Climate Change Adaptation Strategies: implementation by Departments: hearings (Day 3)

Water and Sanitation

06 June 2012
Chairperson: Mr J de Lange (ANC)
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Meeting Summary

Seven government departments made presentations to the Portfolio Committee on Water and Environmental Affairs on their plans and programmes for the implementation of the White Paper on Climate Change.

The Deputy Director-General of Climate Change in the Department of Environmental Affairs (DEA) said the approach to mitigation sought to achieve a balance among the achievement of the development priorities of South Africa; the economic and social opportunities presented by the transition to a lower carbon economy; and the contribution of the country as a responsible global citizen to the international effort to curb global emissions. She identified four steps that were important in the process of mitigation.

National Treasury stated that South Africa was facing a number of environmental challenges that were likely to be aggravated as the economy grew, if natural resources were not properly managed and protected. South Africa was a relatively significant contributor to global climate change with significant
greenhouse gas emission levels from its energy-intensive, fossil-fuel powered economy.

The Ministry of Transport’s Special Envoy on Climate Change acknowledged that the transport sector was one of the fastest growing sources of green house gas emissions. He emphasised that most transport mitigation measures were long-term measures and would require major shifts in the current transport system.

The Economic Development Department noted that the transition to greener growth was economically costly for South Africa because alternatives to externalities-intensive production were few and expensive. The policy should rather focus on reducing negative externalities of economic activities through the development and diffusion of low carbon technologies.

The Department of Cooperative Governance and Traditional Affairs (COGTA) saw its role as facilitating mainstreaming of climate change into municipal development planning processes and programmes. It had developed a Climate Change Response Toolkit in partnership with the DEA and South African Local Government Association (SALGA).

The Department of Trade and Industry emphasised that climate change mitigation was an imperative from both a climate and trade and industry perspective. South African production and trade would become increasingly vulnerable to carbon sensitive policies and private standards, some of which were being deployed with protectionist intent.

The Department of Energy explained that in its response to the White Paper, it would lead the development of the Energy and Climate Change strategy for the sector taking into account emissions allowance in the short, medium and long term. These allowances would have to be cascaded down to sub-sectors and provide a full account of all the roles in the sector.

Members commented that Treasury should set aside more money to pull out all the climate change issues in government business plans; wanted to know what mechanisms were in place regarding greenhouse gas emissions; asked about time frames for changing from road to rail, and if enough research had been done on the Bus Rapid Transit (BRT) system; enquired if the Energy Department had been engaged with on the issue of fuel switch; how much of carbon space had been taken up and when would the Integrated Resource Plan (IRP) be updated because it was outdated; and asked for a simpler explanation of the toolkit devised by COGTA.

Meeting report

Department of Environmental Affairs (DEA) submission
Ms Judy Beaumont, DEA Deputy Director-General of Climate Change, said the approach to mitigation sought to achieve a balance among the achievement of the development priorities of South Africa; the economic and social opportunities presented by the transition to a lower carbon economy; and the contribution of the country as a responsible global citizen to the international effort to curb global emissions. She identified important steps in the process of mitigation:

▪ Defining key sectors for which mitigation potential would be assessed and mitigation measures adopted. This included the definition of significant sectors for which carbon budgeting may be adopted. The South African Greenhouse Gas (GHG) Inventory was using IPCC guidelines and classified emissions into four categories: Agriculture, Energy, Waste, and Industrial Processes and Product Use.

▪ Recommending the use of a best mix of mitigation policies and measures, including carbon budgeting. An in-depth assessment indicated it was best to consider available mitigation options for key sectors and sub-sectors; study published research on the mitigation potential and options for key sectors and sub-sectors; and weigh costs and benefits of achieving desired emission reduction outcomes for key sectors and sub-sectors. Define carbon budgets for significant GHG emitting sectors and sub-sectors. Adopting a carbon budget would provide for flexibility and least-cost mechanisms in relevant sectors and sub-sectors. The initial carbon budgets for significant GHG emitting sectors and sub-sectors would be adopted within two years. These may be revised as required based on monitoring and evaluation results, technological advances, evidence and information.

