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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #4123/01 3391232
ZNR UUUUU ZZH
R 051232Z DEC 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 2884
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0710
RUEHRL/AMEMBASSY BERLIN 0573
RUEHBY/AMEMBASSY CANBERRA 0590
RUEHJA/AMEMBASSY JAKARTA 0163
RUEHLO/AMEMBASSY LONDON 1378
RUEHMO/AMEMBASSY MOSCOW 0713
RUEHOT/AMEMBASSY OTTAWA 0543
RUEHFR/AMEMBASSY PARIS 1237

UNCLAS SECTION 01 OF 02 PRETORIA 004123 
 
SIPDIS 
 
SIPDIS 
 
STATE PLEASE PASS USAID 
STATE PLEASE PASS USGS 
DEPT FOR AF/S, ISN, EEB/ESC AND CBA 
DOE FOR T.SPERL, G.PERSON, A.BIENAWSKI, M.SCOTT, L.PARKER 
 
E.O. 12958: N/A 
TAGS: SENV ENRG EPET SF
SUBJECT: Disclosing Carbon Footprints, While Burning Coal 
 
REF: Pretoria 3726 
 
PRETORIA 00004123  001.2 OF 002 
 
 
¶1.  SUMMARY: A recent voluntary Carbon Disclosure Project showed 
that a few companies are responsible for the bulk of South Africa's 
greenhouse gas emissions, which ranks 14th in world for emissions. 
The top two emitters, state electricity supplier Eskom and 
coal-to-liquid (CTL) supplier Sasol, have ambitious plans to reduce 
their carbon footprints, but face tough challenges in implementing 
these plans.   Eskom is scrambling to meet growing electricity 
demand in the face of a supply shortfall and will increase 
combustion of dirty coal, before shifting reliance longer-term on 
alternatives, like nuclear.  Sasol's plans to reduce emissions are 
almost entirely based on carbon sequestration, but there are few 
suitable geological formations in South Africa where this can be 
done.  The SAG plans to engage business to fashion a long-term 
climate policy over the next two years.  End Summary. 
 
--------------------------------------------- -------- 
Who'w the Dirtiest of Them All? Firms Disclose Carbon 
--------------------------------------------- -------- 
 
¶2.  South Africa's first voluntary Carbon Disclosure Project (CDP) 
showed that the country's carbon emissions were dominated by a few 
major players.  State-owned power utility Eskom, which participated 
voluntarily in the project for Johannesburg Stock Exchange-listed 
companies, emitted 208 million metric tons of methane and carbon 
dioxide in 2006, 40.5 per cent of South Africa's total and 2.8 times 
number two emitter Sasol (71 million tons emissions).  Sasol is the 
world's largest single-point emitter of greenhouse gases (Ref). 
Mining companies BHP Billiton and Anglo-American closely followed 
Sasol in the ranking.  South Africa's response rate for the CDP was 
75 percent, much higher than many other countries.  Telkom, Arcelor 
Mittal Steel SA, and Kumba Iron Ore were among companies that 
elected not to participate in the survey or project. 
 
-------------------- 
Pressure to Go Green 
-------------------- 
 
¶3.  Environmental Affairs & Tourism Minister Marthinus van Schalkwyk 
announced: "Business can assume that government will increasingly 
assess, monitor, and regulate greenhouse gas emissions.  It can also 
assume that there will be a much stricter regulatory framework and a 
hefty price on carbon."  Van Schalkwyk made his comments on the eve 
of his departure to Bali for the UN Climate Change Conference 2007. 
Observers expect South Africa to come under some pressure to reduce 
its emissions - at more than 440 million tons of CO2 per year, it is 
the largest polluter in Africa and the 14th largest greenhouse gas 
emitter in the world.  South Africa is a signatory to the Kyoto 
Treaty, but faces no obligations as a developing country.  Van 
Schalkwyk briefed business leaders on the outcome of a study on 
long-term mitigation scenarios for climate change.  This aims to 
foster debate on the way forward between government and business and 
inform the preparation of a long-term climate policy in 2008/2009. 
 
