Climate Change Bill: public hearings

Meeting report

Opening Remarks

Apologies were received from Ms Barbara Creecy, Minister of Forestry, Fisheries and Environment (DFFE), the Deputy Minister, Ms Maggie Sotyu, and the Director-General (DG), Ms Nomfundo Tshabala, because they were appearing at the Standing Committee on Appropriations.

The Chairperson said that this was the second meeting on the oral submissions regarding the Climate Change Bill. At the first meeting last week, they had been reminded that climate change was transforming their lives in alarming and unimaginable ways. All the issues mentioned last week, such as droughts, floods and heat waves, were climate-induced, and their impacts touched a lot of South Africans. The Climate Change Bill required them to focus more clearly on the benefits of early action, which was long overdue.

The Preamble to the Climate Change Bill mentions that climate change would contribute to increased frequency and intensity of extreme weather events and affect human health and access to food, water, biodiversity, habits, ecosystems, coastal infrastructure and human settlements. They had implemented climate change actions that included a myriad of tools that sat in different governmental departments, coordinated by the DFFE. This approach had been inefficient, and it was for this reason that the government had thought it wise to initiate a process of formulating a law dedicated to climate change.

At their meeting last week, she had already indicated that they had received more than 13 000 submissions. Although they had not yet processed all the submissions, they had good reason to believe that the submissions and the inputs were useful.

Legal Resources Centre (LRC)

Ms Anneline Turpin, Attorney, Legal Resources Centre, said the LRC was founded in 1979 and was an independent non-profit public interest law clinic that used the law as an instrument of justice.

Recommendations on the Climate Change Bill

International commitments: The LRC highlighted that the current nationally determined contributions (NDCs) must represent progression and be communicated to the United Nations every five years to ensure accountability and continued commitment to strengthening the climate change response.

The Climate Change Bill must adequately address training and education as required by the Paris Agreement. It must also include how it would seek to actively involve communities in public participation processes.

Just transition: The LRC stresses that renewable energy must be put at the forefront of the just transition.

Climate change financing and corruption: The Climate Change Bill must have a financial framework. The LRC supports economic modelling and climate classification tagging in the budget for tracking climate-related expenditure. Transparency management and fiduciary standards must be met before the various departments in government access the approved funds.

Polluter pays principle - Clause 3(J): The polluter pays principle needs to be implemented with mechanisms to allow parties to be held liable should they not comply with their greenhouse gas (GHG) mitigation plan. The principle should further include specific reference to cumulative impacts and require decision-makers to consider these. The aim of a cumulative effects assessment was to avoid what had been described as the “tyranny of small decisions” and its cumulative impact on the environment and climate change.

Policy alignment and institutional arrangements: There was a need for the Climate Change Bill to address how the policies under Clause 7(1) would be aligned vertically (national, provincial and local levels) and horizontally (between national departments). The Bill must further address how to offer the skills to local communities to address climate change challenges.

The role of local government: Local governments must be capacitated financially and institutionally so they could comply with the obligations of the Climate Change Bill.

Public participation: The Climate Change Bill referral to "public participation" under Clause 29 was inadequate. Including local communities, grassroots organisations and the public in the forums at the provincial and municipal level was crucial to enable effective, transparent, accountable and coherent government, as required in Section 41 of the Constitution.

In conclusion, the LRC said that they accepted the Climate Change Bill as a measure to address climate change, with its flaws reflected in their written and oral submissions.

World Wildlife Fund (WWF)

Mr James Reeler, Senior Climate Specialist, World Wildlife Fund (WWF), delivered the presentation.

The WWF's recommendations covered the following aspects of the Climate Change Bill:

Timelines
They highlighted the need to prioritise adaptation action and curb delays, and encourage clarity on deadlines.

Governance
They encouraged a stronger role of the Presidential Committee for Climate Change (PCCC) as an administrative body. The ministerial determination on sector emissions must not be on a consensus basis, but consultation-based.

Transparency
They encourage transparency of all the data gathered within the system to inform target setting, ensure independent analysis and review, and facilitate public engagement.

Penalties/alignment
The WWF calls for the strengthening of the penalties and alignment of the carbon tax and carbon budget.

Long-term goals
Long-term goals within the legislation must be clearly articulated.

(Please consult the presentation for further details on the key points.)

Discussion

Mr N Paulsen (EFF) said that one of the biggest challenges faced by South Africa was a just transition because it relied on coal-generated power. In Europe, they were now going back to using coal as a primary source of electricity generation. What were the proposals to balance the country's dependence on fossil fuels and the transition to renewables? He did not think there would be a complete transition to renewable energy -- there would always be a mixture of different sources of energy generation.

