This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 PRETORIA 004921 
 
SIPDIS 
 
DEPT FOR OES/PCI/GTHOMPSON; OES/PCI/ESHAW; AF/S/MTABLER- 
STONE; AF/EPS 
 
E.O. 12958: N/A 
TAGS: SENV ENRG ECON SF
SUBJECT: ENERGY EFFICIENCY:  SOUTH AFRICA READY TO PLUG 
INTO CSD MATRIX 
 
¶1.  SUMMARY.  Following highly successful presentations 
by Griff Thompson, Sr. Energy Advisor, the South Africa 
government (SAG) and Eskom, South Africa's electrical 
power giant, agreed to follow a process leading to the 
May 2006 meeting of the Commission on Sustainable 
Development Meeting (CSD 14) that would emphasize 
implementation and project development, rather than a 
mere review of technologies and policies.  Eskom 
committed to researching its data base for feasible 
regional projects, although it would not commit to 
having such a project ready by CSD 14.  The SAG 
concurred that specific projects linked to potential 
avenues for financing would be a far more productive 
path.  SAG agreed to advise the embassy of upcoming 
meetings at which the Department could present the 
matrix being developed by the CSD Secretariat and to 
assist in contributing case studies and best practices 
to the matrix.  Several useful additions to the matrix 
were offered, including adding measurement criteria. 
END SUMMARY. 
 
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US ADVOCATES CSD SECRETARIAT'S MATRIX 
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¶2.  Griff Thompson, Sr. Energy Advisor, Department of 
State, briefed several major players in the South 
Africa energy arena during his visit after the joint SA 
Department of Science and Technology (DST) and 
Organization for Economic Cooperation and Development 
(OECD) Energy Workshop, held November 21- 22, 2005. 
His brief relied upon the following key points:  The 
CSD is more than just 2 weeks in NYC; work needs to 
begin now to make CSD14 more than simply a review 
session.  There are no great mysteries to be reviewed. 
Those in the field know what the issues are, the 
technologies and the barriers.  Spending a year 
reviewing what is already known wastes important 
opportunities. 
 
¶3.  The U.S. has supported the CSD Secretariat in its 
work to develop a matrix that can used to maximize 
CSD14/15.  The matrix will collect case studies and 
projects that can then be replicated in other countries 
and regions.  In this context, the U.S. views energy 
efficiency as the critical element.  $16 trillion is 
needed between now and 2030 to adequately respond to 
the growing global energy demand, so financing of these 
projects is the key.  A properly constructed matrix can 
be used to identify champions who will broker 
relationships and partnerships.  The U.S. aims to be 
pro-active in assisting in seeking the necessary 
support from donors, and to helping form strong 
partnerships with the World Bank and other entities. 
Sequencing is another critical element.  Energy 
efficiency measures require a continuum of financing. 
If the right measures are chosen, then projects can 
move from the grant stage to the market-based stage and 
be self-supporting.  Finally, the U.S. views energy 
efficiency as a fundamental developing country priority 
because it bridges the development and environmental 
agenda by directly responding to the issues of air 
pollution, while alleviating poverty. Access to energy 
services is a necessary catalyst to economic and 
political development. 
 
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ESKOM WILL WALK THE PATH IF FUNDING COMMITMENTS ARE 
MADE 
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¶4.  Thompson's first meeting was with Wendy Poulton, 
Eskom General Manager - Corporate Sustainability and 
Rochelle Chetty, Chair of Eskom's Business Action for 
Energy (BAE).  Eskom, a SA state-owned entity, is a 
vertically integrated utility that generates transmits 
and distributes electricity. It supplies approximately 
95% of the country's electricity and 60% of the total 
electricity consumed on the African continent. Compared 
with other international utilities, Eskom is the 
eleventh in terms of generating capacity and ninth in 
terms of sales, and boasting the world's largest dry- 
cooling power station. Eskom sells directly to 
approximately 6 000 industrial, 18 000 commercial, 70 
000 agricultural and 3 million residential customers. 
Eskom also supplies electricity to some 284 
municipalities which then distribute to their clients. 
Eskom owns and operates 13 coal-fired, 2 gas-fired, 2 
hydro and 2 pumped storage power stations, as well as 
one nuclear power station.   Eskom transmission lines 
span the entire country and extend into most Southern 
African Development Community (SADC) countries. Its 
distribution teams connect an average of 1 000 new 
homes every day.  The majority of sales are in South 
Africa, with only small percentage elsewhere in the 
Southern African region. 
 
