NCPC-SA: South Africa RECP: A VEHICLE FOR INDUSTRIAL EFFICIENCY AND COMPETITIVENESS

NCPC-SA: South Africa RECP: A VEHICLE FOR INDUSTRIAL EFFICIENCY AND COMPETITIVENESS

NCPC-SA PRESENTATION TO: Parliamentary Committee on Trade & Industry 19 MARCH 2013

Presentation Content National Context The DTI Green Industry Unit Salient Features of the Manufacturing Industry NCPC-SA Mandate & Core Focus Areas Resource Efficiency Programme & Outcomes Industrial Energy Efficiency Programme & Outcomes Questions & Answers

NATIONAL CONTEXT 1. The IPAP sets out government s industrial policy and implementation plans to create critical platforms that are used as a basis for scaling up key strategic sectors. 2. Issues of climate change have increasingly moved Green Industries to the centre of the global stage in a wide range of multilateral and bilateral fora, agreements, policy perspectives and programmes and government is committed to introduce economic instruments that would support Green Initiatives.

The dti Green Industry Unit Main Objective The Green Industries Chief Directorate s main objective is to promote the industrial development of a new South African Green Industry Sector, and improve the resource efficiency (RECP) of existing industries in South Africa with a strong emphasis on building its productive capacity in partnership with stakeholders and aligned with the New Growth Path s target of 300 000 additional direct jobs by 2020 to green the economy, with 80 000 in manufacturing and the rest in construction, operations and maintenance of new environmentally friendly infrastructure

Enablers for Green Economy Regulatory framework Market-based instruments Innovation, science and technology Greater localisation and manufacturing Investment, finance opportunities and financing instruments including leveraging of funds Availability of skills Institutional capabilities and capacity Partnerships

The DTI s Green industries Current Focus Areas Renewable Energy and Nuclear Energy Energy and Resource Efficiency and Cleaner Production Waste Management and Recycling Water and Waste Water Industries Industrial Climate Change Response Measures?

NCPC Cleaner production and climate change focus Enhancing Competitiveness Undertaking an Impact assessment and Strategic Review to achieve a wider reach at lower cost and mitigate against Climate Change GHG mitigation analysis for industry A comprehensive approach to ensure we realise opportunities, improve competitiveness of existing industries, guide required structural change in a responsible manner and ensure that our energy intensive sectors do not collapse

RECP-MANUFACTURING

Declining Share of Manufacturing Sector 70 60 Contribution to national GDP Tertiary sector SA economy increasingly dominated by services-related sectors - in line with international trends. % Share 50 40 30 20 10 0 Primary sector (Agriculture & Mining) 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Secondary sector (incl. Manufacturing) Share of the manufacturing sector - the 2nd largest sector of the economy - decreased sharply since the early 1990s in light of globalisation, trade liberalisation and an increasingly challenging global trading environment. Source: SARB

MANUFACTURING SECTOR IN SOUTH AFRICA 1. South Africa has a highly established, diversified manufacturing base able to compete in the global economy; 2. Manufacturing sector provides a locus for stimulating other sectorsservices, and drives employment creation and economic empowerment 3. In 2008, manufacturing contributed 16.2% of Annual GDP second largest contributor to SA economy. In 2011, manufacturing reduced its contribution to GDP to 14.6%. (SA-the Good News via Buanews, 2012); 4. Dominant manufacturing sectors identified are agroprocessing, automotive, chemicals, ICT, electronics, metals, textiles, clothing Manufacturing 5. Value Add in a perpetual decline for the last 9 years 6. Negative Balance of Trade escalating

NCPC-SA MANDATE The dti s industrial sustainability programme for RECP to enhance manufacturing industry competitiveness through the mechanism of: renewable energy, water, materials and energy efficiency waste management that potentially contribute to industrial development, localisation, economic growth and job creation.

NCPC-SA PROGRAMMES

ALIGNMENT: KEY FOCUS AREAS TO STRATEGIC OBJECTIVES STRATEGIC OBJECTIVES Effectively communicating the benefits and advantages of RECP/EE KEY FOCUS AREAS Awareness raising workshops Build RECP/IEE Capacity and Capability in South Africa Train local experts Build Institutional Capacity Enhance RECP/IEE knowledge Develop Sustainable Intrapreneurs/Entrepreneurs Enhance the competitiveness of priority sectors identified through IPAP Offer technical assistance Facilitate implementation Assist with investment opportunities and linkages to MCEP and other relevant incentive programmes

ALIGNMENT: KEY FOCUS AREAS TO STRATEGIC OBJECTIVES STRATEGIC OBJECTIVES KEY FOCUS AREAS Contribute to the shaping of relevant economic policies around CSP/RECP and the Green Economy Provide Policy advice Assist with the development of appropriate policy tools and economic instruments Accelerate the uptake of RECP/IEE practices and increase the penetration of RECP/IEE services and offerings; Through demonstration projects, showcase sustainable RECP successes and outcomes

WHAT IS RESOURCE EFFICIENCY(RECP)? Resource Efficiency can be defined as the efficiency with which we use energy, water and materials throughout the economy which is the value added per unit of resource input In an economic sense and for the purposes of of the NCPC-SA mandate, Resource Efficiency refers only to intermediate goods, energy, water and materials which aim at improving input-output relations of these resources in the production process, while also mitigating environmental impacts caused by the process.

