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EASTERN AFRICA POWER POOL

(EAPP)

EAPP REGIONAL
POWER SYSTEM
MASTER PLAN

ENVIRONMENTAL
ANALYSIS REPORT

December 2014
Published by:

EAPP, Eastern Africa Power Pool


Kirkos sub city, House No.513
P.O Box 100644
Addis Ababa, Ethiopia

Ea Energy Analyses
Frederiksholms Kanal 4, 3. th.
1220 Copenhagen K, Denmark

Energinet.dk
Tonne Kjærsvej 65
7000 Fredericia, Denmark

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Contents

1 Introduction ........................................................................................4

2 Environmental impact of fossil-fired generation ...................................6


2.1 Sulphur dioxide emissions .................................................................. 6
2.2 Carbon dioxide emissions ................................................................... 7

3 Modelling assumptions ...................................................................... 10

4 Baseline emission levels: 2015 ........................................................... 12

5 Emission level development pathways ............................................... 14


5.1 Main scenario ................................................................................... 14
5.2 Alternative scenarios ........................................................................ 16

6 Emission mitigation measures ............................................................ 20


6.1 Environmental implications .............................................................. 20
6.2 Economic implications ...................................................................... 24

7 Discussion and implications ............................................................... 26

8 References ........................................................................................ 29

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1 Introduction
The current Environmental Analysis Report is a supporting document to the
EAPP Master Plan 2014, addressing the environmental considerations and ex-
ternalities arising from the projected increase of fossil fuel-fired generation in
a number of EAPP member countries in the medium to long term to satisfy
the rapidly growing power demand in the region. The focus of this report will
be on SO2 and CO2 emissions from power generation in the EAPP region due
to the importance of these pollutants to the local and global environment and
the quality of life.

Tanzania has discovered significant gas reserves and also has significantly re-
vised its coal reserves upwards. This, together with the planned coal-fired
power plants in Egypt, Kenya and Sudan, would result in an increase in carbon
and sulphur emissions. In order to assess how expansion plans for generation
capacity may influence the level of emissions, the Balmorel model (the model-
ling tool used in the EAPP Master Plan 2014 least-cost expansion planning) will
determine the amount of carbon and sulphur that might be dispelled to the
atmosphere. These will be determined on the basis of the technology and the
fuel used in each case. The result will be a development path for each pollu-
tant, which will be tracked across the scenarios evaluated in the study (more
details in Volume III: Results Report), and implications thereof will be dis-
cussed.

In addition, 2 scenarios have been specifically created (and will be discussed in


more detail) to assess the impact of different prospective emission mitigation
measures:

Scenario Description
Requirement of 30, 35, 40, 45, and 50 % share of renewables to
Renewable satisfy the gross demand in 2020, 2025, 2030, 2035, and 2040 re-
spectively across the region
CO2 price of $10, $20, $30, $40, and $50/ton in 2020, 2025, 2030,
CO2 price
2035, and 2040 respectively across the region

Table 1: The description of the environmental scenarios modelled in the EAPP Master Plan 2014
study

The EAPP Master Plan 2011 Volume IV includes a generic assessment of the
potential environmental impacts of building major transmission lines in the
EAPP region and provides recommendations for mitigating environmental im-
pacts. This work is comprehensive and does not require updating.

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The environmental assessment of large hydropower and nuclear power pro-
jects, in turn, warrants a separate comprehensive analysis based on the indi-
vidual projects in question, and is beyond the scope of the current Environ-
mental Analysis Report.

Data uncertainty A number of assumptions (e.g. optimal power dispatch, investment coordina-
tion possibility regionally between generation and investments etc.) and pro-
jections regarding the development path of key parameters (e.g. power de-
mand growth, fuel prices etc.) have been made in the EAPP Master Plan 2014
study, and the accuracy of the results herein reported is subject to the materi-
alisation of the said assumptions.

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2 Environmental impact of fossil-fired genera-
tion
Fossil-fired power generation, and coal-based generation in particular, are sig-
nificant sources of pollutants and greenhouse gases (GHGs). Two types of
emissions, namely, sulphur dioxide (SO2) and carbon dioxide (CO2) will be ana-
lysed in more detail in the current analysis.

2.1 Sulphur dioxide emissions


Sulphur dioxide is a colourless heavy gas with a pungent smell, also known to
be an irritant. Sulphur dioxide is emitted in the combustion process of fossil
fuels that contain sulphur. Coal burning accounts for 50% of annual global SO2
emissions, making it the single largest source of the global sulphur dioxide
emissions, with oil and diesel burning contributing a further 25-30%. Other
sources include: metallurgical operations; smelting of non-ferrous ores of cop-
per, lead, nickel, and zinc; manufacturing of sulphuric acid; conversion of
wood pulp to paper; and refuse incineration. Road transport is usually only re-
sponsible for a small fraction (<5%) of total sulphur emissions. Natural sources
of sulphur dioxide include volcanic activity (UNEP, 2009).

