Numsa submission to Parliament on energy efficiency
Numsa's submission on efforts to reduce the amount of energy required to provide products and services.
The National Union of Metalworkers of South Africa (Numsa) welcomes this opportunity to submit its views on energy efficiency to Parliament’s portfolio committee on energy.
The union is aware that even though South Africa ranks 13th in the world as a carbon emitter, there have been a number of developments since COP17 that highlight the need for South Africa to become more energy-efficient.
There is also some resonance of this in the National Climate Change Response White Paper of 2011, the Green Economy Accord of 2011 and several policy documents released by auxiliary departments that seek to reduce the country’s emissions by 34% by 2020 and 42% by 2025.1
However, it should be noted that the country’s Energy Efficiency Strategy of 20052 takes its mandate from the 1998 White Paper on Energy Policy, and apart from its vision of making energy affordable to all without damaging the environment, the strategy set “a national target for energy efficiency improvement of 12% by 2015” (Energy Efficiency Strategy RSA, 2005: ii).
In 2008 the Minister of Minerals and Energy, Buyelwa Sonjica, released the first review of the strategy, and more recently the department of energy informed the portfolio committee on energy of its intention to release a revised national Energy Efficiency Strategy for public comment by the end of 2011 (Sabinet Law, 2011)3.
Following the adoption of the Energy Efficiency Strategy in 2005, the Minister also indicated in the 2008 review that the Department had entered into an Energy Efficiency Accord with some “40 large industrial and commercial consumer” and that 14 of these companies had invested some R9.9-billion on energy efficiency improvements over the three-year period.4
Numsa on the Energy Efficiency Accord
While Numsa welcomes these achievements, the union is disturbed by the fact that government has time after time sidelined labour and civil society formations from participating in the development of its energy efficiency policies.
The exclusion of both labour and civil society formations from participation in the Energy Efficiency Accord and the dominance of big business in what has explicitly been described as a voluntary rather than mandatory initiative, confirms a number of our fears about the nature and intention of the accord:
• The voluntary nature of the accord does not place any obligation on business to implement energy efficiency measures, and as long as industries are made to comply with the minimum regulatory standards as far as emission levels are concerned, the chances of further investments in energy efficiency projects will remain as they are – voluntary!
• The accord does little to discourage a “business as usual” approach and leaves energy efficiency almost entirely in the hands of the private sector
• The National Business Initiative (NBI) and Business Unity South Africa (Busa) have complete control over the accord:
To convene the business of the accord and its link with Government, an Energy Efficiency Technical Committee (EETC) was formed with NBI playing the management and secretariat roles.
The committee meets on regular basis to share best practices on the promotion of energy efficiency within their respective companies and to exchange ideas of common interest with regards to energy efficiency.
The EETC is chaired by one of the signatory companies and the deputy chair is provided by the Department of Minerals and Energy (DME) (NBI/DME, 2008: p3)5
In its assessment of the accord, the NBI and Busa have made several recommendations calling on government to ensure that:
• The voluntary efforts on energy efficiency by business will be considered in the planned Power Conservation Programme (PCP).6
• Power rationing to be shared fairly by all sectors in the economy and not just by business.
• Business wants more high-level engagement from government departments.
• Business wants government to provide an integrated package of incentives and financial mechanisms to sustain their involvement and interest in energy efficiency programmes.
• There is more government support for Research and Development – Support from the South African National Energy and Development Institute.
• There is adequate skills training in energy management and technical operations and for the energy Seta to play a more proactive role in establishing the requisite training standards.
Seemingly, the accord becomes a one-sided affair, with business setting the agenda and Government showering its blessings with a promissory note acknowledging that all is well and on track.
Absence of trade union and civil society participation in policy development
In August 2011 the department of energy (DoE) briefed the parliamentary committee on energy on some of its work on energy efficiency and energy savings. DoE highlighted progress on the following projects:
• The solar water heating programme;
• Fiscal energy efficiency and demand side management programme;
• Industrial energy efficiency project (start: April 1 2011 – finish: March 31 2014); and
• Energy efficiency target monitoring project (start: April 1 2011 – finish: March 31 2014).
