Proposed emissions-reduction regulations, which are not yet in effect but will be enforced through mandatory reporting, carbon taxes and industry-specific ‘carbon budgets’, will act as a behavioural mechanism to force greenhouse-gas (GHG) emitters to reduce their emissions and energy use, as part of South Africa’s pledge to contribute towards a low-carbon economy, says environmental consulting company Environmental Resources Management (ERM).
“There is a lot going on in South Africa in terms of regulations and a lot of different government departments doing different things,” says ERM partner Simon Clarke.
The yet-to-be-adopted regulations relate to discussions due to take place between United Nations (UN) member countries at the 2015 UN Climate Change Conference of the Parties (CoP), which will take place from November 30 to December 11 in Paris, France.
Clarke says the UN CoP has been rumoured by members to be a potential replacement for the UN-mandated, though somewhat outdated, Kyoto Protocol. The Kyoto Protocol is an international treaty that serves as an extension to the 1992 UN Framework Convention on Climate Change, which commits State parties to reduce GHG emissions. It is based on the premise that global warming exists and that man-made carbon dioxide emissions have caused it.
If the new deal does materialise, Clarke believes there may be new individual targets for specific countries.
The UN has asked member countries to submit their intended nationally determined contribution (INDC) documents ahead of the UN CoP, in December. The INDCs essentially outline a country’s pledge or commitment to its method of reducing GHGs. This enables countries to submit ideas relevant to their specific contexts in terms of what they wish to contribute to the global effort.
The South African government is currently drafting its INDC, which will be submitted at the conference as part of South Africa’s contribution to reducing its overall carbon footprint.
Meanwhile, Clarke says the Department of Environmental Affairs (DEA) is forging ahead with its mandate of ensuring GHG-emitting companies report their GHG emissions, and formulating the carbon budgets for GHG emitters of varying sizes and types.
Clarke explains that a central carbon budget will be defined for the country. This will be divided among various sectors and then rolled down to specific industries and companies. The overarching purpose will be to reduce emissions for the entire country. It is understood the first phase of the carbon budgets will be non-legislated with formal requirements only imposed from 2021.
He suggests that some carbon emitters may be allowed leeway in terms of industry-specific carbon budgets, owing to the methods of their operations. This includes those that use a manufacturing process that would be difficult, if not near impossible, to reduce process emissions, without a fundamental and expensive change to the technology that is used. An example is the cement industry.
Meanwhile, National Treasury is formulating the carbon tax regulations. Clarke says it has been suggested that these will come into effect in 2016, but this is still unclear. “There is genuine concern from various industries about the imposition of the carbon tax, and the financial burden this will place on companies that are already struggling in a low-growth environment in South Africa. There are ongoing discussions between National Treasury and the DEA about alignment between the carbon budgets and the carbon tax.”
The Department of Energy is also forging ahead with new energy regulations, which will require companies to report on energy use and develop and submit energy plans. These energy plans will be used by companies to drive energy reduction.
ERM principal consultant Anthony Dane advises GHG-emitting companies to start gathering data on their GHG emissions and energy use, and that they gain a better understanding of their data and the ways in which they manage it. He says companies need to have confidence in the accuracy of their data, which may require external verification – a field in which ERM specialises.
“After gathering the data, the companies should begin to implement plans to reduce their carbon emissions and energy use,” adds Clarke.
Clarke notes that reducing energy consumption can be a simple process that involves evaluating the company’s energy use and identifying areas in which operations can be streamlined and efficiencies gained. “In most cases, this approach is cost effective and can result in savings of between 2% and 15% of total energy use, without having to spend vast sums of money on energy-efficient equipment,” says Dane.
However, many local industries argue that South Africa is a developing country that cannot afford to implement costly measures to reduce its carbon footprint.
How to do this is seen as a major challenge and many question how quickly South Africa will be able to transition to a low-carbon economy. With this in mind, government is designing mechanisms to assist industries in reducing their carbon footprint.
However, this has raised concerns among industry representatives about what mechanisms should be used and how they are going to be designed and implemented over time. “Transitioning to a low-carbon economy is going to involve tremendous costs, which is hugely significant for the energy sector,” says Dane.
Clarke, therefore, adds that it is essential for business to work with government to try and inform each other on an appropriate level transition to a low-carbon economy.
He advises companies to be prepared for stricter legislation, as these regulations are going to come into force sooner rather than later.
However, Clarke notes that the initial non-legislated phase during the introduction of the carbon budgets, will serve as a trial phase. “This will provide an opportunity for companies to start transitioning to low-carbon processes.”
Dane believes South Africa is still proving to be more ambitious than some of its counterparts in its attempts to reduce carbon emissions. “Few question the need for South Africa to transition to a low-carbon economy. The challenge is how to achieve this in a manner that is appropriate given South Africa’s unique developmental priorities,” he concludes.