Barbara Creecy goes with Climate Change

.  article dated May 2022…..

Bill gives business a compliance framework…….

The Climate Change Bill has now been formally introduced to the National Assembly by the Minister of Forestry, Fisheries and Environment, Barbara Creecy.  The aim of this first piece of legislation is stated as being an initial process as part of the overall plan to ensure that South Africa has an all embracing statutory framework in place to respond to the inevitability of climate change.  The Portfolio Committee on Environment, Forestry and Fisheries will now consider the Bill and shortly ask for public comment which, no doubt, will be extensive.

The Bill, Minister Creecy told parliamentarians, gives effect to South Africa’s international commitments and obligations in relation to climate change, and defines the steps to be taken to protect and preserve the planet for the benefit of present and future generations. She said that the Bill spells out that all adaptation and mitigation efforts must be based on the best available science, evidence and information.

Green impetus

Minister Creecy said that the proposals in the Bill will facilitate South Africa’s transition to a greener economy and will compel businesses to reduce greenhouse gas emissions and identify sectors where greenhouse gas emissions must drop and fall into line to assist the country in meeting the internationally agreed targets.   “This Bill is a crucial step forward in the development of our country’s architecture to manage and combat climate change by reducing greenhouse gas emissions that accelerate climate change.”

When asked by an MP what the “carrots and the sticks” were in the plan that would motivate for change in emissions, she said “I think it has always been the view of National Treasury, which I repeat, that through the carbon tax mechanism the country gets both a carrot and a stick at the same time. Emitters will be incentivised to reduce their greenhouse gases to gain lower production costs.  If they don’t do it, they will simply face an increase in energy input cost,” she said

Balancing act

Minister Creecy told MPs that the new carbon tax would represent a “domestic financing mechanism” for the immediate future. She went on, “I think that what is really important is how the carbon tax and the carbon budgets will synergise.  That was important work which we all agreed when it was going through NEDLAC — that there needed to be that important synergy between a carbon tax ‘taking’ and carbon credits ‘giving’.” 

She concluded that companies who emit the defined gases are allocated “carbon budgets,” and they will not be allowed to exceed this budget. This will require the development of thresholds and will also inform a company’s carbon tax bill, she said, noting that National Treasury had already begun the voluntary process of allocating carbon budgets, a complex process simply because South Africa had not yet counted or quantified in any way their emissions. Neither have they had to report in the public domain about their emissions — not just as sectors, but as individual enterprises.

This is apparently all part of Phase One of a future framework and Minister Creecy told MPs that she thought the decision by National Treasury to postpone phase two of the carbon tax until 2026  was a good one and would give them more time to work on all those mechanisms. She added that her department had a much  broader commitment to ensure that as transition took place in the work environment there was not a negative impact on jobs, including production factors and the broader national economy.  Most important was to understand the social the complexities that existed in any area. Hence, they had coined the use of the words “just transition”, she said

Looking ahead

The Minister was then asked about how she saw the electric car market in South Africa car developing, bearing in mind that many in the motor industry were saying that the introduction of electric vehicles (EVs) as a major factor on SA roads was a long way off – primarily because of carbon tax proposals; the high industry costs of re-tooling the industry and the high cost of running EVs.   

The Minister was clearly evasive, saying that the idea of EV incentivisation had occupied her mind a lot in recent months but she added that Trade and Industry Ebrahim Patel was “extremely passionate about it.”

Localisation

The Minister said that “undoubtedly” the issue was that “all are confronted with the new imperative of localisation, a discipline introduced by the DTIC.”  She noted that the vehicle manufacturing sector in South Africa was big, certainly by African and Asian standards, and was responsible for a huge number of high-quality jobs.

She said, “South Africa now has to ensure that they are not importing in any great quantity electric vehicles, whilst SA’s own automotive manufacturing industry has only just started transitioning for such a change under difficult export market conditions.”  She appeared to be careful what she was saying. 

More old chestnuts

Minister Creecy said Department of Forestry, Fisheries and Environment (DFFE) was also fully aware of the need by the auto industry to met new fuel specifications in terms of international agreements and the delay on DTIC’s Green Paper on EV dispensations. She was sure that a change in policy that focused on EV’s would come about in the not-so-distant future.

”Meanwhile, I am fully aware that 79% of South Africa’s carbon emissions are as a direct result of Eskom’s coal-fired stations and that there is failure to acknowledge the slow progress in greater input from renewables”. 

Big bucks

When asked by MPs regarding the US$8.5 billion offered to DFFE by a number of developed countries at COP26 which is conditional as funds for ‘closing the gap between renewable energy resources and coal-fired energy sourcing’, Minister Creecy said that of what South Africa had said in the original presentation to these developed countries was that there were three areas to utilise these funds.

Firstly, she had said, to deal with an ESKOM transition to part-renewables programme; secondly, for the development of a green hydrogen economy in general terms and thirdly, she said, on research and development to support the development of an e-vehicle industry in South Africa.   The Minister highlighted that any transition in the automobile industry was like Eskom dealing with coal and coal suppliers and this involved retraining and re-tooling an industry.

Auto makers were totally aware, she said, of the EU imperative that from 2035 imports of internal combustion engines will be tightly controlled if not refused. With all SA-produced vehicles having such engines at this time, the country is looking to a transition of its entire automobile industry, she said.

Caveats

In closing for DFFE on his platform, Tlou Ramaru,  said the National Environmental Management Act (NEMA) required the Climate Change Bill to be read, interpreted, and applied in conjunction with NEMA, the Bill becoming a specific environmental management act of its own and positioned within NEMA.  Ramaru said that the Inter-Ministerial Committee on Climate Change was fully conscious that one of the key points during the earlier NEDLAC process and debates on the Climate Change Bill had been the issue of the synergy between the carbon tax and the carbon budget, which Minister Creecy had described.

He repeated that it had been agreed at NEDLAC that in principle any penalty mechanism would as a carbon tax and applied where emissions were more than the allocated carbon budget.

Consensus machine

In closing, Minister Creecy said the Climate Commission was to become a statutory body which was currently being formed. “In becoming a statutory body, the Commission will have a life of its own but for the moment, I see DFFE as the midwife.”

She was specific that the Climate Commission will never take on the role of government “since it is the state that regulates society and implements government policy and programmes.”  The role of the Commission, she said, is to bring divergent interest groups in society together.

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