Cape Town energy futures: Policies and scenarios for sustainable city energy development Harald Winkler, Mark Borchers, Alison Hughes, Eugene Visage and Glen Heinrich January 2005 ENERGY RESEARCH CENTRE University of Cape Town Cape Town energy futures: Executive summary ii EXECUTIVE SUMMARY The purpose of this report is to develop some scenarios for Cape Town’s energy future. The simulation model, the Long-Range Energy Alternatives Planning (LEAP) system, has been used to simulate how energy might develop in Cape Town over the twenty years from 2000 to 2020. These developments are driven not only by the nature of the energy sector itself, but also by broader factors, notably population, household size, economic growth (which may vary by sector) and other factors. The report builds on previous work done on the ‘state of energy’ for Cape Town (CCT & SEA 2003). That report was useful in capturing the current status of energy in the city, informed the City Energy Strategy conference and Cape Town’s own strategy (SEA, CCT & ICLEI 2003) and provided the starting data for this study. This report takes the work further in developing a tool that simulates what might happen to energy in the future, in a business-as-usual case and with policy interventions. A range of policy interventions are selected, and how these would change energy development in the city is examined, compared to a reference case. Interventions were selected based on various criteria, including implementation cost and technical feasibility, environmental priority, and political will. Different policies can be grouped for their sectors – industry, residential, commercial, government and transport – and also combined to form multiple-policy scenarios. These scenarios should be understood as a series of ‘what if’ questions, e.g. what if the City of Cape Town increased efficiency in its own buildings. The scenarios are not any prediction of the future, nor are any of these scenarios considered more likely than others. Instead, we report the implications of different policies and scenarios. The implications for energy, environment (both local pollutants and global greenhouse gases) and development are of particular interest. This study reports the cost implications of different scenarios only to a limited extent, as to do this adequately for many of the scenarios is beyond the scope of the project. Areas where further work is required, including around costing, are also identified. The following are the main conclusions of the work: ? Policies can make a difference to energy consumption in Cape Town. The energy scenarios examined in this study generally show energy consumption rising as economic activity (GGP) and population increase. However, significant energy savings are possible relative to business-as-usual. Unsurprisingly, since transport currently accounts for 54% of energy consumption, the biggest energy savings potential lies in this sector. ? Major energy savings can be made from modal shifts in the transport sector and with efficient lighting. Amongst all interventions considered, by far the largest savings can be gained by a shift from private to public transport modes. Savings of 1200 TJ / year, equivalent to 36 million litres of petrol and diesel in the first year.1 Switching to more efficient lighting can result in substantial savings in several sectors (see Table 26), amounting to 38 million kWh in 2001. Energy savings are important to the City, since it depends on imports of both electricity and liquid fuels. ? Energy efficiency saves money over the life of the intervention. Efficient lighting in the commercial sector can save R144 million over the projection period. More efficient heating and air conditioning could save R 32 million in the commercial sector, and R1.3 million in government buildings over the projection period. ? Energy saving in poor households can reduce their energy bills substantially. The significance of savings in the residential sector is that is low-income households can save on their energy bills. Each household could save R75 per year just by installing two CFLs (at capital cost of about R30). The payback periods for ceilings and solar water heaters (SWHs) is expected to be longer. Local government should consider subsidising the capital costs of these interventions for 1 However, electricity use increases 50 TJ with the modal shift due to increased use of electric trains. ENERGY RESEARCH CENTRE Cape Town energy futures: Executive summary iii poor households. The potential for SWHs is largest in medium- to high-income households, where electric geysers constitute the largest single use of electricity. These households should be able to afford the upfront costs of SWHs. ? Implementing the city’s renewable energy target will have significant costs, which can be partly off-set by selling carbon credits The estimated total capital costs of implementing the renewable energy target is R4 370 million. These are total costs, and should in future be compared to the costs of the alternative, e.g. building a coal-fired power station. The reduction of GHG emissions could earn the city revenues of R700 million over 20 years – about 17% of the total capital costs. ? Targeted interventions can reduce local air pollution. Cape Town has long suffered from the problem of ‘brown haze’. Policy interventions can address this problem of local air pollution, which is largely vehicle-generated. Improved public transport infrastructure will be key in reducing transport energy and emissions by making a modal shift possible. In 2020, a shift to public transport can save 1021 tons of particulates. Total reductions of SO2 are 1400 tSO2 by 2020, most of which comes from industry (see Table 28). ? Cape Town can become a leader in addressing greenhouse gas emissions. Cape Town has already set a forward-looking target for renewable energy. The scenario modeling shows that this policy could save 49 ktCO2-equivalent in 2001 already. A surprising result is that transport policy can result in even larger savings in the same year, of 72 ktCO2-eq. While these interventions require substantial investment in energy and transport infrastructure, they would enable Cape Town to become leader in addressing a critical global environmental problem – in line with its goals as a member of the Solar City initiative (see Appendix B) . ? Some policies are viable in terms of costs, social benefits and the environment. CFLs in residential, commercial and government sectors and HVAC in commerce and government sectors stand out as policies that have benefits from every angle, and should be implemented at scale immediately. The LEAP dataset described in this report is downloadable from the COMMEND and ERC web-sites http://forums.seib.org/leap/default.asp?action=60 and http://www.erc.uct.ac.za/Projects/COMMEND.htm ENERGY RESEARCH CENTRE CONTENTS 1. INTRODUCTION.............................................................................................................................................8 2. DEMAND FOR ENERGY SERVICES .......................................................................................................8 2.1 RESIDENTIAL................................................................................................................................................8 2.1.1 Medium-to-high-income households..............................................................................................9 2.1.2 Low-income households: electrified..............................................................................................9 2.1.3 Low-Income households: non-electrified................................................................................... 10 2.1.4 Summary for residential................................................................................................................ 10 2.2 INDUSTRY...................................................................................................................................................11 2.2.1 Energy use by sub-sector.............................................................................................................. 11 2.2.2 Growth rates ................................................................................................................................... 13 2.3 COMMERCIAL.............................................................................................................................................13 2.3.1 Energy characteristics................................................................................................................... 14 2.3.2 Summary .......................................................................................................................................... 15 2.4 GOVERNMENT............................................................................................................................................16 2.4.1 Non-building energy use............................................................................................................... 16 2.4.2 Government buildings................................................................................................................... 16 2.4.3 Summary .......................................................................................................................................... 18 2.5 TRANSPORT ...............................................................................................................................................18