THE TRIPLE BOTTOM LINE RECP addresses the three sustainability dimensions individually and synergistically: ECONOMIC: Production Efficiency: optimization of the productive use of natural resources (materials, energy and water); ENVIRONMENTAL: Environmental management: minimization of impacts on environment and nature through reduction of wastes and emissions; and SOCIAL: Human Development: minimization of risks to people and communities and support for their development.

Priority Sectors Aligned to IPAP 2002 TO 2006 2006 TO 2013 1. Clothing and Textiles 2. Agro-processing 3. Chemicals Sectors added in 2006 4. Automotives 5. Pulp and Paper 6. Metals and engineering 7. Tourism and Hospitality 8. Built-Environment 9. Mining (IEE only)

Our approach to RECP assessments is guided by the following key themes THEMATIC FOCUS Water Energy Materials Waste WHAT TO LOOK FOR Identify all uses of water by creating a water flow chart Identify all energy types and costs Identify all materials including hazards and create a material flow chart Identify all waste streams by creating a waste stream flow chart

OVERCOMING BARRIERS?

Why RECP: What s in it for the Manufacturing Business?? Cost savings through reduced wastage of energy, water and materials Improved operating efficiency of the plant Better product quality and consistency Recovery of some wasted materials (Reuse) Possibility to improve the working environment (health and safety) Improvement of the enterprise s image Better compliance with environmental regulations Cost savings on end-of-pipe waste treatment New and improved market opportunities

WHAT ARE THE DESIRED IMPACT AREAS? Competitive manufacturing industries Company Bottom line returns Resource Efficient and productive companies contributing to low carbon economy Business Growth & Sustainability Market Access Job retention or job creation

Identified Savings (Rands) How do We Know Real Benefits Exist through RECP? IDENTIFIED SAVINGS SUMMARY 2003-2012 70 000 000 60 000 000 Total sites Assessed: 303 Total Assessments: 423 Total Savings: R 179 378 400 Assessments Completed = 98 Sites Assesed = 61 Assessments Completed = 150 Sites Assesed = 86 50 000 000 40 000 000 30 000 000 Assessments Completed = 107 Sites Assesed = 107 Waste management Material Water Energy 20 000 000 Assessments Completed = 68 Sites Assesed = 49 10 000 000 0 2003-2009 2009-2010 2010-2011 2011-2012

SUCCESSFUL RECP CASE STUDY OUTCOMES Example: 4 Small Medium Chemical companies 5 Medium Large Textiles, leather & footwear companies Option Description Boiler Improvement i. Steam leaks ii. Pressure control iii. Insulation iv. Boiler feed air control v. Condensate return vi. Steam trap maintenance Compressor Control i. Air leak maintenance ii. Vairable speed control iii. Pressure control iv. Flow control (Accumulator) Energy Management i. Washbath covers (insulation) ii. Washbath Insulation Lighting Retrofitting i. Replacement of bulbs ii. Retrofit of Electronic Control Gear iii. Natural lighting iv. Task lighting Saving (Rand) Investment (Rand) Simple Payback (Yrs) 324 200 126 500 1.0 Environmental Benefit (per year) 46 900 kg Low Sulphur Oil 3 kl/yr heavy fuel oil 750kL Water CO 2 e (kg/yr) 158 700 177 232 329 975 1.9 267 641kWh 156 982 37 295 n/a n/a 479 937 753 511 1.6 31 116kWh 303kg LPG 423 695 kwh 1.8kVA 32 500 154 552