¶4.  Department of Environmental Affairs & Tourism Chief Director: 
Air Quality and Climate Change Peter Lukey stated that his Minister 
QAir Quality and Climate Change Peter Lukey stated that his Minister 
was committed to South Africa's taking real steps to mitigate 
climate change, noting that Africa will be a potential victim of 
climate change.  Lukey spoke at the November 28 South African 
Institute of International Affairs-sponsored conference entitled 
"The Second Scramble for Africa - Lifting the Resource Curse". 
Lukey underscored the messages from the United Nations 
Inter-governmental Panel on Climate Change (IPCC): Measurable 
climate change is human-induced and will continue and we 
collectively have to take steps to mitigate climate change and adapt 
now.  He called for South Africa to take a leadership role in 
implementing new carbon-friendly, energy-efficient technologies, 
rather than waiting to follow the "north". 
 
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Eskom Stuck Between a Rock and a Hard Place 
------------------------------------------- 
 
¶5.  Eskom faces pressure to quickly overcome a shortage in 
electricity supply for South Africa's booming economy.  In the short 
term, it will refurbish and build more coal-fired plants, increasing 
 
PRETORIA 00004123  002.2 OF 002 
 
 
its over-whelming reliance on coal.  In the longer term, the company 
aims to reduce its reliance on coal to 70 percent by 2025, by 
significantly expanding its number of nuclear power plants.  Taking 
advantage of lax environmental laws, and in the interest of saving 
time and money, Eskom will not be installing Flue Gas 
Desulphurization (FGD) to control harmful emissions at the Medupi 
Power Station, under construction in Limpopo.  Eskom defends itself 
by noting the lack of government regulation on SOX and citing the 
additional cost of using FGD technology. 
 
-------------------------- 
Sasol with Limited Options 
-------------------------- 
 
¶6.  Sasol has identified global climate change as a "principal 
strategic challenge" in its ability to deploy coal- and 
gas-to-liquid technologies globally, according to group environment 
expert Fred Goede (Sasol's representative on the IPCC).  His 
statement accompanied the release of Sasol's 2007 sustainable 
development report, accompanied by an "environmental road-map for 
the next 15 years, giving particular attention to greenhouse gas and 
water management.  Sasol is looking to increase its investment in 
CTL in South Africa, the United States, China, and elsewhere, but it 
is under pressure to implement carbon-capture technologies and 
suitable storage solutions.  Sasol executives underscored the 
company's commitment to researching and developing these 
technologies at a workshop it hosted at the U.S.-Africa Business 
Summit held in Cape Town November 14-16.  Sasol officers echo the 
corporate commitment, but admit that South Africa's geology does not 
lend itself to easy carbon capture solutions (Ref).  On the margins 
of the Cape Town Summit, Sasol executives told Assistant USTR Florie 
Liser that the company had voluntarily implemented process changes 
to reduce harmful emissions despite minimal government regulations. 
In recent press reports, environmentalist activists and some Sasol 
share-holders criticized Sasol for focusing only on carbon 
sequestration, setting the bar too low, and failing to achieve past 
targets. 
 
 
¶7.  COMMENT: Corporate and government responsibility for mitigating 
carbon footprints is being actively debated in the South African 
press and other fora.  In the lead up to the Bali Conference on 
Climate Change, the debate has been constructive in that it 
recognizes the need for a post-Kyoto multi-lateral arrangement that 
includes the U.S.  South Africa wants to maintain its economic 
growth and recognizes the environmental impact that growth has on 
climate change.  Moreover, environmentalists are criticizing South 
African companies like Eskom and Sasol for not doing much to 
mitigate other emissions like SOX and NOX, as well as criticizing 
the government for not establishing regulations and standards for 
these emissions.  Anyone driving through the Gauteng Province around 
Johannesburg and Pretoria will notice lots of Eskom smoke-stacks 
with little apparent effort to control the visible emissions. 
 
BOST