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POWER SUPPLY: City's Gas-To-Energy Plan Falls Flat

 



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The City of Cape Town and CEF (Pty) Ltd have been working together over the past two years to develop a landfill gas-to-energy Clean Development Mechanism (CDM) project, in order to generate ‘green’ energy. However, owing to recent legislation passed by National Government, the City say it has had to explore other partnerships.

The successful completion of a landfill gas-to-energy project will:

·           Ensure significant environmental benefits to Cape Town

·           Assist the country as a whole in meeting its voluntary target to reduce harmful greenhouse gas emissions

·           Generate revenue to help cover the costs of the City’s landfill operations through the sale of carbon credits and electricity.

The City initially partnered with CEF, owing to a joint vision: the promotion of renewable energy projects. Negotiations had reached an advanced stage, whereby CEF would develop the City’s landfill gas-to-energy CDM project.

With the growing uncertainty as to whether the Kyoto Protocol would be extended or replaced, the success of the gas-to-energy CDM project was likely to rest on CEF’s ability to secure a premium rate for the electricity it would generate from the methane gas in the City’s landfills. CEF intended to apply for the renewable energy feed-in tariff (REFIT), thereby adding to the financial stability of the project.

However, the National Government has released regulations as part of its REFIT programme, barring public entities (such as CEF and any municipality) from participating as a majority shareholder in the REFIT programme. This policy prevents CEF from developing the project for the City as CEF was intended to be the majority shareholding entity conducting the CDM project.

As a result, the parties agreed to terminate the Memorandum of Understanding they had signed in 2009, leaving the City to pursue other courses of action to ensure the viability of the project.


 
 
 
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