The Chairperson said that the LRC presentation had mentioned that the rush for oil and gas exploration along the coastline of South Africa must cease and not be permitted to proceed beyond that which had already been explored until January 2020. She had assumed they were looking at oil and gas exploration from a greenhouse gas perspective. However, another stakeholder had warned the Committee that these energy resources should be left in the ground or else South Africa would be increasing the climate liability of its future generations in the light of increasing environmental litigation. Should concerns about South Africa’s potential climate liability underpin the processing of the Climate Change Bill? Was it too premature? If so, why?

The Chairperson said that the LRC had asserted that the Climate Change Bill failed to adequately address training and education as required by the Paris Agreement. How did it envisage this to happen on the ground, especially in the deep rural areas? What activities would be considered under training and education? She had heard the LRC mention the Department of Basic Education (DBE), but at the same time, there were three spheres of government, so which sphere of government should be entrusted with this responsibility to ensure that it did not fall through the cracks, which often happened when actions were entrusted to multiple spheres of government? Did the LRC want the Department of Education to take responsibility?

The Chairperson asked the WWF how they thought the role of the PCCC could be strengthened. Did it propose the establishment of an independent advisory body in addition to the PCCC? Would having these two closely related climate agencies be unique to South Africa, or was it based on the best practice elsewhere?

Ms S Mbatha (ANC) said the LRC had stated that South Africa had failed to acquire training and education for climate change, and that it needed to find an alternative way of dealing with issues of community empowerment. She advised rephrasing “ education and training” to “health, education and promotion," saying this would be better because it cuts across all the departments, further deals with creating community awareness, and encourages a bottom-up approach. It also assisted communities in buying into the topic and own it. Education and training refer to people in a professional world who would adopt a top-down approach.

LRC's response

Ms Turpin said that the presentation highlighted that the reliance on coal-based power destabilised international politics -- for example, the Russian-Ukrainian war. South Africa needed to start a conversation around the just transition. It needed to show commitment in its legislation toward a just transition. Those who live in Africa had access to sun and wind but were not seeing a committed shift to a greener economy.

She said the presentation highlighted that the Paris Agreement stated that if the country was serious about limiting global warming to 1.5 degrees by keeping its emissions within the required range, it could not explore gas and oil further. The LRC believed that the political parties were better positioned to address how rural communities could be reached through education and training. She repeated that the rural communities need to be included in the discussion pertaining to climate change, and further encouraged conversations on how training could be facilitated. She agreed that the bottom-up approach was very significant, and called for workshops and programmes to equip the local communities so that they could understand the climate change implications.

WWF response

Mr Reeler said that the continued use of coal for a longer time was unnecessary, but it would be a specific choice South Africa had to make in contravention of the international agreements. He said several peer-reviewed publications had looked at the feasibility of the WWF‘s water, solar, energy and electricity provisions. It was feasible in all contexts, requiring investment in the grid, battery backup and green hydrogen for long-term storage. The push for coal in Europe was not a long term transition but an interim process, because they had not yet completed their transition. They were using gas, and it had been cut off. Had they invested sooner in renewables, they would not have had to deal with this problem. The question was not how it could be done, but when.

He said that the Climate Change Bill was missing a very critical component -- an advisory role. The Bill had broad principles but did not set targets for certain bodies. Reporting and monitoring the progress of carbon budgets was very important for the government to implement and analyse the cross-cutting process. The PCCC needed some teeth, and in that regard, there must be provisions for recommendations. The PCCC was described as a representative body for all societal sectors, and the President appointed officials based on their technical skills. It was essentially a brokering entity focusing on a common vision. The requirement for a scientific advisory body was to be independent and assess the economics and the science underlying the processes out of the PCCC’s expertise.

He said that Korea and the UK had two separate entities. Therefore, it would make sense in the South African context to have two separate entities. He added that there was a difference between the specific technical education and training required around the just transition, and informing the public. The DBE had been mentioned because it was mandated to set down basic learning with learners over a long period. A strong integration of climate change education in the curriculum would be valuable. The PCCC could also have regular interactions with the media to promote public understanding of climate change.

Follow-up discussion

Ms Mbatha fully agreed with the LRC that renewable energy would combat some climate change-related issues. She added that there should be energy efficiency monitoring by the government and the private sector. She asked LRC their views on the piles of waste across the country, with limited disposal sites. Other countries practised separation of waste at source in a hierarchical manner and had big incinerators to process the waste so it did not go to the landfill sites. One of the processes converted waste to energy for the city, and only the treated ash went to the landfill sites. Could South Africa adopt this practice as part of their climate change compliance?

