South African Energy Policy FES Briefing Paper 11| August 2007 Page 4 tal policy objectives namely: “ Securing supply through diversity ” . However, reform of existing systems always pre­sents challenges. Also, especially in terms of di­versification of primary energy sources, the his­tory of coal in development of the South African energy system and the realities of local coal costs, including spatial layouts of major South African markets play an important role in selecting coal as a least-cost supply option. Issues related to distance of South African mar­kets from other large international markets and local availability of abundant very low cost coal are mentioned in the section below on areas that are problematic. South Africa has recently successfully introduced piped gas from Mozam­bique into the local market although known re­serves limit the potential from this source to a contribution of 4% of primary energy supply. The electricity generation expansion programme is considering conventional nuclear and CCGT fi­red by imported LNG for base-load stations although no commitments have been made. These options are more costly than coal, if calcu­lations are limited to standard economic consi­derations in the current economic environment and so these choices rely on government inter­vention to implement diversification policy. Environmentally sound development and use of energy The establishment of energy systems and heavy industry to exploit South Africa’s large coal re­sources in an era when pollution and environ­ment degradation were not as prominent on the policy agenda as today, and the prevalence of large areas of poverty in South Africa, with the inevitable environment degradation, much of this energy related, are legacies that have sensi­tized current policy that has been developed using more democratic processes where the voi­ces of the many that bear the brunt of pollution, environmental degradation and energy poverty are better represented than before. As a result, energy-environmental linkages enjoy prominence in South African policy. The physical and economic realities of the legacy systems, energy poverty, local asymmetry in energy con­sumption and access and environment degrada­tion are a large challenge and central to formu­lation and implementation of South African energy policy, and are also linked to long-term security of supply considerations. 4 G8 Petersburg Declaration action plan- seven core aims 1. Reducing energy poverty The first statement of Energy Sector Policy Ob­jectives in the South African Energy Policy White Paper of 1998(SAWPEn) is: “ Government will promote access to affordable energy services for disadvantaged households, small businesses, small farms and community services. ” The prominence and position of this statement accords with government economic and social policy in general, which recognizes poverty as a highest priority issue. South Africa has a Gini coefficient of 58, amongst the highest in the world and 26% unemployment according to the narrow definiti­on of the unemployed or 44% if discouraged work seekers are included. A large and signifi­cant proportion of the population lives in condi­tions of poverty, one of which is inadequate ac­cess to affordable, safe energy. The asymmetry of access to and consumption of energy is mirrored in what has been called the South African“dual economy”: within the boundaries of one country there is a relatively small proportion of citizens enjoying a“first” economy which exhibits developed world cha­racteristics and is linked into the global economy while a large proportion of citizens inhabit a po­verty stricken“second” economy with few links to the first economy or the global economy. Domestic asymmetry in energy consumption is perceived as an element of economic inequity in general. Thus in a democratic policy process in South Africa it is possibly less problematic to build support for processes to address asymmet­ry in consumption than in countries without a dual economy. This could impact G8 policies around energy consumption asymmetries in two diametrically opposed directions: on the one hand it could as­sist with building support for policies that add­ress the asymmetry in terms of leveling it, while on the other, if world resource constraints limit the degree to which the asymmetry can be dec­reased while maintaining current levels of con­sumption amongst high-consuming countries, this could work against the support for such po­licies.