Human and environmental effects of exposure to high concentration of SO2


emissions include respiratory impacts (difficulty breathing, respiratory illness,
aggravation of asthma and bronchitis etc.) and aggravation of existing cardio-
vascular conditions, as well as material, terrestrial and aquatic ecosystem
damage. Sulphur dioxide is a precursor to sulphates, which are associated
with acidification of lakes and streams, accelerated corrosion of buildings and
monuments, and reduced visibility. SO2 contributes to the formation of acid
rain (US EPA, 2012).

Occurrences of acid rain have been reported in e.g. South Africa, in the East-
ern Transvaal Highveld, the industrial heart of the country where coal-fired
power stations and large metal working industries are concentrated. This area
has a history of producing most of the country's pollution: in 1987 it was re-
sponsible for 1.84 million tonnes of sulphuric acid and 0.84 million tonnes of
nitric acid. The acid rain that occurs in this region and can average pH 4.2 and
can fall as low as pH 3.7 (Collins, 2001).

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Figure 1: Global sulphur dioxide emissions by meta-region, in Mt sulphur. Source: (Smith,
Andres, Conception, & Lurz, 2011)

It should be noted that Africa only contributes a minor share of the global SO2
emissions (as illustrated by Figure 1), with China, Northern America and Eu-
rope are leading the charge – and South Africa being responsible for the ma-
jority of all African emissions, as presented in Table 2. However, it is the im-
mediate local and regional health and environmental effects that should be
considered (also in East African context) when evaluating the prospective in-
crease in SO2 emissions in the EAPP member countries.

Country / 1990 2005 % change


Region MtSO2 MtSO2 1990-2005
China 17.2 32.7 90%
US & Canada 24.1 15.1 -37%
Western Europe 18.2 6.2 -66%
Africa 3.4 2.7 -21%
South Africa 2.3 2.5 9%
International Shipping 7 12.1 73%

Table 2: Total SO2 emission estimates by decade (for the indicated year) and region. Source:
(Smith, et al., 2011)

2.2 Carbon dioxide emissions


Carbon dioxide is a colourless gas formed during the combustion of any mate-
rial containing carbon. Carbon dioxide is a ‘greenhouse gas’ (GHG), and is one
of the primary causes of human-induced climate change. There are no known

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serious direct health effects from CO2, yet the indirect health effects of cli-
mate change are numerous (UNEP, 2009).

Box 1, based on the Working Group II contribution to the Fourth Assessment


Report of the Intergovernmental Panel on Climate Change “Africa. Climate
Change 2007: Impacts, Adaptation and Vulnerability” (Boko, et al., 2007) pro-
vides examples of the projected future risks and impacts caused by a changing
climate, including reduced food security, aggravated water stress and compro-
mised human health.

Box 1: Future risks and impacts caused by a changing climate. Source: (Boko, et al., 2007)

“Africa is one of the most vulnerable continents to climate change and cli-
mate variability, a situation aggravated by the interaction of ‘multiple
stresses’, occurring at various levels, and low adaptive capacity (high confi-
dence).”

“Agricultural production and food security (including access to food) in


many African countries and regions are likely to be severely compromised
by climate change and climate variability (high confidence).”

“Climate change will aggravate the water stress currently faced by some
countries, while some countries that currently do not experience water
stress will become at risk of water stress (very high confidence).”

“Human health, already compromised by a range of factors, could be fur-


ther negatively impacted by climate change and climate variability, e.g.,
malaria in southern Africa and the East African highlands (high confi-
dence).”

The IPCC Climate Change 2014 Synthesis Report in addition highlights that the
risks are not evenly distributed, being generally greater for “disadvantaged
people and communities at all levels of development (IPCC, 2014).

Although coal represented 29% of the world total primary energy supply in
2011, it accounted for 44% of the global CO2 emissions due to its heavy car-
bon content per unit of energy released. As compared to natural gas, coal is
nearly twice as emission-intensive on average (IEA, 2013). Similar to the SO2

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emission situation, Africa is only a minor CO2 emitter on a global scale. How-
ever, the level of absolute emissions in Africa has been increasing significantly
over the past 2 decades, as shown in Table 3.

Country / 1990 2011 % change


Region MtCO2 MtCO2 1990-2011
China 2,277 7,999 251%
United States 4,868 5,287 9%
Europe 3,154 2,932 -7%
Africa 544 967 78%
Germany 949 747 -21%
United Kingdom 549 443 -13%
Table 3: World CO2 emissions from fuel combustion. Data source: (IEA, 2013)

Again, it should be highlighted that South Africa accounts for 38% of all CO2
emissions from fuel combustion in Africa (based on 2011 statistics), with coal
accounting for 70% of its primary energy supply and 94% of its electricity gen-
eration mix. South Africa has committed, under the Copenhagen
Accord, to reduce emissions by 34% by 2020 and by around 42% by 2025,
compared to the current emission baseline (IEA, 2013).

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3 Modelling assumptions
The level of SO2 and CO2 emissions in the current analysis has been deter-
mined based on the results of scenario modelling in the Balmorel modelling
framework. The Balmorel power system model is an economic and technical
partial equilibrium model that simulates the power system and least-cost dis-
patch. The model optimises the production at the existing and planned pro-
duction units and simultaneously simulates investments in new generation
and transmission (see EAPP Master Plan 2014 Volume I: Main Report for more
information).