Ms Turpin said that South Africa had to look at the bi-products regarding waste recycling. For instance, how much content of greenhouse gases was going to be released during incineration? Otherwise, this was something that could be considered, given the correct assessment. She appreciated the proposal and said they would look into it as one of the alternatives toward a just transition.

Summary of the presentation from the EMS Foundation and Wild Law Institute

Mr Cormac Cullinan, Director, Wild Law Institute, presented the entity's recommendations on the Climate Change Bill. These were:

(1) The Bill lacked the recognition that there was a need to transform society by addressing the root causes of the problem.

(2) The responses to climate change must be comprehensive and integrated. The Climate Change Bill talked only about mitigation and adaptation. The Wild Law Institute stated that a lot more had to be done. It would be better to speak about climate change responses from a broader perspective, such as education, as alluded to in the two previous presentations.

(3) The Institute believes the climate emergency required urgent and bold responses.

(4) Establishing funding mechanisms must be one of the Bill’s priorities to enable and support effective climate change responses. The PCCC must advise on how this fund would be administered and spent. The funds from the polluters must be paid into this fund. The fund must be audited and its expenditure must be disclosed to the public.

(5) The Wild Law Institute also proposed that the Climate Change Bill must include the following principles:

the principle that human health and wellbeing must be safeguarded and pursued by promoting harmonious coexistence, and not at the expense of nature;
the principle that the climate system, including the natural systems that had created and contributed to maintaining climate stability, must be protected for the benefit of present and future generations of human and other beings.

(6) A new section -- general duty and specific duty -- must be added to the Climate Change Bill.

General duty involved everyone taking climate change response measures as soon as reasonably possible (section 6A(1), (2));
Specific duty would require organs of state to promote and facilitate the taking of urgent and effective response measures (section 6B(1), (2)).

(Please consult the presentation for further details on the recommendations.)

Working on Fire

Mr Trevor Abrahams, Managing Director, Working on Fire (WoF), said the presentation accompanied the submitted written submission in June.

Working on Fire was owned by Kishugu Holdings, established in 1985, and specialised in wildfire firefighting, suppression and prevention. They had been an implementing agent on government-funded expanded public works programme (EPWP)/WOF programme since 2003.

Their recommendations on the Climate Change Bill were:

The Climate Change Bill needed to include a provision for developing mitigation strategies now. They should be prioritised as much as the just transition concept. The provisions should include a more effective disaster management response, community preparedness, awareness, education and communication.
The legislative provisions should be aimed at addressing the institutional mandate and the resource basis of South Africa’s response to the threat of wildland fires.
The WOF programme on fire awareness could be repurposed to play an effective role in community education around the broader issues arising from climate change.
There was a need to establish a public-private partnership (PPP) framework to deal with the mitigating measures and fiscal constraints.
The Climate Change Bill needed to include provisions for building institutional capital at all government levels to respond to climate change's impact on wildland fires.

Discussion

The Chairperson noted the statement by WOF which highlighted that the Climate Change Bill did not make provision for a risk reduction and mitigation strategy against one of the significant threats to climate change, especially the prevalence of wildland fires and the subsequent damage they could cause. She said that the concern was very legitimate. She asked whether the WOF had brought this concern to the attention of the DFFE when the Climate Change Bill was developed. What had transpired if they had? How did they see the WOF programme's role in the country's climate change challenges? What could the country do to deal with the reported threat of wildfires?

Ms Mbatha said she would like to see the percentage of women in the WOF programme move from 30% to 50 %. She asked if the former firefighters had resigned from their professions. She agreed that wildfires were a problem since they contributed to climate change. What about the veld fires they conducted during winter seasons? What were their impacts on climate change?

Mr P Modise (ANC) said that the Wild Law Institute asserted and agreed that the climate change response meant that any actions taken by humans to restore climate stability or to prevent/mitigate, increase and adapt to the adverse effects of climate change must include adaptation and mitigation. Towards the end of his presentation, Mr Cullinan asserted that climate change responses should go beyond adaptation and mitigation. Whilst this assertion may not be self-contradictory, he would like him to take the Committee through other responses and measures that he recommended that the PCCC or any other stakeholders affected by climate change impacts must adopt.