¶5.  Eskom participates as a member of the BAE and the 
International Chamber of Commerce (ICC), serving as 
Chair of the Environment and Energy Committee of the 
ICC.  Eskom has been pushing for a stronger voice, more 
opportunity for dialogue, and a bigger role in 
partnership developments for the ICC.  Eskom is 
currently searching for a flagship regional project 
that it can roll out on the grid.  Eskom has identified 
an infrastructure project and is involved in regional 
initiative for that project. An informal meeting on the 
project was held in Nairobi earlier this year.  The SA 
Minister of Minerals and Energy attended and wants to 
hold another side meeting concerning the project at 
Dubai.  Eskom and the Minister hope to align the 
project within the CSD process.  UNEP has been helpful 
in facilitating the meetings.  The BAE would consider 
other events at which it could piggyback these 
meetings. 
 
¶6.  After listening to Thompson's presentation, Poulton 
immediately turned to financing.  Ms. Poulton plainly 
stated that Eskom would be interested and would 
participate in the Energy Efficiency Investment- Forum. 
She noted that South Africa business and the Department 
of Mines and Energy have recently signed an energy 
efficiency accord that would be in line with the U.S. 
proposal.  But, in her opinion, financing of projects 
remains the key element.  It is vital to leverage 
multilateral financing, and to provide developing 
countries with credit/ benefits/ incentives (similar to 
the CDM). 
 
¶7.  Poulton noted that it is easier to bundle projects 
and that Eskom currently participates in the SA Power 
Pool (SAPP).  Although there have been discussions 
within that organization about regional bundling and 
projects, nothing formal has been proposed.  Other 
regional organizations in which Eskom participates 
include the Power Institute of East and Southern Africa 
(PIESA) (with members outside SADC - Uganda and Kenya) 
which focuses on research, joint projects, standards 
and distribution, and the Union of Producers and 
Distributors of Africa (UPDIA) which also has broader 
membership than SADC.  In response to Thompson, Poulton 
said that she would research what case studies Eskom 
currently has on regional projects and would advise 
him. 
 
¶8.  Ms. Poulton concluded by returning to the issue of 
funding.  She asked for more details regarding who 
would provide the funding and who would be decide what 
projects to fund.  She noted that it is very 
disheartening to do all the work necessary to prepare a 
project and then get no funding.  She concluded by 
commenting that it was questionable if anything 
regional could be developed in time for CSD 14. 
 
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SAG UNFOLDS MATRIX - OFFERING SUGGESTIONS, REVISIONS 
--------------------------------------------- --------- 
 
¶9.  Thompson then briefed a group of South African 
government representatives, including Judy Beaumont, 
Chief Director: Planning and Coordination, Department 
of Environmental Affairs and Tourism (DEAT),  Blessing 
Manale, Director for Sustainable Development and 
Coordination (DEAT) and Elsa Du Toit, Director for 
Energy Efficiency and the Environment, Department of 
Minerals and Energy (DME).  He later briefed Peter 
Lukey, DEAT's Chief Director: Air Quality Management 
and Climate Change. 
 
¶10.  Beaumont first noted that the government of South 
Africa does not like to fragment issues such as climate 
change away from other environmental issues.  However 
SAG does agree that a major challenge would be making 
certain that CSD 14 is robust, measurable, reviews good 
practices and scopes out what is needed for CSD 15. 
Beaumont also agreed that it was useful and important 
to define priorities early with clear definitions and 
interlinking between themes. Beaumont felt that the US 
approach using energy as the "glue" holding everything 
together was constructive.  Whatever the final process/ 
approach, the primary goal for South Africa remained 
obtaining specific commitments especially in financing, 
technical support and capacity building.  Thompson 
responded that it is important to get beyond the broad 
generalities of "capacity building" and "financing". 
Everyone agrees that these two are critically needed, 
but until countries begin to define specifically what 
kind of capacity, for whom, for what; and similarly, 
what kind of financing for what energy service and for 
whom, they will continue to address the problem only 
rhetorically.  The framework provided by the proposed 
matrix allows countries to begin to identify the 
details of these various cross-cutting themes, and gets 
everyone closer to tangible solutions. 
 
¶11.  Blessing commented that the mere establishment of 
partnerships was not particularly meaningful.  He noted 
that there are over 300 partnerships now operating in 
SA but no one in government has any real details on how 
well these partnerships operate.  No body, such as the 
UN, monitors what is accomplished.  He believes that 
the energy invested in managing these partnerships 
might be better invested into more realistic projects 
 
¶12.  Du Toit commented that she was an operational 
person.  .  In her mind, reviewing is now complete and 
it is time for implementation.  As an operational 
person, she commented that the matrix did not have any 
measurement criteria.  Outputs need to be defined and 
measured. 
 
