COP28 Preparations: DFFE briefing; Constitutional Court Judgement on the NEMLA Bill; with Minister

Meeting report

The Chairperson welcomed everyone present and acknowledged the presence of Minister Barbara Creecy along with all the delegates from the Department of Environment, Forestry and Fisheries (DFFE). He asked everyone to introduce themselves. An apology from the National Treasury came through this morning indicating that they are in Berlin. Thus, the National Treasury agenda item will fall out. If it is in the interest of the Committee, the briefing can be rescheduled, and the Committee has a right to get that information before COP28.

Minister’s Remarks
Ms Barbara Creecy, Minister of Forestry, Fisheries and the Environment, expressed her gratitude for the opportunity to share the negotiating mandate for the 2023 United Nations Climate Change Conference (COP28). She remarked that COP28 is an important moment in the negotiating life of the United Nations Framework Convention on Climate Change (UNFCCC) because it falls midway between the signing of the Paris Agreement and the EURO 2030, which scientists are saying is the year in which the world will be facing various physical tipping points if global warming is not addressed. “From the technical report of the global stocktake, it is already known that we are not on track with the stocktake, although there has been progress since the signing of the Paris Agreement”, she said. “However, we are not on track to make the 1.5-degree average temperature increase, the adaptation, and the provision of adequate means of implementation from developed to developing countries”, she added.

“The Conference of the Parties of the UNFCCC (COP) will need to examine why we are not on track and how our understanding of the current situation guides our approach to the indices due in 2024. In addition, there is work to be done by the African continent and the G7, as we lack a clear global target on what we consider adaptation and climate resilience. We are yet to comprehend the new financing instruments, both predictable and non-debt, which will be available to developing countries to combat climate change in the post-2024 environment. However, we do know that we will be operationalising the Loss and Damage Fund this year, which is an important objective for developing countries, particularly for those vulnerable to climate change. We anticipate challenging negotiations as usual, and we expect South Africa as a negotiating group to vigorously advocate for the issue of adaptation and new adequate and predictable climate finance for developing countries.”

Briefing by the Department: Preparations for the UNFCCC Climate Change Conference in December 2023
Mr Maisela Kekana, DDG: Climate Change and Air Quality Management, DFFE, presented.

South Africa is participating at the COP28 to the UNFCCC in the United Arab Emirates (UAE) from 30 November to 12 December 2023. The conference will see the first Global Stocktake, which will provide a comprehensive assessment of progress since the adoption of the Paris Agreement in 2015 and help inform parties to prepare for their next nationally determined contributions.  

COP28 is taking place at a time when all regions of the world are facing challenges posed by a rapidly changing climate and the best available science is informing policymakers on the risks and potential solutions. It is also a period of increased geopolitical tensions, trade disputes, and divisions amongst Parties on issues such as carbon border taxes, particularly between developed and developing countries. Many countries are facing resource constraints that hinder their ability to take decisive climate action and developed countries continue to backtrack on their commitments and to try to reframe the nature of climate finance.

The South African delegation has a mandate to negotiate for the full implementation of the UNFCCC and the Paris Agreement, including the global goals on mitigation, adaptation, and means of implementation for climate action. The focus for South Africa is on:
.-the urgent need to enhance international cooperation for climate action across all spheres of the economy and society;
-the need for a scaled-up and new quantified long-term goal for finance that is based on the needs of developing countries and backed up with a collectively negotiated implementation road map;
-the need to build momentum for reform of the global financial system so that multilateral development banks and other financial institutions can offer the scope of finances required for the climate transition, particularly in developing countries; and
-progress on establishing a global goal on adaptation with appropriate new and predictable financing.

The country will also launch the South African Pavilion on 6 December 2023, at COP28 in Dubai, UAE. The South African Pavilion will provide the global community with evidence that multi-sector collaboration in Africa is working to mitigate the effects of climate change and showcase work in transforming economies and building resilient societies in a just and equitable manner.

(See Presentation)

Discussion
Ms N Gantsho (ANC) appreciated the report from the Department and asked about the progress on addressing the Loss and Damage, and if there was a draft that would inform the financing model since the interim Committee on Loss and Damage was set up. From SA, were there any discussions with various sectors to reinforce South Africa’s negotiating mandate?

It is known that the developed countries have not been honouring their pledges, but have there been any discussions to compel them since the Paris Agreement signing? Is there some headway to establish a mechanism to ensure that the voices of developing countries are heard and considered in the global space and supportive of cooperation initiatives?