He said that although South Africa was confronted by poverty, unemployment and inequality, climate change must not be considered an instrument to respond to those triple challenges. The effects of poverty, unemployment and inequality must not be downplayed, just as they had to prioritise mitigation of climate change effects such as floods. There was a need to move away from looking at responses to climate change as one of the strategies to create employment. They had to appreciate the other strategies implemented to address the triple challenges outside the climate change argument. He agreed with the Wild Law Institute that everyone must take climate change responses seriously. Did the Institute have programmes at the societal and community level, such as awareness, civil education etc., or did they leave this responsibility to the government to sensitise the climate change issue among society? What mitigation measures were they recommending?

Mr Modise had said that everyone was well aware that there were many well-known polluters, such as Sasol and Eskom. As lawmakers, how did they recommend that these polluters be forced to pay? Was it only through carbon taxes that these companies could contribute to mitigating the impacts of climate change? It was a given that a lot of funds would be needed to mitigate climate change with the seasonal changes. How did the presenters think the funds could be raised to deal adequately with a catastrophe?

Mr Paulsen said that the Wild Law Institute had placed more emphasis on the role of municipalities in implementing the Climate Change Bill. Had any work been done to determine the estimated cost required to prepare the municipalities? The Committee was currently dealing with the National Forest and Veld Fire Amendment Bill,  and he asked the WOF about the funding requirements needed to address the recent fires that devastated the University of Cape Town (UCT) and Knysna. What had been their resource challenges? Which municipalities were equipped to deal with such incidents? How much would it cost to equip other municipalities properly to mitigate forest and veld fires?

Mr D Bryant (DA) said the Wild Law Institute presentation mentioned that government puts too much emphasis on growing the economy, which had negative consequences going forward if it was the sole ambition. He suggested being pragmatic with the challenges they were currently facing. The country was in a dire economic situation, and with its relations with the world. There was a need to recognise that many potential solutions put forward -- from the national to the local level -- were contingent on a significant amount of money being rolled out and sustained. South Africa had old infrastructure, including and excluding state-owned enterprises (SOEs) that were falling apart. Was there not a pragmatic way to approach economic development and growth without it being a barrier to achieving the climate goals? Could one look at ways to use the economy as one of the drivers that would assist in achieving climate goals? The WOF presentation highlighted how there had been a significant and noticeable increase in the number of disastrous fires over the past few years. How were these fires monitored and tracked? Could they provide a chart on this, because it would be handy during deliberations on the Climate Change Bill?

The Chairperson asked the Wild Law Institute if nations were not codifying climate emergencies into their climate laws. Were they suggesting it would be good for South Africa to integrate climate emergencies into its proposed Climate Change Act?

WOF and Wild Law Institute responses

Mr Abrahams said that the WOF programme was conducted through the Natural Resource Management department of the DFFE, but they were unaware of the drafting of the Climate Change Bill, and had not been consulted. He said there was no question that they were going to be confronted by more climate change risks, danger and damage. It was important that as they went forward, they learnt from the 19 years of lessons accumulated -- in particular, the approach to developing an integrated fire management system echoed by the United Nations and other international and national organisations. In fact, the UN Secretary-General said that one should spend more on prevention than suppression to get ahead of the curve. They did not have the capacity to respond.

He said that in the tables presented on major fire disasters, more than 500 personnel had been deployed to the Knysna fire. On average, during these disasters, the WOF prepared more than 70% of the boots on the ground, and would have more than 40% of the vehicles on the ground. They were mainly the only fire aviation resource. They therefore needed to reflect on their preparation for the anticipated increase in wildfires.

He said the fire awareness programme reached more than four million people. It was done by firefighters who went to schools and the communities. They were educating them about fire risks at the moment. Surely, this was a useful platform that could be broadened into management awareness around climate change impacts, such as floods and other issues communities needed to adapt to.

They were celebrating the 19 years of the programme, but for the past few months, they had been confronted by contract uncertainty, litigation, etc., which did not place them well in terms of the country’s preparedness for a potential disaster.

Mr Abrahams clarified that the figures presented had indicated that the programme always exceeded a 30% deployment of women, that 51% of the management were women, of whom 60% were former firefighters. In fact, women were moving up from the firefighter level into the management cadre. They also had a huge alumni from the SAPS, the South African National Defence Force (SANDF), municipal fire services, conservation agencies and the private sector. Part of the requirements for firefighting was fitness, which often exceeded the 30% target for women, which was the highest in the world. This had to do with the legacy in terms of understanding. They were open to everyone, and usually did not reach the number of women targeted. It was a constant moving target of women between 18 and 35. However, this was the age when women had children, and it often interrupted their ability to engage with such onerous activities.