Option Description Saving (Rand) Investment (Rand) Simple Payback (Yrs) Logistics Management i. Installation of speed governing systems in vehicles ii. Eco driving training Material Optimisation i. Overspray reduction (LP/Hi Vol) ii. Spray booth humidity control 152 076 202 000 1.3 iii. Operator training spraying technique Stenter Control i. Reduceexhaust air in stenters ii. Stenter burner cycling (1 x operational, 1 x 880 000 50 000 0.1 standby) Raw Materials Waste Management i. Installation of Bobbin Nose Cone Yarn Guides 10 000 10 000 1.0 Waste Management i. Drum Reconditioner pre-delivery inspection ii. Operator awareness training Solid Waste Management i. Waste sorting and recovery of useable material ii. Negotiation of waste removal price (incl. recycleable material tariff) Water Management i. Water efficient showerheads ii. Tap leakages (i.e. push tap vs twist tap) iii. Cooling water recovery (closed loop) SUCCESSFUL RECP CASE STUDY OUTCOMES Environmental Benefit (per year) CO 2 e (kg/yr) 46 274 1 000 0.1 4 345L Fuel 11 421 22 200 n/a n/a 2 194L Paint 788L Thinners 8250L HFO 30% red HFO 500 yarn bobbins (approx 0.2% of yarn usage) 5% reduction in hazardous waste generated n/a 23000 n/a 36 000 1 000 <0.1 n/a 21 752 12 000 0.6 375kL water 2 555kWh n/a n/a 2 940 2 186 966 1 485 986 <1 yr 540 095

INTERNSHIP PROGRAMME THAT PROMOTES GREEN PRODUCTIVITY... Purpose of Sustainable Internship Programme: Integrating talented graduates into the mainstream economy that combine academic training with real world experience and application through skills and technology transfer with a specific focus on green productivity

INTERNSHIP PROGRAMME OUTCOMES & BENEFITS Gaining Industry Experience Employability through green skills opportunity Intern Resource Efficiency Implementation Bottom line Savings through green productivity improvement

Industrial Energy Efficiency Industrial Energy Project Improvement Project

Industrial Energy Efficiency Project Project Achievements to date Mar 2010- Mar 2013 March 2013 Gerswynn Mckuur 29

Why this Project? Industrial Energy Efficiency Project 30

Scope Project Scope and Objective o 4 Year Project: April 2010 End March 2014 o Target Sectors: Automotive, Agro-Processing, Chemicals and Liquid Fuels, Metals & Engineering and Mining. Objective To increase energy efficiency in the target industrial sectors, thereby alleviating the country s acute power shortage while at the same time improving productivity, competitiveness and reducing CO 2 emissions.

Components of the Project Industrial Energy Efficiency Project Effective Policy Framework Demonstration and Communication Industrial Energy Efficiency Energy Management Standards Capacity Building 32

Component Industrial 1- Energy Policy Efficiency Project Framework Effective Policy Framework Support an effective national policy framework for implementing and monitoring industrial energy efficiency in South Africa Achievement: National Energy Efficiency Strategy (NEES) reviewed and gazetted. NEES Gazetted in November 2012 Stakeholder Workshop to collect public comments on NEES held on 24 th Jan 2013 31 Jan 2013: Closing date for Public Comments on 2 nd Review of NEES 33

Energy Management Standard

Industrial Energy Efficiency Project Component 2- Standards Introduction and Promotion Energy Management Standards Supportive standards and capacity in place (compatible with ISO energy management standard) Achievements: SANS/ISO50001 adopted as national Energy Management Standard Qualification requirement developed to become SANS/ISO 50001 Lead Auditors SANS/ISO 50001 Lead Auditor Training Curriculum developed 9 SA delegates registered with SAATCA as SANS/ISO 50001 Lead Auditors 35

Capacity Building & Training

Industrial Energy Efficiency Project Component 3 EnMS and ESO Capacity Building Programme A cadre of qualified industrial energy management systems (EnMS) and system optimisation(eso) experts available as technical resource to industry and the country. Capacity Building

Capacitating Outcomes SANS/ISO 50001 published July 2011. Lead Auditor Workshop: October 2012. SANS 50010: Measurement and Verification of Energy Training Outcomes 86 National workshops 1 877 Delegates 31 Qualified Experts 19 National Trainers Nine ISO 50001 Lead Auditors Growth of skilled energy consultant base Legacy of energy systems optimisation capacity in participating companies Growing industrial sector and company awareness, engagement and dialogue around energy challenges and solutions.

Component 3 EnMS and ESO Capacity Building Programme Industrial Energy Efficiency Project As a result of the participation in the Training Programme offered by the project, the 1 st group of 7 South African based large industrial companies started EnMS and ESO implementation. Toyota (Prospecton) Gelvenor Textiles (Durban) PPC Lime Acres and De Hoek St Gobain (Gyproc, Cape Town) Arcelor Mittal (Saldanha Bay) SAB Miller (Krugersdorp) 39

Demonstration Plants

Industrial Energy Efficiency Project Demonstration and Communication Component 4- Auditing, Demonstration and Communication Piloting/Demonstration Programme EnMS Implementation Results over 2 years (2011-2012) Company Name Savings (kwh) Savings (ZAR) tco 2 Emissions Reduction Capital Investment (ZAR) Comments ArcelorMittal 174 002 409 170 300 000 166 519 tbc Mostly No/low cost investment projects. Toyota-SA 13 845 056 9 630 962 11 904 4 913 612 Represents 73 energy saving projects Gelvenor Textile 1 993 340 1 096 336 1 908 0 Only 3 no cost projects declared. Saint-Gobain 1 835 832 1 009 706 1 757 0 No cost behaviour changes excluding on-going water gauge project. Total 191 676 637 182 037 004 182 088 5 413 612