• Energy efficiency and demand-side management:
• Appliance standard and labelling programme; and
• Appliance energy efficiency standards.
• Energy efficiency communication and campaign strategy.
In all these endeavours,the words trade union, labour and civil society are hardly mentioned.
The only reference that comes close to any involvement from civil society is the proposal by DoE to refer the energy efficiency communication strategy to Nedlac’s social partners for consideration:
This strategy is to give weight to the national campaign, including defining roles and responsibilities for all stakeholders, as it is a fact that government cannot do it alone. [DoE, Briefing on energy efficiency and energy savings to the parliamentary portfolio committee on energy, August 10 2011]
However, at the request of Numsa, the DoE did present an overview of its industrial energy efficiency project at a union-organised workshop on October 17 2011, and agreed that the involvement of employees was necessary to ensure that energy efficiency programmes at the level of the shopfloor were successful (Annexure 1).
Short of involving the trade unions, the plan has some merit, but unless there is collective ownership and involvement of all stakeholders, there is the possibility that management will want to drive the process and the participation of employees will be limited to carrying out instructions.
From our own interviews and a snap survey of shop stewards on their perceptions of energy efficiency at the level of the company, the following response confirms that management wants to be in the driving seat:
Response from Numsa shop steward, ArcelorMittal, October 31 2011:
Energy committee: ArcelorMittal have the energy committee at corporate [level] with Mr Francois van der Bank as the energy manager.
Amsa (Vanderbijlpark ) has started with formulating their energy committee.
Response from Numsa shop steward, Assmang Chrome, October 31 2011:
Question: Does our company have an efficiency committee? Is there a structure or energy committee?
Response: Yes! We do have an energy efficiency section led by the energy manager, where all the engineers and superintendents assist him on control measures on energy consumption. The above structure is responsible for both energy consumption and costs
Further consultations with shop stewards belonging to industries that fall within the scope of the Intensive Energy User Group and those involved in some of the solar water heater manufacturing industries confirm that management sees energy efficiency as its own prerogative. During COP17, Numsa conducted several interviews with shop stewards attending the C17 Civil Society Space gathering at the University of KwaZulu-Natal.
Many of them attended the World of Work Pavilion organised by the International Trade Union Confederation, and confirmed that there was little interaction between them and management on issues such as energy efficiency.
But despite all these limitations, many of our shop stewards are playing an active role in promoting energy efficiency in their workplaces (Annexure 2). Some have even complained to the union that their companies have lost huge contracts and that the policy to procure locally manufactured solar water heaters. is being undermined by municipalities that use imported solar water heaters.
This flies in the face of government’s commitment to leverage procurement and local content to stimulate industrial development and job creation.
As indicated in many of our previous submissions to the portfolio committee on energy, Numsa is more than willing to share its ideas on matters of energy and has repeatedly called for the involvement of all stakeholders in matters of energy production and consumption.
Unless there is a commitment from all to participate, and until such time that government and the private sector become less selective on issues that they want the unions and civil society to participate in, the chances of becoming energy-efficient and creating a new and healthier environment will remain an illusion.
1 Department of Environmental Affairs 2011, National Climate Change Response White Paper, viewed 09 April 9 2012, http://www.environment.gov.za/PolLeg/WhitePapers/national_climatechange_response_whitepaper.pdf
2 Department of Minerals and Energy 2005, Energy Efficiency Strategy of the Republic of South Africa, viewed 31 August 31 2012, http://www.info.gov.za/view/DownloadFileAction?id=88503
3 SabinetLaw 2011, Revised Energy Efficiency Strategy in the Pipeline, viewed 31 August 31 2012, http://www.sabinetlaw.co.za/mining-and-energy/articles/revised-energy-efficiency-strategy-pipeline
4 Department of Mineral and Energy 2008, National Energy Efficiency Strategy of RSA, First Review October 2008, viewed 31 August 31 2012, http://www.info.gov.za/ view/ DownloadFileAction?id=103163
5 NBI/DME 2008, Assessment Study of the Energy Efficiency Accord, viewed 31 August 2012, http://www.nbi.org.za/SiteCollectionDocuments/ee_accord_assessment_report.pdf
6 The Power Conservation Programme (PCP) is the key government initiative designed to provide a demand-side solution to the energy challenges facing South Africa.