Mr Abrahams said that prescribed burning was conducted during the winter seasons. The aim was to reduce the fire-fuel load to prevent larger disastrous fires. The more fuel you have, the more intense the fire. He agreed that there were emissions with the prescribed burnings of over half a million hectares annually. The UN said they must prioritise the prescribed burning to reduce the fuel load and further fire impact. It was, of course, a trade-off, but not conducting this practice would lead to costly fire disasters with more emissions.

He agreed that most of the municipalities were poorly resourced, and DFFE contributed only 30% to allow aircraft and to stand by. The provincial disaster management in the Western Cape had embarked on a programme where they paid for the first hour. If one looked at the genesis of a fire, the first hour was crucial. The extent of the WOF fleet had grown to the extent that people paid for them. When there were fires in the communities, they followed the disaster management protocols where they would put out the fire and the cost would be reimbursed. They had done a test case in the Western Cape, responding to shack fires in informal settlements, which was a jurisdiction of the local fire department, and had very successful results after a three-year study. He highlighted that WOF data was tracked and detailed the resources, estimated costs, and hectares, lives and property losses.

Mr Cullinan said it was important to broaden the climate change mitigation and adaptation plans beyond cutting emissions and adapting -- dealing with systematic problems should also be prioritised. For example, there was a need to examine government policies and incentives. One had to ask whether they incentivised any activities that worsened climate change. They needed to interrogate the legal and economic system and ask if there was anything that encouraged the activities that caused climate change. Restoration of ecosystems into their natural states should also be prioritised, and would capture more carbon. Employing people to clear alien invasive species would reduce fire risks and conserve natural biodiversity. There was a need to look at our civilisation and identify the root causes. Education could be associated with mitigation and adaptation, but what they were saying was that a positive vision for society was needed that addressed climate change, biodiversity and all the other issues together. The positive vision sought to live harmoniously with and in nature. The process of implementing this vision would address all of the issues.

He stressed that one also had to be careful about how they implemented the proposed measures. He said the Wild Law Institute was very small, with only two employees. Therefore, they were currently focusing on building networks across Africa. Therefore, they did not have capacity for outreach and educational awareness. However, he gave many talks on these issues and knew that the EMS Foundation had active social programmes.

He said that government must ensure that the existing laws to curb the emissions of greenhouse gases from companies such as Eskom and Sasol were enforced. Sasol had made money for decades on activities that cause climate change, with negative social and environmental impacts. These organisations with huge resources really needed to come to the party and play an active role in cleaning up some of the problems they had caused. They would also expect the government to push them to take measures towards a just transition as quickly as possible. The current forms of business were incompatible with restoring climate stability. The reliance of Eskom and Sasol on coal had to change, but moving to gas could even be worse. Both entities were fully aware of this but were under pressure to give profits to their shareholders. The government needs to say that right now, we are in such big trouble and there was nothing wrong with making a big profit, but some of the profit must be used to solve problems they had created.

He added that the cost of not doing anything was going to be far higher than the cost of taking measures at local municipalities. It was worth spending more on all climate change mitigation and adaptation measures. It was unfortunate that it was engraved in most people’s thinking that the economy was more significant. He said lives were more important than the economy. He had spent most of his life in the private sector and was not opposed to making profit. Therefore, he was not saying economic growth was unimportant, but that economic growth must be developed in a way that the basis of the economy -- the environment -- was not destroyed, otherwise, they were doomed to fail. They were not trying to shut off the investments, but were saying that one had to invest in the right things to preserve humanity's future.

He concluded that declarations of climate emergency were sometimes for grandstanding, and in some other countries, they were trying to make a political point. He thought this Climate Change Bill did recognise that there was a climate emergency. When something was an emergency, the measures taken would be different than when there was no emergency. One could install firefighting equipment and buy extinguishers when one's house was not on fire. Once one's house was burning, one had to act very quickly, call the fire brigade and take other measures. Secondly, the legal system acknowledges that when things are an emergency, one needs to take swift action. However, the legislation should provide the tools to act when necessary.