Ms H Winkler (DA) noted that as per the Climate Change Tracker, South Africa’s current policies and actions are insufficient compared to the modern domestic pathway, and these need substantial improvement to be consistent with the 1.5-degree temperature limit for the 2030 goals. She said that it will have devastating effects for the SADC region if we reach 4 degrees of climate, and experience mass climate refugee exodus. South Africa is already experiencing the consequences of climate change and extreme weather. Thus, are we going to meet our Paris Agreement targets by 2023? According to the climate tracker, these targets will not be met. How are we going to negotiate for climate financing if we cannot meet our own targets that are legally binding according to the Paris Agreement?

Secondly, regarding the R11.8 billion secured for the Just Energy Transition, the Committee has not had any interaction or feedback as to where this transition process is at, because it is integral to the mitigation plans. How are we going to meet our international targets if there is no clear plan or a pathway or timeframe of how we are going to transition and how this funding is being used? How are we even going to protect this funding from being siphoned off? Some Members had suggested a Loss and Damage Fund be included in the Climate Change Bill with negotiations underway, but there could be a provision in the Bill that includes how this Fund is administered to the provinces. Why did we not make this provision in the Bill when we knew we were going to COP28?  

Mr D Bryant (DA) referred to operationalising the Loss and Damage Fund: what are we envisaging the finance mechanism of that to look like? Secondly, if we are looking at direct financing, are we not going to face the same challenges in trying to convince the leaders to pollute if we are exempting other leaders like China? What is the strategy to negotiate for direct financing instead of debt? Thirdly, regarding the funding for adaptation, how much more debt can we continue to potentially pile up with the looming burden of repayment?

Ms T Mchunu (ANC) asked about the EU (European Union) and the USA (United States of America) that seem to be going ahead with the carbon border adjustment mechanism. SA had indicated that this matter will be taken to the World Trade Organisation because climate change litigations seem to be used as a discriminatory trade barrier. Are there any formal negotiations with the EU member states or EU as a block to create some exemptions to enable a gradual transition of our highly emitting sector? Is there scientific evidence that CBAM could reduce emissions without threatening our carbon-intensive sectors?

Lastly, is there any finance mechanism being discussed to prevent financial institutions from being used as proxies or abused by developed countries to force regime changes?

Mr N Paulsen (EFF) said that the presentation had indicated that developing countries need more equitable funding models. He also asked if this is funding to implement national plans, in the form of loans, grants, and other donations. Secondly, industrialisation requires energy, which is currently carbon-intensive – what role will fund pledgors play in determining national contributions?

In COP27, the Department played a minimal role at the pavilion, and it was mostly dictated by members of the Presidential Climate Commission. He asked if any of the business sponsors sponsoring the pavilion have any form of association with members of the Presidential Climate Commission.

Minister Creecy said that finance is at the root of the complexities that they are dealing with regarding the climate transition. One would know that the global financial architecture requires reform, not just to ensure that developing countries can lead their climate objectives, but also to meet their sustainable development goals. All developing countries are behind in meeting their sustainable development goals because of Covid-19. Members would also recall that, at that time, there was a strong view by the developing countries that they should not be forced to choose between building climate resilience and achieving sustainable development goals. Now, the global shortage of finance particularly donor or grant instruments meant that countries were being forced to inappropriate choices. This leads to the question of climate justice: what has caused the climate crisis in the world? It is the accumulated emissions from over 200 years of industrialisation and development by the developed countries that created these emissions and the current climate crisis.

The Minister continued responding:

“While we all must contribute to fighting climate change, developed countries have more responsibility because they created the problem, and their wealth was built on the climate crisis”, she said. There is a requirement in the Paris Agreement and UNFCCC, which states that developed countries must assist in financing the climate transition of developing countries. “It is also a fact that we have been waiting for many years for the R100 billion to be honoured. Year after year, we have been waiting for this fund to be honoured, but we are living in hope. This amount of money is a drop in the ocean. Our transition requires R1.5 trillion between now and 2030, and we only have 11.5 billion USD, which depends on the Rand exchange, and it will not be a quarter of what is required”.