The level of SO2 and CO2 emissions reported in the current analysis is deter-
mined by the fuel use in the power production modelled in each time period
by the individual generation units represented1 (each characterised by capac-
ity, fuel type/technology, efficiency etc.), and the corresponding emission fac-
tors.

CO2 content SO2 content


Fuel
(kg/GJ fuel) (kg/GJ fuel)
Natural gas 56.8 0
Coal 95 0.07
Fuel oil 78 0.446
Light oil 74 0.023
Peat 107 0.24
Municipal waste 32.5 0.156
Wood 0* 0.025
Coke 95 0.07
Methane 49.28 0
Table 4: Assumptions regarding the SO2 and CO2 content in different fuels per GJ of fuel energy
content. Only fuels emitting SO2 and/or CO2 have been listed.
* Wood and bagasse are assumed to be carbon-neutral fuels.

Table 4 provides an overview of the emission factors used in the current anal-
ysis. The emission coefficient for coal is of particular importance, given the
significant increase in coal-fired generation in the modelled results in the
Main scenario towards 2040.

SO2 emissions from coal- The SO2 emission coefficient for coal (0.07 kg/GJ) has been based on the
fired generation World Bank guidelines, 2008 edition (IFC World Bank Group, 2008) corre-
sponding to the emission limit for large (600 MW+) boiler type of plants, with

1
Please see EAPP Master Plan 2014 Volume II: Data Report for more information on the generation units
represented. Please see EAPP Master Plan 2014 Volume III: Results Report for detailed power generation
results.

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solid fuels located in degraded airsheds. The World Bank guidelines have been
explicitly stated as relevant for coal power plant projects in Kenya and Sudan
by their respective utility representatives, and have been assumed repre-
sentative of the EAPP region.

The emission limit applicable to SO2 content in flue gas of 200 mg/Nm3 stated
in the World Bank guidelines has been converted to kg/GJ by using the coal
flue gas emission volume assumption2 of 350 Nm3/GJ (World Bank Group,
1998).

The 200 mg/Nm3 emission level (and the corresponding 0.07 kg/GJ, respec-
tively) represents 90% reduction in SO2 emissions relative to the average non-
desulphurised emission level of ca. 2000 mg/Nm3. This level of desulphurisa-
tion has been deemed attainable both from technological and financial stand-
points for the prospective power plant projects in the EAPP member coun-
tries.

Industry sources suggest that sulphur emission level reduction of up to 95%


can be technologically and financially viable, whereas reduction beyond 95%
requires more advanced and costly technological solutions.

2 Coal flue gas: dry, 6% excess oxygen

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4 Baseline emission levels: 2015
The point of departure for the baseline emission levels is the power genera-
tion in the EAPP region in 2015. Figure 1 provides an overview of the power
generation by fuel type and country in modelled year 2015 in the Main sce-
nario. It should be noted that no model-based investment takes place in 2015,
power generation is based on the least-cost dispatch of the modelled existing
and committed units.

250
Annual power production (TWh)

200

150

100

50

0
SOUTH_S
BURUNDI DJIBOUTI DRC EGYPT ETHIOPIA KENYA LIBYA RWANDA SUDAN TANZANIA UGANDA
UDAN
FUELOIL 0.67 3.86 0.19 0.02 4.94 0.43 0.50
LIGHTOIL 0.02 0.89 0.02 0.16 0.57 0.18 0.88 0.13 0.11 2.26
METHANE 0.21
COKE 0.77
WIND 4.30 0.69 0.19
WATER 0.21 10.85 13.63 8.99 3.99 0.33 7.49 2.61 3.79
GEO 0.39 0.04 5.01
SUN 0.03 0.25 0.03 0.02
PEAT 0.12
WOOD 0.46 0.15
BAGASSE 0.86 0.35 0.35
Natural gas 182.88 32.17 6.65

Figure 2: Annual power generation in TWh in the EAPP area by fuel type and country in mod-
elled year 2015 in the Main scenario (based on least-cost dispatch of the existing and commit-
ted generation units). See EAPP Master Plan 2014 Volume II: Data Report and Volume III: Re-
sults Report for more information.

As can be seen in the graph, natural gas-fired generation dominates in the re-
gion, largely because of its prevalence in Egypt and Libya. A number of coun-
tries have fuel oil in their generation mix, whilst no power is generated from
coal in 2015 (except for some coke-fired generation in Sudan).

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Predictably, natural gas-fired generation is the main source of CO2 emissions
in the region in modelled year 2015 in the Main scenario, as illustrated by Fig-
ure 3, with fuel oil and coke being responsible for the rest.

140,000

CO2 emissions ('000 tonnes)


120,000 PEAT
100,000 NAT_GAS
80,000 METHANE
60,000 LIGHTOIL

40,000 FUELOIL

20,000 COKE

Figure 3: CO2 emission level in ‘000 tonnes in the EAPP region by fuel type in modelled year 2015
in the Main scenario (based on least-cost dispatch of the existing and committed generation
units)

The main source of SO2 emissions in modelled year 2015 in the EAPP region in
the Main scenario, on the other hand, is fuel oil, with the other sources con-
tributing only marginally as presented in Figure 4.