Follow up discussion

The Chairperson said that it was strange that the WOF was receiving money from the DFFE, but it had not been involved in drafting the Climate Change Bill and National Veld and Forest Fire Act, and she believed there was something wrong with that. It was known that WOF was an implementing agent of the Department in the area of fire management. She asked Mr Tlou Ramaru, Acting DDG: Climate Change Adaptation, why WOF was not involved in the drafting of the two pieces of legislation? She would also appreciate a response from Ms Nodada, DDG: Forestry Management,

Mr Ramaru replied that the Department had consulted internally for the previous four years. The internal consultations had been through various working groups represented by all the branches. The consultations were also conducted through MINTEK and all other stakeholders participating in the MINTEK, and the Ministers and Members of Executive Council (MINMEC) provided inputs. External consultations were offered through workshops across all nine provinces, with all key stakeholders invited to make inputs. The Climate Change Bill had been in the public domain for a very long time through the media, public participation and notices. He shares his concern with the Chairperson that WOF was not aware of the Climate Change Bill for such an extensive period of time. He would look into the records to review the provincial engagements to check if WOF did not participate at any governmental level.

The Chairperson asked Mr Abrahams if the DFFE had ever consulted the WOF regarding their inputs on the Climate Change Bill.

Mr Abrahams confirmed that they were never consulted.

The Chairperson asked the DFFE to retrieve their records and submit them to the Portfolio Committee, to check whether WOF had been part of the consultation process.

ESKOM

Ms Gina Downes, Corporate Specialist: Environmental Economics, Eskom, said the utility supported the current Climate Change Bill, and favoured its speedy processing.

She listed Eskom's recommendations on the Bill:

It supported the mainstreaming of climate change issues in all national, provincial and local government processes, but there did not seem to be any initiatives to ensure sufficient capacity building for this. This was concerning, given the speed at which this capacity building would have to take place.
Climate change response implementation plans under section 15 (1)(d) must be developed for every province, district and metropolitan municipality. Eskom also called for the strengthening of capacity building at the local level.
Provincial and municipal climate change response plans under section 15 (3)(b) must include measures or programmes relating to both adaptation and mitigation, in line with the constitutional mandate of the province or the metropolitan or district municipality.
Clause 15(3)(b) must be role specific. It should specifically exclude the activities of industries within a province or district municipality that had been allocated a carbon budget in section 24(1) and had already submitted a pollution prevention plan to the national department.
Eskom supported the proposed integration of carbon budgets and taxes, such that emitters pay higher taxes on emissions that exceed the budgets. Integrating these two instruments would be more effective in driving strategic decision-making across all relevant stakeholders, to reduce greenhouse emissions. However, the current Carbon Tax Act could not refer to mandatory carbon budgets until the Climate Change Bill came into force. Once the Climate Change Bill was enacted, the Carbon Tax Act could be amended to implement the “penalty.”
Eskom said that the introduction of penalties per section 49B(2) of the National Environmental Management Act was a premature response that would lead to inappropriate criminal sanctions.

SASOL

Ms Shamini Harrington, Vice President: Climate Change, said Sasol supported the Climate Change Bill, with the following suggestions to strengthen it:


The previous versions of the Bill reflected that the carbon budget would result in a carbon tax penalty. Sasol called for an administrative penalty without criminalisation if a budget was exceeded, supported by positive incentives in the form of an integrated mitigation system.
The Bill did not provide sufficient assurance that sectoral emission targets (SETs) would not negatively impact industry beyond the requirements set by the applicable carbon budget. Sasol suggested that a provision must be added that ensured SETs and associated policies and incentive measures were developed to support the achievement of carbon budgets held by companies within the relevant sectors, similar to the Inflation Reduction Act in the United States and the Fit for 55 policy package supporting the European Union member countries.
Sasol called for specific criteria for allocating carbon budgets and SETs that considered mitigation potential and the ability to transition.
The Climate Change Bill did not sufficiently recognise the mitigation potential and the feasibility to transition, as criteria for allocating the carbon budget and the availability of economically feasible technology. Sasol suggested that the Climate Change Bill must make a provision for developing a holistic, integrated mitigation system. It was supportive of carbon pricing that enabled mitigation and a just transition.

Discussion

Mr Paulsen asked Eskom and Sasol if their entire business depended on finding carbon fuel sources. What was the roadmap for Sasol once South Africa took a renewable route?

Mr Bryant asked Sasol and Eskom if they had been consulted yet, or if they were part of any process regarding the $8.5 million committed at the COP26 to assist South Africa to transition toward green fuel resources. Were they confident that this would come off? Were they making any plans in that regard? Were they looking into alternative revenue streams to transition to a greener economy?

Mr Modise stressed that Eskom and Sasol were the biggest contributors and emitters. In their presentations, they acknowledged that climate change was one of the pressing matters of our time. South Africa was one of the top 15 largest greenhouse gas emitters in the world. He said Eskom had argued it was a champion of a just transition for South Africa. Was this perpetual load shedding part of their climate change mitigation strategy? Eskom also supported a proposed integration of the carbon tax and carbon budget so that the emitters should pay a higher tax on emissions that exceeded the budget. Some municipalities, government departments and individual households owed money to Eskom -- how would they pay the taxes they were talking about? Would they come back to Parliament and ask the Committee to increase their budget so they could pay these taxes they were recommending?

