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Occasional  Paper 17: Replacing Coal with Cleaner Natural Gas in Southern Africa (the Equity Dimension)

By

Joe Asamoah


Executive Summary
The search for more environmentally-benign primary and secondary energy carriers has of late focused more attention on natural gas for power generation, commercial, industrial and household use. Globally, natural gas has been touted as the fastest growing component of primary energy consumption, projected to be more than twice the utilisation levels over the period 1997-2020. Gas-fired power plants run more efficiently than other fossil fuel generators; and natural gas, as the least carbon intensive fossil fuel, presents an attractive alternative to coal and oil for electricity generation.

The approximate reserves of natural gas in Southern Africa, about 8.36 trillion cubic feet, is reasonably vast to justify huge investments in the natural gas industry in the region. As of now, about two-thirds of the reserves are located in Mozambique and Namibia, each sharing a border with South Africa. The location of the reserves is highly skewed, but favourable to the development of the gas industry in the region, considering the fact that South Africa - the economic powerhouse of the region - has more capacity to utilise natural gas than any of the remaining SADC countries. Additionally, in the event of the gas reserves that feed Mossgas drying up, the latter could be supplied with natural gas from the Kudu offshore gas fields in Namibia.

Currently, natural gas use in the region is dominated by South Africa with a developed gas-to-liquid industry. Other uses of natural gas in the region are for industrial and commercial applications, including domestic use - mainly for cooking. In addition to the existence of vast reserves of gas in the region, there is also the need for big anchor projects. These will provide revenue streams and further justification for the huge investments in infrastructure needed for the uptake of the utilisation of the gas in the region. Anchor projects exist in the region. In line with global trends in the use of natural gas for the generation of electricity, the potential for similar use in the region is real. There is capacity to generate electricity either in standalone-gas turbines or in combined gas turbine and steam cycle plants. This use may materialise in the Cape Town area of South Africa and also in Dar es Salaam in Tanzania. Plans are at advanced stages in the latter locations for the specified use of natural gas. 

Energy reforms currently sweeping across the region provide the underpinnings of a vibrant future gas industry. The reforms are increasingly leading to the distinction between public energy policies and planning on one side, and private investment and operation on the other. Additionally, the reforms introduce certain imperatives in the form of strengthening energy strategy formulation and enhancement of energy sector management and work force capabilities. They bring improvement in the quality of pre-investment work, increased focus on environmental sustainability, involvement by local communities and gender equality. Several meetings held between government officials of South Africa and their counterparts in Namibia and Mozambique, prior to the drafting of the gas bill in South Africa, attest to the seriousness of efforts made to harmonise energy policies and legislation in the region.

The dominant use of coal in the electricity generation sub-sector in the Southern part of the region, with its attendant air pollution and the emission of greenhouse gases may be minimised, if gas is utilised either wholly or partially in power plants. The use of natural gas in the region will bring about a reduction in cross border pollution since natural gas is more environmentally benign than coal. It is also envisaged that gas projects that mitigate greenhouse gas emissions may qualify for carbon credits under the Clean Development Mechanism (CDM) of the Kyoto Protocol. This may stimulate the growth of the natural gas industry in the region, due to the additional revenue from the CDM. If vehicles using natural gas are introduced, or existing vehicles modified with appropriate devices, the use of natural gas in the transport sector may be enhanced.

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