60,000
SO2 emissions (tonnes)

50,000 WOOD
40,000 PEAT

30,000 LIGHTOIL

20,000 FUELOIL
COKE
10,000

Figure 4: SO2 emission level in tonnes in the EAPP region by fuel type in modelled year 2015 in
the Main scenario (based on least-cost dispatch of the existing and committed generation units)

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5 Emission level development pathways
There is interest in development of coal-fired power generation in several
EAPP member countries in the short to medium term (Egypt, Kenya, Sudan
and Tanzania). The rapidly growing power demand, however, intensifies the
power supply challenge is the medium to long term. This section will explore
the projections of the Main scenario, as well as different future generation
and emission development pathways based on prospective developments in
the key drivers and parameters.

5.1 Main scenario


The projection period of the EAPP Master Plan 2014 study extends to 2040,
and based on least-cost generation and transmission optimisation in the EAPP
region (in the absence of specific environmental requirements and con-
straints, i.e. in the Main scenario), a significant increase in coal-fired power is
observable. Figure 5 illustrates the projected development in the total genera-
tion capacity in the EAPP region towards 2040 in the Main scenario. Natural
gas-fired generation capacity is dominant in the short to medium term (i.e.
until 2025), yet rapid development of coal-fired generation capacity takes
place 2030 onwards. By 2040 nearly a half of all generation capacity in the
EAPP region is coal-fired.

300,000
METHANE
Total generation capacity (MW)

COKE
250,000 WOOD
WIND
200,000 SUN
PEAT
MUNI_WASTE
150,000
LIGHTOIL
FUELOIL
100,000 Bagasse
WATER
50,000 NAT_GAS
GEO
- Coal
2015 2020 2025 2030 2035 2040

Figure 5: Total installed generation capacity in MW by fuel type in the EAPP region over the pro-
jection period based on the modelling results of the Main scenario

The dominance of coal is even more prominent in power generation, as pre-


sented by Figure 6. Due to its relative cost competitiveness, coal-fired genera-
tion takes precedence over natural gas-based generation in the merit-order
dispatch, resulting in 1/3 of all power generated in the EAPP region in 2030

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being coal-based in the Main scenario (and reaching 2/3 share in power gen-
eration by 2040).

FUELOIL
1,600

Annual power production (TWh)


LIGHTOIL
1,400 METHANE
1,200 COKE
BAGASSE
1,000
WOOD
800 WIND
SUN
600
PEAT
400 MUNI_WASTE
200 WATER
Natural gas
- GEO
2015 2020 2025 2030 2035 2040 Coal

Figure 6: Annual power production in TWh by fuel type in the EAPP region over the projection
period based on the modelling results of the Main scenario

The increase in coal-fired generation in the medium to long term results in sig-
nificant increase in SO2 emissions 2030 onwards, as illustrated by Figure 7. The
projected emission level towards 2040 is 12 times higher than the 2015 base-
line. In the short to medium term, however, a decrease in the SO2 emission
levels could be expected if the commitment to phase out oil-based generation
succeeds towards 2020.

700,000

600,000 WOOD
SO2 emissions (tonnes)

500,000 PEAT

400,000 MUNI_WASTE
LIGHTOIL
300,000
FUELOIL
200,000
COKE
100,000
COAL
-
2015 2020 2025 2030 2035 2040

Figure 7: Annual SO2 emission level in tonnes in the EAPP region over the projection period
based on the modelling results of the Main scenario

Significant increase is projected in the CO2 emission levels as well, especially in


the medium to long term, as presented by Figure 8. The emission level growth
in excess of the power generation (demand) growth rate reflects the relatively

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much higher CO2 intensity of coal as compared to natural gas. The projected
CO2 emission level towards 2040 is almost 8 times higher than the 2015 base-
line.

1,000,000
900,000 PEAT
CO2 emissions ('000 tonnes) 800,000
NAT_GAS
700,000
MUNI_WASTE
600,000
500,000 METHANE
400,000 LIGHTOIL
300,000 FUELOIL
200,000
COKE
100,000
0 COAL
2015 2020 2025 2030 2035 2040

Figure 8: Annual CO2 emission level in ‘000 tonnes in the EAPP region over the projection period
based on the modelling results of the Main scenario

5.2 Alternative scenarios


A number of alternative scenarios have been explored in the EAPP Master
Plan 2014 (see Volume I: Main Report and Volume III: Results Report for more
information). The projected impact on generation and emission levels will
hereby be presented, based on a number of key parameter variations mod-
elled:
- Only G: no further development of regional interconnections above
and beyond the existing and committed lines, only investments in
generation and the dispatch are optimised;
- Benchmark: relaxation of the national security of supply requirement,
allowing the countries to rely on each other for power supply and de-
mand;
- Nuclear: the nuclear development plans as per Egypt’s and Kenya’s
National Master Plans have been implemented in full;
- 8% rate: more favourable financing terms for investments (8% inter-
est rate on generation and transmission investments instead of the
default 10%);
- NG price: higher natural gas price (same as the European gas price).