Mr Modise said that Sasol had highlighted that they were a strong contributor to the South African economy, but he had thought the presenter was going to say that Sasol was the largest consumer of coal and the greatest emitter of greenhouse gases in the country.

He said Eskom had spoken about the 1 200 MegaWatts they aimed to achieve by 2030, so there were almost eight years to go. How far were they now on a scale of one to ten? When would the five projects (wind and solar) as part of decarbonisation be approved? Who were the important people who would conduct this regulatory approval? He asked Sasol to rate themselves on a scale of one to ten on how far they were on their roadmap to a just transition.

He said he argued differently from SASOL, and believed that a structural transition to a climate resilient economy required criminalisation. If the carbon tax and carbon budget were not criminalised, how would they enforce Sasol and Eskom? How would they ensure that there was compliance? The carbon tax came into effect in 2019, and emitters have been compelled only since then. Other than that, it had always been a leisurely affair. How would one enforce and ensure that people complied with the regulatory frameworks and legislative pieces if they did not criminalise? Should one just warn people perpetually without taking any action?

The Chairperson said she agrees with Mr Modise on the questions posed to Eskom. Why should Eskom be concerned or be against the application of section 49(b)2 of the National Environmental Management Act? Other stakeholders had requested tgovernment penalise the excess carbon budgets under the proposed climate change law. Why should it appear at this stage that Eskom is expected to exceed its carbon budgets? Did the current version of the Climate Change Bill change for better or worse? What were those substantive changes? Sasol argued for the relaxation of certain penalties, while many stakeholders argued that the Climate Change Bill lacked teeth in its present draft form. She was concerned that they were running the risk of not meeting the carbon budget targets for emitters like Eskom and Sasol if they did not start on a strong footing. The ongoing challenges of meeting the minimum emissions standards in terms of quality should also serve as a warning. How would carbon budgets for companies be enforced, if the carbon budget could not be legitimately regulated as an offence? Why would companies meet their carbon budgets or requirements if they were aware that there was no criminal offence?

ESKOM and SASOL responses

Eskom
Ms Downes said that Eskom had been consulted regarding the $8.5 billion by the task team headed by the Presidency. They expected that some of the money would become available to them, but they understood it to be more in terms of concessional loans than grant funding. In the meantime, as those processes unfold, they had already initiated discussions with development finance institutions such as the World Bank and the African Development Bank. They were proceeding with certain repowering and repurposing projects at some of the power stations scheduled to be shut down with the funding”.

She said that load shedding was not part of Eskom’s climate change mitigation strategy, and apologised for the difficulties experienced because of load shedding. They were all affected equally, and her colleagues did their best to bring the system back online.

She said that Eskom had two sources of income. In an ideal situation, all of its costs would be covered by the revenue generated from electricity tariffs. However, the costs had exceeded the revenue generated, and it had managed to obtain approval from the National Energy Regulator of South Africa (NERSA). It had requested special appropriations from the government in the past few years. They kept trying to claw their way back to a trajectory that did not rely on funding. The pricing policy of NERSA -- being revised currently -- in a regulated market included an allowance for a pass-through of taxes. Ultimately, an electricity consumer would be paying if they exceeded their carbon budget and had to pay extra. It was certainly not their intention, as much as people objected to the idea, but it reinforced many other aspirations that the economy was striving for regarding energy efficiency. When the household bill goes up, one looks at ways to avoid the expenses. Similarly, industries and commercial enterprises around the country had driven substantial energy efficiency improvements, consequently leading to declines in sales, which was a good thing.

Ms Downes said it was clear that the current Climate Change Bill left the allocation of carbon budgets to the regulations, and there was no draft of these regulations for them to comment on. They did not specifically know the carbon budgets and how they would be allocated. They, therefore, could not say whether they were going to exceed them or not. In their experience of the pilot stage of the voluntary carbon budgets, they compared what came out of forecasting processes such as the medium-term system adequacy outlook. This was a five-year forecasting undertaken by the transmission operator to see if they had adequate supply. They, therefore, had to check how much carbon space was required, and then contrast it with the national goals of being below 2 and 1.5 degrees. It was likely that the carbon budget allocation may not be sufficient to cover the adequacy of supply, which would put operators and power stations under pressure and have to choose if they should continue to emit and ensure adequacy of the supply, or if they should go to jail. Going to jail was not a fair position for an operator to be in given, and she had explained before that not all the technologies were available yet.