“Members have pointed out the complexity of indebtedness and that we do not want to add to it. We do not want to add to the indebtedness, and this brings up the inter-generational issue pertaining to climate change. Our generation benefitted from the expenditure of fossil fuels which is creating a crisis for the new generation. Essentially, we are telling this generation that we created the climate crisis, and they must pay for it. To find the money to reach the sustainable goals and meet the targets requires the reform of the international finance architecture. At COP, you will be told there are instruments in the UNFCCC that allow for private sector money and that is where we must look, but private money is not like water. It has risk and indebtedness. Thus, the international financial architecture must deal with the indebtedness of developing countries for those private instruments to work”.

“These battles have been ongoing and they are part of the broader battles for developing countries to ensure that they have money for sustainable development and achieving climate resilience.

South Africa is responsible for 1.17% of global emissions. Let us assume that we achieve carbon neutrality tomorrow, will that stop the climate crisis? It speaks for itself. However, we have a responsibility to ensure that we reduce greenhouse gas emissions because we accept the signs as a responsible country we must contribute. We must contribute in the context of common but differentiated responsibilities and capabilities. We told the developed countries at COP26 that whether we can reach the 2% or 1.5% mark depends on the availability of finance, and we only have a quarter of what is required available”.

“The JET Implementation Plan went through the Cabinet last week and it was approved. Surely, in due course, the Committee may request a presentation on it. It is a significant document because it focuses on six different investment areas and stresses the fact that we must achieve our climate objectives in the context of meeting our development objectives at a speed the country can afford. There is no reason at this stage to assume that we will not meet the indices targets in 2030. But we do understand that, due to the current energy crisis, we had to slow down on the decommissioning of the old coal-fired power stations”.

“Regarding CBAM (Carbon Border Adjustment Mechanism): the position of the Minister of Trade, Industry, and Competition is clear that we do not accept unilateral unnegotiated trade tariffs being imposed upon us. Minister Ebrahim Patel has communicated that to the EU, and she has also met with EU commissioners and communicated the same message. CBAM is contrary to the principle in the UNFCCC of common but differentiated responsibilities and capabilities. We agree that the EU must meet net zero by 2025 or 2040 because they have created this problem, but to accept us (South Africa) to achieve net zero at the same pace as the EU is contrary to the Paris Agreement. This is a matter that South Africa is opposing and this position was accepted by other African countries at the Nairobi African Climate Summit”.

Mr Kekana assured Members that, before the final draft goes to the Cabinet, there are wide consultations within the government and its structures as well as civil society. The Department also gets invited by civil society organisations to their gatherings to get their positions. There are meetings scheduled with various civil society organisations at COP28.

On the Climate Action Tracker, Mr Kekana said: “we have had many meetings with the people running the Tracker. The first point they acknowledge is that we do not recognise what is in the Tracker because it does not use equity in its documents, and this is acknowledged by them. This is contrary to the Paris Agreement or Climate Negotiations. They also acknowledge that but keep promising that it will be revived – that does not look like it is in the interest of the person funding them. The person in charge is a South African, but we are privileged when we go to COP. We get invited to review their documents, but there is one issue they acknowledge that their work does not involve equity. If they were to do that, they would have a completely different take. When countries do their own indices do not rely on the Tracker but other tools. We still engage them and acknowledge their work”.

On the Loss and Damage Fund, he said that the transitional committee tried to fulfill the mandate of operationalising the Fund and left the issue of sources for further consideration. However, the signal in the current governing instrument is that developed countries should provide finance to the fund as well as other parties. “We are also concluding the technical part of the Loss and Damage Fund and there is now interest from people who will host it”, he added.

Ms Winkler agreed with Minister Creecy but said South Africa was in the top 15 countries globally emitting CO2, and this is a significant statistic that cannot be overlooked because it is only about climate commitments. However, communities are dying due to air pollution in high-priority areas. “We are unable to even monitor the air pollution in those areas because the air quality monitoring stations were not functional”. Therefore, it is not just about the commitments but the domestic angle as well.

Ms Winkler continued: “we need to recognise that we need the funding, but there are forces at play in South Africa, including an Energy Minister that has a self-professed fossil fuel dinosaur that is committing to relying on fossil fuels for our energy needs. This is a direct contrast or juxtaposition to the ambitions of this Committee and to the Minister. It is not only about financing but also political will. This is the greatest impediment for South Africa. There are also externalities associated with air pollution that are not factored in these cost analyses, and this concerns the health of the people”.

Mr Bryant referred to the operationalising of the Loss and Damage Fund: does it make it obligatory for all signatories of the Paris Agreement to contribute financially? Is it likely going to be voluntary?