Figure 9 presents an overview of the development in the generation capacity


fleet in the EAPP region over the projection period in the selected scenarios.
Higher natural gas price (NG price) results in relatively the highest additional
investment in coal-fired generation capacity. More favourable financing terms

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(8% rate) is another parameter which results in significant additional invest-
ment in coal-fired capacity, making the high-investment-cost and relatively
low-fuel-cost coal technology more competitive with the alternatives. In both
cases the additional coal-fired capacity investment displaces natural gas-fired
generation investments. Towards the end of the projection period, in 2040,
however, the 8% rate case results in reduced coal capacity investment (vis-à-
vis the Main scenario), and additional investment in hydro and wind power ca-
pacity takes place. In addition, the more favourable financing terms also result
in model-based investment in nuclear-based capacity.

The implementation of the nuclear capacity development plans in Egypt and


Kenya (Nuclear), in turn, displaces coal and natural gas investments, as well as
some hydro-based generation capacity.

Relaxation of national security of supply requirement (Benchmark) results in


less investment in coal- and natural gas-fired capacity, and reduced capacity
investments overall vis-à-vis the Main scenario. At the same time, more hy-
dro-based investment takes place, as well as investment in wind power.

The case of frozen regional interconnection project development (Only G) re-


sults in higher coal-fired capacity investments, as well as in investments in
wind and solar power. Less investment in hydro power takes place, reflecting
the more local nature of power supply in this case.
300,000
Total generation capacity (MW)

250,000

200,000

150,000

100,000

50,000

-
8% rate

8% rate

8% rate

8% rate

8% rate
Only G

Only G

Only G

Only G

Main
Only G
NG price

NG price

NG price

NG price

NG price
Main

Main

Main

Main
Benchmark

Benchmark

Benchmark

Benchmark

Benchmark
Nuclear
Nuclear

Nuclear

Nuclear

Nuclear

2020 2025 2030 2035 2040


Coal GEO NAT_GAS WATER LIGHTOIL SUN WIND Nuclear

Figure 9: Total installed generation capacity in MW by fuel type in the EAPP region over the pro-
jection period based on the modelling results of the selected scenarios

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A similar picture is to be observed when looking at the power generation mix
in the EAPP region in the selected scenarios (presented in Figure 10). It is
worth noting that coal-fired generation is being dominant in excess of its
capacity share.

1,600
Annual power production (TWh)

Nuclear
1,400
FUELOIL
1,200 LIGHTOIL

1,000 METHANE
COKE
800 BAGASSE
600 WOOD
SUN
400
PEAT
200 MUNI_WASTE
WIND
-
WATER
8% rate

8% rate

8% rate

8% rate

8% rate
Only G

Only G

Only G

Only G

Only G
Main

NG price

Benchmark
Main

NG price
Main

NG price
Main

Nuclear

NG price
Main

NG price
Benchmark
Nuclear

Nuclear

Benchmark
Nuclear

Benchmark

Benchmark
Nuclear
Natural gas
GEO
Coal
2020 2025 2030 2035 2040

Figure 10: Annual power production in TWh by fuel type in the EAPP region over the projection
period based on the modelling results of the selected scenarios

Predictably, the SO2 emission levels mirror the coal-fired power generation
dynamics, as presented in Figure 11. Relaxation of national security of supply
requirements (Benchmark), as well implementation of the nuclear-based
power development plans in Egypt and Kenya (Nuclear) result in lower overall
SO2 emission levels compared to the Main scenario. Higher natural gas prices
(NG price) and limited regional transmission capability (Only G), in turn, yield
higher projected SO2 emission levels.

The case with more favourable financing terms (8% rate) is less straight –for-
ward, however. It results in more coal-based investments (and generation, as
well as SO2 emissions) earlier in the projection period as compared to the
Main scenario; whilst in the long term, it makes additional nuclear, hydro and
wind power investment (and generation) possible, thereby reducing the SO2
emission level in 2040 vis-à-vis the Main scenario.

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800,000
SO2 emissions (tonnes)

700,000
600,000
500,000
400,000
300,000
200,000
100,000
-

8% rate
8% rate

8% rate

8% rate

8% rate
Only G

Only G

Main
Only G

Only G

Only G
NG price

NG price

NG price

NG price

NG price
Main

Main

Main

Main
Benchmark

Benchmark

Benchmark

Benchmark

Benchmark
Nuclear

Nuclear

Nuclear

Nuclear

Nuclear
2020 2025 2030 2035 2040

COAL COKE FUELOIL LIGHTOIL MUNI_WASTE PEAT WOOD


Figure 11: Annual SO2 emission level in tonnes in the EAPP region over the projection period
based on the modelling results of the selected scenarios

The projected CO2 emission levels follow the same pattern, largely driven by
the coal-fired generation, as shown in Figure 12. Coal-based generation over-
takes natural gas as the main source of CO2 emissions by 2030 across all sce-
narios, except the case with higher natural gas price (NG price) and more fa-
vourable financing terms (8% rate) where this transition takes place already
by 2020, and 2025, respectively.

