter 8 in the Fifth Assessment Report of the Intergovernmental Panel on Climate Change’, IPCC, p 714.
[viii] Kirchgessner D.A,. Lott RA, Cowgill RM, Harrison MR, Shires TM (1997) Estimate of methane emissions from the US natural gas industry. Chemosphere 35: 1365–1390. Available at <https:www3.epa.gov/ttn/chief/old/efdocs/methane_dec2000.pdf>
[x] CEF Group of Companies.(2019). Integrated Annual Report 2018/19. p.96. Available at < https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwj376nXx4vyAhV4ShUIHWFwCv4QFjAAegQIBhAD&url=https%3A%2F%2Fwww.cefgroup.co.za%2Fannual-theme-menu%3Fdownload%3D545%3Aannual-report-2018-2019&usg=AOvVaw1wkvDgSMAD0ewANZfEtHgX>
[xi] Report of the Portfolio Committee on Mineral Resources and Energy on the Annual Performance Plan and Budget Vote No. 34 for 2021/22 Financial Year of the Department of Mineral Resources and Energy and its entities, dated 14 May 2021. Available at <https://pmg.org.za/tabled-committee-report/4581/>
[xii] Report of the Portfolio Committee on Mineral Resources and Energy on the Oversight Visit to the Western Cape Province, dated 17 March 2021. Available at <https://pmg.org.za/tabled-committee-report/4533/ >
[xiii] Creamer, T. 2019. Tail Wagging Dog, Engineering News Vol 39. No38 .p7.
Ciunningham, N. 2021. Global LNG Industry Reeling as its Image as a Climate Solution Shifts to ‘Climate Problem’. Available at <https://www.desmog.com/2021/06/24/global-lng-natural-gas-industry-reputation-climate-problem-report/>
[xiv] Caldecott, B., Harnett, E., Cojoianu, T., Kok, I. and Pfeiffer, A., 2016. Stranded assets: A climate risk challenge. Washington DC: Inter-American Development Bank.
[xv] Hayhoe, K., Kheshgi, H.S., Jain, A.K. and Wuebbles, D.J., 2002. Substitution of natural gas for coal: climatic effects of utility sector emissions. Climatic Change, 54(1), pp.107-139.
[xvi] South Africa’s new Nationally Determined Contributions are delaying the Just Transition. (2021) groundWork & Earthlife Africa (ELA). Available at <https://www.groundwork.org.za/archives/2021/news20210604-SouthAfricas_new_Nationally_Determined_Contributions_are_delaying_the_Just_Transition.php>
[xvii] Energy Outlook, supra note 39, at 241.
[xviii] Energy Outlook, supra note 39, at 241.
[xix] Wright, J.G., Calitz, J.R., Van Heerden, P.R., Bischof-Niemz, S.T., Mushwana, C. and Senatla, M., 2017. Formal comments on the integrated resource plan (IRP) update assumptions, base case and observations 2016.
[xx] Cruz, A.M., Krausmann, E., (2013). Vulnerability of the oil and gas sector to climate change and extreme weather events. Climatic change, 121(1), pp.41-53.