1. FACTORING EXTERNAL COSTS INTO POLICY AND INVESTMENT DECISION MAKING
Arp, R. and Keen, S.
Presented at the SATC
8 July 2019

4. “Internalising the external cost”

5. South Africa is no exception
90%
95%
Our addiction to fossil fuels is unsustainable.
South Africa is no exception

6. FACTORING EXTERNAL COSTS INTO POLICY AND INVESTMENT DECISION MAKING
External costs = second-hand impacts
Account for external costs
Make sustainable decisions
How much does electricity actually cost?
How much does transport actually cost?
What carbon price to combat climate change?

7. Transport: SA studies Accidents = = 23.5 cents/t.km Emissions =
Congestion =
Swarts et al. (2012) & Jorgensen (2009)
R140/t JHB → Durban

8. Transport: International studies
R6.9/t.km
R8.45/t.km
R1.97/t.km
R60.29/t.km
Accidents =
Air pollution =
Emissions =
Congestion =
Korzhenevych et al. (2014) & ECORYS (2004)

9. R46 470/t SAVING Transport: International studies = R77/t.km
R46 500/t JHB → Durban
5 cents /t.km
= R30/t JHB → Durban

10. Electricity Kusile Power Plant = R1.5 – R3.3 trillion
Air pollution and GHG emissions?
R750 billion and R380 billion
Nkambule and Blignaut (2017)

11. Electricity Air pollution + GHG emissions from the rest? = 5cents/kWh
= R /hour during stage 4 load shedding
Price increase of 30% - 181%
Thopil (2013) & Thopil and Pouris (2015)

12. Carbon price
R120/tCO2e

13. Carbon price to achieve 2⁰C?
World Energy Outlook 2015
R238.15/tCO2e
High level commission on carbon prices 2017
R505.63/tCO2e
IPCC 1.5⁰C Report 2018
R826.74/tCO2e
IPCC 1.5⁰C report 2018 (Fifita, et al., 2018); High level commission on carbon prices 2017 (CPLC, 2017); World Energy Outlook 2015 (IEA, 2015)