1,000,000
CO2 emissions ('000 tonnes)

900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Only G

8% rate

Only G

8% rate

Only G

8% rate

Only G

8% rate

Only G

8% rate
NG price

NG price

Benchmark

NG price

NG price

NG price
Main

Main

Main

Main

Main
Benchmark
Nuclear

Benchmark
Nuclear

Nuclear

Benchmark
Nuclear

Benchmark
Nuclear

2020 2025 2030 2035 2040


COAL COKE FUELOIL LIGHTOIL METHANE MUNI_WASTE NAT_GAS PEAT

Figure 12: Annual CO2 emission level in ‘000 tonnes in the EAPP region over the projection pe-
riod based on the modelling results of the selected scenarios

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6 Emission mitigation measures
The future development pathway scenarios so far presented have all featured
a manifold increase both in SO2 and CO2 emission levels across the EAPP re-
gion in the medium to long term, in line with projections of significant in-
crease in coal-fired power capacity investments and generation (based on
least-cost optimisation of generation and transmission investments, as well as
dispatch – in the absence of environmental considerations). No regional
agreements as to the treatment of externalities exist at the time of writing
this report (e.g. SO2 emission standards or the planning value of SO2 or CO2).
However, in order to illustrate examples of environmental policies (and the
projected environmental and economic impacts thereof), two scenarios have
been specifically developed as a part of the EAPP Master Plan 2014 study.

The 2 ‘environmental’ scenarios modelled in the EAPP Master Plan 2014 study
are presented in Table 5.

Scenario Description
Requirement of 30, 35, 40, 45, and 50 % share of renewables3 to
Renewable satisfy the gross demand in 2020, 2025, 2030, 2035, and 2040 re-
spectively across the region
CO2 price of $10, $20, $30, $40, and $50/ton in 2020, 2025, 2030,
CO2 price
2035, and 2040 respectively across the region

Table 5: The description of the environmental scenarios modelled in the EAPP Master Plan 2014
study

6.1 Environmental implications


The impact of the two environmental scenarios on the installed generation ca-
pacity is presented in Figure 13.

3
‘Renewables’ are defined as follows: generation based on hydro (also large hydro), wind, solar, geother-
mal, biomass (bagasse and wood), municipal waste and methane (only relevant for Rwanda, and consid-
ered renewable because of its origin of Lake Kivu deposits)

20 | EAPP Master Plan 2014 - Environmental analysis report - 19-12-2014


450,000

Total generation capacity (MW)


400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-

Main

Renewable

CO2 price

Main

Renewable

CO2 price

Main

Renewable

CO2 price

Main

Renewable

CO2 price

Main

Renewable

CO2 price
2020 2025 2030 2035 2040

Coal GEO NAT_GAS WATER LIGHTOIL SUN WIND Nuclear

Figure 13: Total installed generation capacity in MW by fuel type in the EAPP region over the
projection period based on the modelling results of the selected scenarios

As it can be observed, both environmental policy instruments (as illustrated


by the respective scenarios) result in more investment in natural gas-fired and
renewable technologies (predominantly wind), whilst introduction of CO2
price in particular leads to elimination of coal-fired generation development
compared to the Main scenario. The CO2 price case also observes considerable
investment in nuclear generation capacity taking place.

Both environmental scenarios result in substantially higher total generation


capacity investment as compared to the Main scenario, explained by lower
full-time hours of wind power generation in particular (as opposed to fossil-
fired generation). It should also be noted that the required share of renewa-
ble generation in the Renewable scenario does not significantly exceed the
baseline, i.e. the RES share of the Main scenario, towards 2025, as presented
in Table 6. The share of RES generation peaks around 2025/2030 in the Main
scenario and declines thereafter, whereas the RES generation targets con-
tinue increasing in the Renewable scenario. It is, however, the CO2 price sce-
nario that results in the highest RES shares altogether 2030 onwards.

21 | EAPP Master Plan 2014 - Environmental analysis report - 19-12-2014


Scenario 2020 2025 2030 2035 2040
Main 28% 32% 32% 29% 27%
Renewable 30% 35% 40% 45% 50%
CO2 price 29% 35% 54% 56% 56%
Table 6: Share of generation from renewable energy sources as a proportion of the total power
generation in the EAPP region over the projection period based on the modelling results of the
selected scenarios

The power generation in the EAPP area over the projection period is pre-
sented in Figure 14. As it can be seen, coal-fired generation is being activated
in excess of its relative capacity share in each scenario, whilst wind power
generation (alike natural gas-fired generation) are exhibiting significantly
lower average full-load hours of production.

1,600
Annual power production (TWh)

1,400
1,200
1,000
800
600
400
200
-
CO2 price

CO2 price

CO2 price

CO2 price
CO2 price
Main

Main

Main

Main

Main
Renewable

Renewable

Renewable

Renewable

Renewable
2020 2025 2030 2035 2040

Coal GEO Natural gas WATER WIND


MUNI_WASTE PEAT SUN WOOD BAGASSE
COKE METHANE LIGHTOIL Nuclear

Figure 14: Annual power production in TWh by fuel type in the EAPP region over the projection
period based on the modelling results of the selected scenarios

The emission levels of sulphur dioxide in the EAPP region over the projection
period are presented in Figure 15. The CO2 price scenario results in the lowest
SO2 emission level, in line with its very low share of coal-fired generation. The
emission levels in the Renewable scenario match those in the Main scenario
until 2030, but decrease significantly compared to the Main scenario in the
long term.