She said it required multiple actors to create enabling environments to meet these carbon budgets. Ekom had progressed far with their analysis of socio-economic impact assessments for shutting down, repairing and repurposing some of the power stations to avoid social impacts. They did not think they could continue to decrease greenhouse gas emissions below 2 degrees on the trajectory at the very least. It would depend on one's assumptions about how stringently the carbon budget would be set. Must one assume that carbon budgets were going to be set fairly, or did one expect that they would be set in line with the 1.5 degree pathway? They were certainly not setting out to exceed those carbon budgets.

Ms Downes said that the current version of the Bill had changed in respect of two clauses linking the carbon budget exceedance to carbon tax. There were two clauses in the previous Bill which had made it clear that that was an intended link. Why had those two clauses been removed?

Sasol
Ms Harrington said that Sasol had a roadmap, tracking liquid fuel consumption and electric vehicles, which was a global movement. They were not putting our heads in the sand, believing that their business was going to stay the same. The technology utilised by Sasol was not a sunset business, hence she had shown the vision of a new Secunda. They needed to be able to produce sustainable aviation fuels compatible with the net zero future through Fischer-Tropsch technology. Sasol had the assets, pots and pans to effectively do this, and it was globally demanded. SASOL’s emissions were related to the use of coal, but the Fischer-Tropsch technology did not produce those emissions. Swapping out coal for a more sustainable feedstock (biomass, sustainable carbon) in the Fischer-Tropsch process created products suitable for a low carbon future that would decarbonise the aviation sector. Sasol was looking at producing sustainable jet fuel and sustainable chemicals with zero scope one and two emissions. They saw a new business that produced new products using the best technology to create jobs in the country. They saw this opportunity spurring growth in different ways and in different regions. The roadmap would move Sasol from its reliance on coal, to gas and then green hydrogen, which would produce sustainable fuels.

She said that SASOL had not been specifically identified as a recipient of $8.5 billion. However, given the competitive advantage that South Africa had, green hydrogen had been identified as an opportunity for some allocation of money. Sasol was partnering with the Presidency, the Infrastructure Fund and the Gauteng government to tap into some funding that would unlock green hydrogen. Green hydrogen was expensive, and they wanted it to be below $2 per kg by putting the projects in the ground that would unlock it.

She had mentioned in her presentation that they were a significant emitter of greenhouse gas emissions related to the Secunda slide. Sasol emitted 60 million tonnes of carbon dioxide, and it aimed to get to net zero by 2050. In an ideal world, it could get to zero scope one and two emissions. It was very achievable, so long as the technology became cost effective within the time frames. Sasol’s roadmap was moving towards decarbonisation using existing assets, moving to gas, applying energy efficiency, bringing in renewable energy, and then moving to an environment where they could integrate green hydrogen. It was looking into utilising industrial streams of carbon coming from other sectors (iron, steel, and cement), and combining it with green hydrogen to produce new products.

She said about 70 % of the 1.2 GigaWatts was related to NERSA licensing. They were awaiting a process to get a project of over 100 MegaWatts, which had recently been put through the regulations, to be promulgated as soon as that happened, which they hoped would be in the next few months. About 30 % of the projects were already approved, which would come through by as early as 2025.

She said that the just transition roadmap was under development and was part of the executive remuneration related to this financial year. Sasol would come back and provide more information on different interventions around the just transition. They would not do this alone, but would engage the community and employees. It would be an engaging consultative process. 

SASOL was certainly not looking for a relaxed regulatory environment regarding carbon budgets. The Climate Change Bill right now does not have any regulations and enforcement related to the carbon budget. They wanted the carbon tax because the penalties related to the NEMA were quite low. It was a very substantial incentive not to exceed the carbon budget. They were saying that what had been put forward previously was the mechanism to utilise. It was always an administrative tax penalty in the form of a carbon tax. Given the sizable tax liability that was related to this, this was a significant incentive to keep Sasol on track so that they could retain and meet their carbon budget. SASOL’s roadmap of a 30% reduction had been set up with a carbon budget in mind. She said that part of SASOL's roadmap was to ensure that the NEMA and Air Quality Act were integrated into their system so that they could be compliant and meet their emission reduction targets.

The Chairperson appreciated everyone’s engaging and empowering inputs, and said that the Portfolio Committee would continue engaging with the presenters.

The meeting was adjourned.