¶13.  Du Toit then noted that for many developing 
countries, including South Africa, too much attention 
is wasted on electrification.  Electricity is still far 
too expensive for many South Africans.  What is needed 
is an energy package that allows the consumer to choose 
the most effective energy source, whether that source 
be candles, gas stoves, solar or electricity. 
Providing people with free candles and solar appliances 
would be far better in her opinion than electrifying 
the country.  Government should be working to make the 
fuel people do use cleaner, safer and more sustainable. 
People must be brought up to a basic level before 
advancing to what people cannot afford. 
 
¶14.  Du Toit concluded by advising that the African 
Ministers of Energy and Hydropower Conference would be 
held March 6-9 in Sandton. This would be an ideal venue 
at which to seek additional support.  She will keep the 
embassy informed about details of the meeting as they 
are made public.  She also noted that it might be 
helpful to attend the meetings of the Energy Ministers 
of Africa (AFRIC).  She will provide more information 
on that organization as well. 
 
¶15.  Final comments from this group focused on the role 
of civil society and labor.  All SAG participants felt 
that the participation of civil society, labor and 
business within the CSD process was not as robust as it 
needed to be.  (FYI.  This comment had been echoed in 
an earlier conversation between EST Off and Eskom. End 
FYI)  Both business and labor see the UN process as not 
accessible and less than transparent  Noting the U.S. 
was also not pleased by the lack of participation, 
Thompson said that he had met with the Secretariat and 
the Chair seeking ways to open the meetings and the 
discussions.  The U.S. hopes to make business, civil 
society and labor authentic partners in the CSD 
process. 
 
¶16.  Peter Lukey and Reginald Mabalane, Dir AQM, 
described the role of DEAT in all multilateral 
organizations.  DEAT coordinates the SAG position.  For 
DEAT, the nexus between climate change and energy is a 
major concern since climate change adversely affects 
South Africa's ability to develop.  CSD policies must 
align with Kyoto. The objective for South Africa at CSD 
remains the desire for a tangible outcome, measurable 
impacts in SA, and technology transfers.  None of this 
has really happened yet and there have never been any 
real commitments to make this happen.  The proposed 
matrix by the CSD Secretariat is a good start but it is 
merely a "poetry basket" now.  The matrix needs 
tangible projects with cost/benefits analysis and 
concrete programmatic items.  The bottom line should be 
a document with specific clear interventions having 
clear impacts. 
 
¶17.  Lukey also noted that although South Africa has 
huge coal reserves, the SAG has a strong commitment to 
reduce coal usage.  In this regard, SAG is in the 
process of establishing a new National Energy 
Efficiency Agency under DME.  This entity will 
coordinate public and private energy efficiency 
investment.  Currently electricity in South Africa is 
the cheapest in the world. The government does not want 
to raise prices as this would adversely impact 
business, industry and transportation which would not 
help development.   DEAT is in partnership with DME to 
reduce residential coal burning, using a grass roots 
technique invented in the late 1800s by a SA housewife. 
This top down coal burning reduces 80% of emissions and 
20% of fuel usage.  DEAT will shortly be rolling out a 
new publicity campaign. 
 
¶18.  Lukey also noted that there were other ways the 
government could increase energy efficiency including 
the introduction of fees and tariffs similar to those 
now used in the water sector.  All residents receive a 
basic water ration, usage above that rate is charged at 
a flat fee until a certain luxury level is reached. 
Then the luxury rate is charged.  This is an important 
incentive for water conservation and could work for 
electricity as well. 
 
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CONCLUSION: SOUTH AFRICA'S MAIN CONCERN: SHOW US THE 
MONEY! 
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¶19.  Despite the initial hesitations from DEAT, by the 
end of that conversation DEAT appeared willing to join 
with the U.S. in following the matrix process at CSD 
¶14.  Eskom committed to participate as well.  Both 
entities, however, remain cautious.  Unless specific 
financing and commitments can be shown, neither SAG nor 
Eskom will be willing to walk this path for long.  They 
are quite articulate and explicit about their 
requirement for specific and concrete projects and 
funding.  If the U.S. cannot fulfill their commitment 
to help, then it would be better to know that sooner 
rather than later. 
 
 
TEITELBAUM