Component 4- Auditing, Demonstration and Communication Piloting/Demonstration Programme Industrial Energy Efficiency Project 23 Medium-Large companies participating in current EnMS implementation programme Province Company Annualized kwh Saving Payback (Yrs) Period Eastern Cape XXXXX Foods 2 628 708 1.5 2012/2013 Eastern Cape Automotive Supplier 301 564 0.9-2.9 2012/2013 Eastern Cape Automotive Supplier 912 970 0-1.2 2012/2013 Eastern Cape XXXXXX Batteries 2 817 649 2.0-3.9 2013 Gauteng Automotive Manufacturer 500 000 3.7 2012/2013 Gauteng Automotive Supplier 438 409 0-0.2 2012/2013 Gauteng XXXXX Glass Company 1 936 287 0 2013 Western Cape Wine/Distillery Company 70 000 0 2013 Western Cape XXXXX Plastics /Packaging 666 667 1 2013 Western Cape Paper and Pulp 1 456 998 0 2013 Total Energy Saving Achieved 12 408 252 kwh 42

SME Energy Savings Identified Printing 1% Mining 1% Other Chemicals, Plastics & Pharmaceuticals 14% Manufacturing 10% Automotive 35% Metal Allieds & Engineering 14% Agro-processing 18% Clothing & Textile 6%

DESIRED OUTCOMES AND IMPACT OF RECP & IEE PROGRAMMES

Awareness Raising Capacity Building IPA DESIRED OUTCOMES Outcomes Outcomes Adopt RECP/IEE Understand benefits of RECP/IEE Stimulate Green Skills Need Competence in RECP Adopt a systems approach Outcomes Cost Savings Reduce Carbon Emissions Resource Optimisation Clean Technology Uptake

Awareness Raising Capacity Building IPA IMPACT (LONG TERM OUTCOMES) Impact Impact Increase National Efforts in RECP Collaborative Initiatives Expansion of NCPC-SA Offering RECP Clusters Recognition of Green Occupations Strengthen Expert Database Behaviour Changes towards sustainable development Creation of Green Jobs Impact Enhance Value Addition Business Sustainability Industrial Competitiveness Promote industrial competitiveness & diversification Job retention

Energy Management Business Case

Technical Savings Potential (%) Sector and Product OECD Countries 48 Developing Countries Petroleum refineries 10-15 70 Chemical and petrochemical Energy Savings Potential Steam cracking (excluding feedstock) 20-25 25-30 Ammonia 11 25 Iron and Steel 10 30 Cement 20 25 Pulp and Paper 25 20 Textiles 10 20 Food and beverage 25 40 Other sectors 10-15 25-30 Source: UNIDO 2008 and 2011

Relative % of Turnover

Textile Energy Use Typical Energy Balance in Textiles Other 5% Wet Processing 38% Spinning 34% Weaving 23%

Motor system optimisation Steam system optimisation Energy Saving Opportunities Compressed air system optimisation Lighting retrofit Removal of water from textile through vacuum impregnation and vacuum roll extraction Efficient drying and settling technologies eg. RF, sieve drum driers and thermo pack, etc Reduce dye liqour ratios Desizing, Scouring and Bleaching process modifications Supercritical dyeing techniques Ultrasonic assisted wet processing Foam technology Etc.

Conclusions The days of cheap energy are over! The textile industry is a significant but low energy efficient sector. Energy systems optimisation offers no/low cost energy saving opportunities beyond which the implementation of best available technologies can serve to further drive down energy demand. Energy consumption patterns vary for different types of units and different types of products so an important step towards energy savings is to establish machine-wise and unit-wise energy consumption indicators (EnPI s) to enable the evaluation of potential energy consumption to inform buying decisions. Industry data collection remains a challenging task and benchmarking EnPI s will serve to attain confluence in product cost and pricing structures.

Thank You National Cleaner Production Centre of South Africa Pretoria: +27 12 841 3772 * Cape Town: +27 21 658 2776 * Durban: +27 31 242 2365 Email: ncpc@csir.co.za Websites: www.ncpc.co.za www.iee-sa.co.za

ANY QUESTIONS??? National Cleaner Production Centre of South Africa Pretoria: +27 12 841 3772 * Cape Town: +27 21 658 2776 * Durban: +27 31 242 2365 Email: ncpc@csir.co.za Websites: www.ncpc.co.za www.iee-sa.co.za