A survey of energy-intensive users has found that the electricity portion of their total input costs has increased by an average of 9% to 18% between 2007 and 2012.
Shaun Nel, project director and advisor of the Energy Intensive Users Group of Southern Africa, reveals that the impact on the price of the final product rises as a result and companies can take one of two paths to manage the higher tariff: pass the increase directly onto the customer (which can affect competitiveness) or absorb the increase (which impacts on margins).
This issue is of specific importance to South African industry, he says, which responded this month with robust final comment on the released carbon tax policy paper from the National Treasury.
This tax, part of South Africa’s commitment to reduce harmful greenhouse gas emissions, is part of a two-pronged “carrot and stick” approach, setting out incentives for companies to encourage behaviour change, but also legislating penalties for those who fail to do so.
In Europe, where carbon taxes have been in place for some time, indications are that a combination of a “reward and penalty” approach is the most effective way to encourage long-term behaviour change with regard to energy efficiency and carbon emission management.
At the recently hosted Large Power Users Forum (part of African Utility Week & Clean Power Africa 2013) discussions centred on cost reductions and energy efficiency solutions that help energy intensive users to overcome the burden of the new carbon tax as well as addressing their concerns to government ministers and policy makers.
An example of energy savings was demonstrated by ArcelorMittal at the same event last May, which has saved more than R90-million per annum through energy efficiency interventions.
SAB Miller has reduced its electricity consumption by 17% since 2008 with energy-efficiency initiatives such as reducing water temperature, high-efficiency lighting, improved metering, and employee awareness programmes. SABMiller’s Newlands brewery in Cape Town gets 10% of its steam generation power by harnessing biogas from its waste water stream.
In addition, the forum highlighted that companies introducing the ISO 50001 Energy Management Standard can experience an energy savings of between 10% and 20% in the first two years.
Further solutions brought to the table included reform of electricity regulations with the introduction of an independent system operator and distributor. It was also highlighted that good incentive programmes are needed to create a culture of energy efficiency. The most commonly used incentive programme is one where carbon taxes are introduced to encourage a decrease in operations which emit high levels of CO2.