He was pleased that they are not rolling over on the CBAM and agreed with the Minister on the potential impact it would have on other sectors of the economy. He asked if it was possible to consider an incentive rather than a punitive measure for the developing countries.

Minister Creecy said that she was sad that Ms Winkler did not think she and President Ramaphosa had the political will to combat climate change. It was this administration that lodged with the UNFCCC indices that the top of the range is compatible with a two-degree average temperature increase and compatible with 1.5 degrees at the bottom of the range. What South Africa can adhere to depends on the availability of finance, which is consistent with the development trajectory of the country. The President has been consistent in supporting those indices.

Regarding CBAM incentives, this would have been introduced as an incentive, not a “thou shalt not”. The reason why there are strong feelings about this matter is because it is dealt with in a high-handed authoritarian and one-sided manner. It is contrary to the protocols of the UNFCCC.

Regarding the Loss and Damage, Mr Kekana said that the transitional committee was trying to tread carefully around who should contribute because what is in the Convention and the Paris Agreement are different regarding loss and damage. In the former, Article Eight was included to say that there shall be no liability and compensation. The Paris Agreement was going to be adopted without Article 8 unless that was the agreement. Thus, it is difficult to come up with language that makes it obligatory for anyone to provide finance. The responsibility was carefully given to the developed countries and encouraged other parties to contribute.

The Chairperson thanked Members and the Department’s delegation for the interaction. She said that they remain hopeful that the negotiators and the polluters will find one another.

Briefing by Legal Services on the Parliament’s position following the Constitutional Court Judgement on the NEMLA Bill, 2022
Ms Thiloshini Gangan, Parliamentary Legal Advisor, took Members through the Constitutional Court Order delivered in ‘South African Iron and Steel Institute and Others v Speaker of the National Assembly and Others’ (Case No: CCT 240/2022). The Constitutional Court ordered that:
- Parliament has failed to comply with its constitutional obligation to facilitate public involvement in terms of sections 59(1)(a) and 72(1)(a) of the Constitution.
- As the Amendment Act, even though it has been signed by the President, is not in operation yet, there was no need for the Constitutional Court to give a suspended order with a timeframe within which Parliament must cure the defect.
- The judgment in effect prevents the operation of the affected amended provisions and allows Parliament the opportunity to reconsider and process the proposed amendments with due regard to the facilitation of meaningful public participation with those who stand to be affected and in compliance with the Supreme Court of Appeal’s ArcelorMittal South Africa (AMSA) judgment.

(See Presentation)

DFFE response to address the findings of the Constitutional Court
An official from the DFFE took Members through the responses. The presentation, covered, among others, the recommendations which were: the Department initiates a Bill to address the definition of “Waste”; the Bill will be taken through the usual consultation processes before it is introduced in Parliament; and for regulatory certainty that the Department will seek a declaratory order on the extent of the application of the AMSA Judgment.

(See Presentation)

Discussion
Mr Bryant lamented that it was rather unfortunate that the Committee found itself here after a long process, especially because Parliament is nearing the end of term. Some of the amendments made would have been important and realistically that will happen in the next Parliament. He proposed that communication should be made with other interest stakeholders who have commented on the Bill and voiced their concerns. It would be advisable the Department acted swiftly to avoid further financial losses. He supported the proposal of the Department.

Ms Winkler asked why the expanded definition in the F-Bill is so different from the D-Bill and asked how it came about. She also asked if there were any other instances where the Department overlooked the mandatory steps that are required, which could result in further legal challenges by other stakeholders to prevent the wastage of resources. She also sought clarity in the F-Bill that several other byproducts were included, but what are they consisting of? In the instance of Arcelor Mittal, what would those byproducts be? What was happening to those byproducts prior to the amendments?

Mr N Singh (IFP) asked what informed the midstream changes in the definitions. He agreed with the court's judgement. A new Bill can be done in the next term, but how serious will this change of definition going to be? Is there no way for the Department to include the expanded definitions in regulations?

The Chairperson asked if it was only the definition of “waste” that was highly problematic. Is the Department also satisfied with other aspects of the Bill?

It would not be practical for the Committee to commence the Bill process now. The sun has set for the Committee. This is something that will be factored in the next term as there may be significant changes. What happens in the interim? Is NEMLA going to be suspended or some of its provisions can be used?

Mr Singh wanted to know what informed the industry to come up with this and how it impacted the industry or the economy.