22 | EAPP Master Plan 2014 - Environmental analysis report - 19-12-2014


700,000

SO2 emissions (tonnes)


600,000
500,000
400,000
300,000
200,000
100,000
-

Renewable

Renewable

Renewable

Renewable

Renewable
Main

CO2 price
CO2 price

Main

CO2 price

Main

CO2 price

Main

Main

CO2 price
2020 2025 2030 2035 2040

COAL COKE LIGHTOIL MUNI_WASTE PEAT WOOD

Figure 15: Annual SO2 emission level in tonnes in the EAPP region over the projection period
based on the modelling results of the selected scenarios

The CO2 emission levels exhibit a similar pattern, with the CO2 price scenario
yielding the most significant decrease relative to the Main scenario, as illus-
trated by Figure 16.

1,000,000
900,000
CO2 emissions ('000 tonnes)

800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Main

Renewable

CO2 price

Main

Renewable

CO2 price

Main

Renewable

CO2 price

Main

Renewable

CO2 price

Main

Renewable

CO2 price

2020 2025 2030 2035 2040


COAL COKE LIGHTOIL METHANE MUNI_WASTE NAT_GAS PEAT

Figure 16: Annual CO2 emission level in ‘000 tonnes in the EAPP region over the projection pe-
riod based on the modelling results of the selected scenarios

23 | EAPP Master Plan 2014 - Environmental analysis report - 19-12-2014


6.2 Economic implications
Higher share of renewable energy source generation, as well as low-carbon
power generation, comes at a cost, however. Table 7 summarizes the total an-
nual system costs across the entire EAPP region of each scenario over the pro-
jection period in millions USD (2013 real value). It should be noted that capital
investments both in generation and transmission are expressed as annualised
payments, i.e. as the annual payment to repay a loan4 equivalent to the size of
the respective investment.

Investments in Elec- Investments in Electric- Annual Annual Annual Fuel Annual Total
Year /
tricity Generation an- ity Transmission annu- Fixed O&M Variable Cost System Cost
Scenario
nualised (M$) alised (M$) (M$) O&M (M$) (M$) (M$)
2020
Main 4,088 90 3,567 1,292 23,927 32,964
Renewable 4,633 140 3,646 1,302 23,346 33,067
CO2 price 4,517 133 3,632 1,301 23,452 33,036
2025
Main 10,266 178 4,671 1,769 33,738 50,622
Renewable 11,494 349 4,812 1,787 32,295 50,738
CO2 price 11,601 277 4,812 1,765 32,455 50,910
2030
Main 21,473 405 6,464 2,724 43,358 74,425
Renewable 27,049 737 7,153 2,832 37,545 75,316
CO2 price 37,854 667 8,579 2,485 29,216 78,801
2035
Main 32,610 596 8,303 3,783 53,666 98,960
Renewable 45,379 1,121 9,859 3,924 40,441 100,725
CO2 price 55,217 1,047 11,128 3,159 35,734 106,285
2040
Main 44,260 853 10,145 4,822 61,242 121,322
Renewable 62,933 1,545 12,310 4,742 44,148 125,678
CO2 price 70,853 1,433 13,390 3,743 43,111 132,531

Table 7: Annual total system costs by cost component in million USD (2013 real value) in the
EAPP region over the projection period based on the modelling results of the selected scenarios

The cost data indicates that both Renewable and CO2 price scenarios result in
additional investments both in generation and transmission, whilst reducing
the reliance on fossil fuels, as expressed by the annual fuel costs. The total an-
nual system costs are, however, higher than those of the Main scenario, the

4
20 year loan repayment assumed for all technologies except hydro and nuclear (50 years). 10% interest
rate in real terms assumed, corresponding to an Internal Rate of Return (IRR) of 10% or more for all model-
based investments. The year of the investment is assumed to represent a typical year of operation over the
lifetime of the project. See Volume I: Main Report and Volume II: Data Report for more information.

24 | EAPP Master Plan 2014 - Environmental analysis report - 19-12-2014


CO2 price scenario being the most costly in absolute terms (whilst also result-
ing in the highest share of RES generation, and most emission abatement).

25 | EAPP Master Plan 2014 - Environmental analysis report - 19-12-2014


7 Discussion and implications
The future development pathway scenarios based on least-cost optimisation
of generation and transmission investments, as well as dispatch – in the ab-
sence of environmental requirements or limitations - (e.g. the Main scenario)
feature a manifold increase both in SO2 and CO2 emission levels across the
EAPP region in the medium to long term, in line with projections of significant
increase in coal-fired power capacity investments and generation.

The authors of this report contend that environmental considerations and ex-
ternalities should also be accounted for in the generation and transmission
planning process both nationally and regionally. No relevant regional agree-
ments on the treatment of externalities arising from fossil-fired power gener-
ation exist at the time of writing this report. In order to illustrate examples of
environmental policies that might assist in avoiding the significant increase of
coal-fired generation and the resulting emissions (and the projected environ-
mental and economic impacts thereof), two scenarios have been specifically
developed as a part of the EAPP Master Plan 2014 study: the Renewable sce-
nario, and the CO2 price scenario.

