sectoral economic costs and benefits of ghg mitigation - IPCC

Gina Roos
Gold mining is currently concentrated on low production costs in order to remain viable in a slow
market and the socio-economic implications of increased energy costs could again be severe.
The net direct costs for coal mining have been estimated by Lloyd et al. (in draft) at between –
R850/ton of carbon for the use of discards in fuel combustion (with a limit of about 45 000 tons)
to as much as R290/ton of carbon for the removal and combustion of methane. Costs involve the
cost of implementing the technology, while benefits involve the sale of electricity. Indirect costs
of coal have been identified as resource depletion, impacts on water quality, land use, air quality
and health and safety. However, van Zyl et al. (in draft) have examined these issues in the
context of the WWF project and found that current legislation and practice (including the use of
Environmental Management Programmes by the mines) has considerably reduced these impacts
in recent years, except perhaps for the diffuse pollution of ground and surface water.
Higher capital costs associated with new, clean technologies would increase the cost of
electricity production. The higher efficiency of clean coal technologies would reduce raw input
requirements and have secondary environmental benefits, specifically for local air pollutants.
The impact of a change in the cost of electricity has been touched on above as a possible negative
secondary cost. These costs will be quantified in the macroeconomic study, which has now
commenced as part of the Mitigation component of the South African Country Study.
Extending the Analysis to Other Countries
The discussion above has focussed on South Africa as one of many developing countries. The
profile of energy intensive industries differs substantially among the different developing
countries. Less developed countries tend to have a small industrial base which is specific to the
resource base and which generally makes use of a dedicated source of energy. In this case, a
threat to the energy source could be a threat to the industry itself. More developed countries tend
to have a larger industrial base which utilises a greater diversity of resources and may have
access to more diverse energy sources as well.
Generally, the cost of mitigation options will depend on the return on investment period,
proximity to alternative energy sources, costs and quality of alternative energy sources, whether
local synergies are possible and whether the mix of local and foreign inputs is sustainable over
time.
Acknowledgements
The author wishes to acknowledge the authors and organisations who made their draft results
available for use in this paper (Development Planning and Research, Martine Visser, Prof Philip
Lloyd and Hugo van Zyl). In addition, acknowledgement is due the organisations that have
funded the South African Country Study, without whom this research would not have been
possible (Department of Environmental Affairs and Tourism, Eskom, Deutsche Gesellschaft fur
Technische Zusammenarbeit and United States Country Studies Programme,)
References
DEAT, 1998: Climate Change: A South African Policy Discussion Document. Department of
Environmental Affairs and Tourism, Pretoria, 48 pp.
Development Planning and Research (in draft): An investigation into mining as an energy and
water using sector and its environmental impacts. Report prepared for the WWF Project on
Macroeconomics and the Environment: Four Country Study, World Wide Fund for Nature,
Washington, D.C..
Eskom 1996: Eskom Statistical Yearbook 1996. Eskom, Johannesburg, 88 pp.
235