A DFFE Official said that it is always difficult to pre-empt what litigation they are likely to receive, but the bulk of the provisions have been brought into effect by the end of June since the Amendment Act was concluded last year. The official said that the Department is not aware of any additional aspects that were contained in that Bill that are likely to be challenged. Halfway through the process of the proclamation and submitting it to the President for assent, the team realised that it may be a risk-averse approach because they were not sure what the court would rule.

The finalisation of the Bill followed a lengthy process. It was initiated around 2018 and was concluded in 2022. The proposed amendments were done as part of the E and F version of the Bill which happen in the NCOP processes. The Bill went through the NA and was supported and then sent to the NCOP where public hearings were also held. Provincial legislatures brought their negotiating mandates and made specific recommendations, and specific questions for consideration for the content of the Bill. As a result of that process, the waste definition was amended. However, during that time, the AMSA judgment also occurred. These are the circumstances that led to the concerns around the management of waste. The genuine concern of the Department is not on facilities that pre-date Section 20 of the Environment Conservation Act, but the AMSA judgment is being interpreted in a wider context which was not intended. Hence, the definition of waste was expanded.

Ms Mishelle Govender, Chief Director: Hazardous Waste Management and Licensing, DFFE replied that Arcelor Metal’s primary goal is to produce steel. In that process, the ore is run through a furnace. And in the burning of the ore, the metal is extracted and conditioned. In that process, there is a product with very low levels that cannot be extracted and used in the steel process. It is a waste. It does not make business sense due to the excessive costs of extraction. However, the product is still useful, and because it has gone through a furnace, it is strong. It could be used in road infrastructure, and the N3 near Ladysmith has it. The Department’s concern comes from ensuring that the use does not cause a breakdown in the aggregate and leeching in the environment. Before the judgment was handed down, one would not need to go through any licensing and assessment process to determine that this material could not be broken down. “This was in the seventies when we did not know any better”, she said. However, over time, they started looking at how they determined the impact of using that material in road construction and buildings and how it wears over time. These are matters that the team was trying to assess. In crafting the definition, they said that, if something is not useful within your own space, factory, or industry, there must be some risk management plan to ensure that there is responsibility from a cradle-to-cradle perspective.

The far-reaching risk is that they cannot allow the impact if, at some point, found in a river or dam in the water-scarce country that is South Africa, which will cost millions or billions of Rands to clean up. The state would sit with this responsibility. Therefore, in the definition, they are trying to inculcate responsibility before the waste leaves the gate.

Over and above using regulations for the expanded waste definition, there are many mechanisms that they are using, including exclusions. But in the process of exclusion, the generator of the waste must have a measure of where the waste is going and then report it to the Department for monitoring. Currently, if an industry sells or donates its waste, the Department has no control or record of it and finds out when it is too late and it must clean it up. There are also norms and standards where waste generators register with the Department and adhere to those norms and standards. There is a consideration for extending the norms and standards. The Department currently has about 13 for various waste streams. Based on the court judgment, they are now looking at criteria-based management and activating section 14 of the Waste Act, declaring a priority waste. This would mean that the industry needs to put in place measures for waste streams that have contaminating abilities.

Mr Singh asked if ash would be considered waste.

Ms Winkler asked if any studies looked at the impact of these byproducts from the steel industry and how it affects the environment. Secondly, prior to the judgement, were there any steel businesses or players reporting on the use of the byproduct, whom it was sold to, and what they were doing with it? She wanted to know how these players were handling this waste currently. Where was all this waste dumped before?

Ms Govender confirmed that ash is one of the waste products. However, some companies like Eskom apply for exclusions for proven beneficial use. The issue is that they generate more daily than they can sell.

There are studies across the world, which is used in the exclusion process. An applicant should demonstrate that this is used somewhere for beneficial use and the quality is the same or similar without any significant negative environmental impact. The DFFE has partnerships with academic institutions. And if certain areas are identified without any research available, the DFFE will commission that research study.

Producers must start developing some recycling patterns for the products that they put into the market. The DFFE is pushing for the principles of extended producer responsibility across many sectors. Various certificates for regulation that industries are applying for in terms of climate change and responsible care are also assisting the Department with this issue.

Mr Bryant noted a procedural slip which is that the Committee needed to adopt the recommendation of the Department.

The Chairperson welcomed the responses and said that it must be a resolution of the Committee that the recommendation of the Department is adopted.

The meeting was adjourned.