Table 8 shows the absolute SO2 and CO2 emission level development path-
ways in the 3 scenarios in the EAPP region over the projection period in mil-
lion tonnes, put in perspective relative to the historic baseline levels for entire
Africa in 2005 and 2011, respectively.

Scenario 2005 2011 2020 2025 2030 2035 2040


SO2 (Mt)
Africa 2.7
Main 0.03 0.03 0.20 0.40 0.62
Renewable 0.03 0.03 0.20 0.35 0.39
CO2 price 0.03 0.02 0.02 0.02 0.02
CO2 (Mt)
Africa 967
Main 149 187 387 636 894
Renewable 146 180 363 524 585
CO2 price 146 170 141 161 183

Table 8: Annual SO2 and CO2 emission levels in million tonnes in the EAPP region over the projec-
tion period based on the modelling results of the selected scenarios compared to the baseline
levels of 2005 and 2011, respectively

26 | EAPP Master Plan 2014 - Environmental analysis report - 19-12-2014


The pathways show very modest emission level increase across all scenarios
towards 2025, and much more rapid growth 2030 onwards both in terms of
SO2 and CO2 emission levels in the Main scenario. Towards 2040, the EAPP re-
gion would be emitting 0.6 Mt sulphur dioxide and nearly 900 Mt carbon diox-
ide in the Main scenario (the historic baselines amounting to 2.7 Mt SO2 and
967 CO2 in 2005 and 2011, respectively, for the entire African continent).

The Renewable scenario would result in the mitigation of 1/3 of the projected
SO2 and CO2 emissions relatively to the Main scenario, whereas the CO2 price
scenario would nearly eliminate all SO2 emissions, and mitigate 80% of the
CO2 emissions, respectively. Table 9 summarizes the emission abatement in
the 2 scenarios relative to the Main scenario.

Scenario 2020 2025 2030 2035 2040


SO2 emission abatement vis-à-vis the Main scenario (Mt)
Renewable -0.0004 -0.0005 -0.0004 -0.06 -0.23
CO2 price -0.0011 -0.0114 -0.1787 -0.38 -0.61
CO2 emission abatement vis-à-vis the Main scenario (Mt)
Renewable -3.3 -7.2 -25 -112 -310
CO2 price -3.5 -17.1 -246 -474 -712

Table 9: Annual SO2 and CO2 emission abatement of Renewable and CO2 price scenarios vis-à-vis
the Main scenario (Main as the base) in million tonnes in the EAPP region over the projection
period based on the modelling results of the selected scenarios

Table 10 summarizes the additional annual system costs of the two scenarios
relative to the Main scenario. The additional expenditure to achieve higher
share of RES in generation, as well as low-carbon generation, increases over
time in line with the increasing required RES targets and CO2 prices, respec-
tively, as well as rapidly growing demand (and need for additional power gen-
eration) combined with a limited pool of cost-competitive RES projects.

Scenario 2020 2025 2030 2035 2040

Total additional annual system costs vis-à-vis the Main scenario (M USD)
Renewable 102 116 891 1,765 4,357
CO2 price 72 289 4,376 7,325 11,209

Table 10: Annual total system cost difference of Renewable and CO2 price scenarios vis-à-vis the
Main scenario (Main as the base) in million USD (2013 real value) in the EAPP region over the
projection period based on the modelling results of the selected scenarios

27 | EAPP Master Plan 2014 - Environmental analysis report - 19-12-2014


It should be noted, however, that the CO2 abatement costs towards the end of
the period (2035 and 2040) are very similar, and average at around 15
USD/tonne of CO2 abated across both scenarios (based on data from Table 9
and Table 10). This finding indicates that, since the CO2 abatement level in ab-
solute terms is significantly higher in the CO2 price scenario, whilst keeping
the average abatement cost on a per-tonne basis largely unchanged, it could
be argued that CO2 pricing instruments are more cost-effective in relation to
controlling CO2 emission levels.

It should be highlighted that the assumptions and projections underlying


these specific scenarios should not be regarded as recommendations; rather,
as an illustration of two different environmental policy instruments, and their
respective impact. On a regional level, an agreement on the planning value of
externalities like SO2 and CO2 could be reached, as well as on SO2 emission
standards. EAPP could act as a coordinator in this process.

Additional parameters that can influence the future projected emission levels
include the natural gas price (higher price results in more coal-fired genera-
tion and higher emission levels), as well as limited regional power system inte-
gration, i.e. no further cross-border transmission projects in the EAPP region
(resulting in e.g. limited possibilities of additional hydro power integration and
higher reliance on fossil-fired generation). More regional collaboration, e.g.
through removing national security of supply requirements, could, in turn,
yield more investment in cost-competitive RESs in resource-abundant areas,
and thereby reduce the emissions. Finally, the implementation of the nuclear
power development plans in Egypt and Kenya would reduce the SO2 and CO2
emission levels in the region, whilst more favourable financing terms would
lead to more investment in capital-intensive (yet cheaper-fuel) coal-fired tech-
nologies in the short to medium term, and more investment in wind, hydro
and nuclear technologies towards 2040.

28 | EAPP Master Plan 2014 - Environmental analysis report - 19-12-2014


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