As the only quick solution available, it is aimed at closing the supply-demand gap in the short-term, until new base-load stations come online. PCP has two central elements:
• Energy Conservation Scheme (ECS) to reduce energy consumption by approximately 10%.
• Electricity Growth Management (EGM) to manage new electrical connections in line with available supply capacity. For more information go to Eskom Power Conservation Programme: http://www.eskomidm.co.za/power-conservation-programme
Numsa’s research and development groups will assess, amongst other things, the following issues:
How policy initiatives affect Numsa?
What must we aim for?
1.Review of government-supported solar water heating projects
In 2009, government set a target to install 1-million solar water heaters by 2014.
The programme is driven by:
• grants from the fiscus to participating municipalities; and
• a rebate programme run by Eskom and other organisations.
Problems have emerged with the implementation of the programme. In April 2011, Eskom revised the rebates downwards.
There has also been a reduction of installation rates per supplier. Unless something is done, the chances of meeting the 1-million target by 2014 looks remote (see next page for rebate instalments thus far).
To avoid possible failure, government is conducting a review of the solar water heater programme through the renewable energy market transformation (REMT) project. A revised programme is due in March 2012.
Comrades from solar heater manufacturing companies reported widespread importation from China.
They also provided evidence of how changes in Eskom rebates led to retrenchments.
• As a union that organises solar heater manufacturing enterprises, we should be involved in the renewal energy market transformation review.
• We must insert local content requirements in the revised programme.
2.Implementation of regulations on energy efficiency of buildings
From November 201, all new buildings will have to have;
• 50% of the annual volume of their hot water requirements provided by solar and other renewable energy appliances.
• appliances that ensure efficient use of energy.
What this means is that new buildings will have to be fitted with energy efficient heating, air conditioning and mechanical ventilation systems. This is according to a sub-regulation published by the Minister of Trade and Industry in June 2010 in terms of the National Building Regulations and Building Standards Act.
It is our members and our sectors that manufacture these appliances.
• We must ensure that local content requirements are part of the programme and that jobs are created through the implementation of the building standards.
3.Review of energy efficiency strategy
• Since September 2010, government has been reviewing its 2005 Energy Efficiency Strategy. A reviewed strategy will be out for public comment in November/December 2011. The government hopes to finalise the process by March 2012.
• The Industrial Development Corporation with the backing of German development bank KfW has officially unveiled a R500-million fund – the Green Energy Efficiency Fund .
The fund will lend energy-intensive industrial sectors at prime less 2% over a maximum period of 15 years for projects which seek to promote energy efficiency. The loans will come in tranches of between R1-million and R50-million.
• Many of our companies are energy-intensive. The increase in electricity tariffs has affected their profitability. In turn employers are offloading the increasing price of electricity on our members through retrenchments.
• Some Numsa-organised companies, such as BHP were pilots where the Energy Efficiency Strategy was implemented.
• Block unilateral implementation of energy efficiency programmes by management.
• Energy Efficiency Strategy energy committees must involve shop stewards.
• Build our technical capacity on energy efficiency.
• Discuss how savings from energy efficiency are shared.
4.National Treasury proposal on a carbon tax
In line with the resolution on climate change of the ANC’s 52nd national conference, national treasury published in December 2010 a discussion paper on the introduction of a carbon tax – Reducing Greenhouse Gas Emissions: The Carbon Tax Option.
The paper proposed a tax on CO2 emissions, a proposal that business has opposed. From our sectors submissions from Alstom, ArcelorMittal, Eskom, General Motors and Seifsa form part of the 79 written comments lodged with the department.
Since the publication of the discussion document, treasury has worked on the issue, with a draft policy paper expected in November 2011. The details of the tax are expected in the budget speech in February 2012.
Employers in our sector are opposed to the tax. They are telling our members that the introduction of a carbon tax will be an economic burden on them and is likely to lead to job losses.
• We need to be prepared to comment on the policy paper that is due in November 2011.