▪ Using the market, deploy a range of economic instruments to support the system of desired emission reduction outcomes. This would include the appropriate pricing of carbon and economic incentives, plus the possible use of emissions offset or emission reduction trading mechanisms for those relevant sectors, sub-sectors, and companies or entities where a carbon approach had been selected.

▪ Formulate mitigation plans and undertake monitoring and evaluation. The formulation of mitigation plans would require companies and economic sectors or sub-sectors for whom desired emission reduction outcomes have been established to prepare and submit mitigation plans that set out how they intended to achieve the desired emission reduction outcomes. For monitoring and evaluation, a national system of data collection was necessary to provide detailed, complete, accurate and up-to-date emissions data in the form of a GHG inventory and monitoring and evaluation system to support the analysis of the impact of mitigation measures.

Consideration of sector-based approaches
Sectoral approaches were having the potential to overcome a number of political and technical issues of concern and allow for greater participation of all actors in the mitigation efforts of the country; facilitating the setting of tangible emissions or technology-based targets within high profile sectors; providing an opportunity to accelerate the adoption of technology and facilitate access to financing; and offering the potential to increase carbon market finance.

In order to guide policy and intervention choices for SA’s mitigation approach, it was important to undertake comprehensive analysis of mitigation potential for key economic sectors. Research and modeling would illustrate the range of possible options ranging from existing initiatives to those requiring more effort by different sectors; and modeling different sectors would lead to exploration options for reducing emissions. Analysis from modeling and research would provide mitigation potential options.

Macro-economic analysis provided an understanding of the broader economic costs, for example, the impact on GDP, employment and other macro-economic variables. Macro-economic modeling would quantify costs and benefits of reducing emissions in key sectors for each mitigation option.

Coordination within the government and with stakeholders would be central to the success of mitigation work. That was why a Technical Working Group had been established in order to coordinate and align the mitigation work (including the generation of the best mitigation options for key economic sectors; managing the development of the national
Monitoring, Reporting and Verification (MRV) system; and coordinating sectoral technical work by having a task team per sector).

The primary objectives of the flagships were to:
▪ anchor and consolidate existing climate change response programmes and catalyse new initiatives
▪ demonstrate effectiveness of a range of interventions: policy and regulatory measures, market-based instruments and technology innovation
▪ create awareness and provide information on the efforts of South Africa to reduce emissions and build resilience
▪ draw out lessons learned and contribute to the further development of policies and programmes
▪ contribute to longer term planning processes such as the definition of desired mitigation outcomes.

National Treasury submission
Mr Cecil Morden (
Chief Director, Economic Tax Analysis) and Ms Sharlin Hemraj (Senior Economist, Environment Fiscal Reform and Tax Incentives Relevant for Energy Sector) were the representatives. South Africa was facing a number of environmental challenges that were likely to be aggravated as the economy grew if natural resources were not properly managed and protected. These, amongst others, included emissions of local air pollutants that get manifested in poor air quality with adverse impacts on society; excessive emissions of greenhouse gases that contribute to global warming; and increasing levels of solid waste generation comparable to many developed countries.

South Africa was a relatively significant contributor to global climate change with significant GHG emission levels from its energy-intensive, fossil-fuel powered economy. Two options for intervention:

1. Command-and-control measures
These entailed the use of legislative or administrative regulations that prescribed certain outcomes, and usually target outputs or quantity such as minimum ambient air quality standards for businesses.

2. Market-based instruments
These are policy instruments that attempt to internalise environmental externalities through the market by altering relative prices that consumers and firms face, and were utilising the price mechanism and complemented command-and-control measures. Under certain circumstances, market-based instruments were considered more efficient than command-and-control measures.

Carbon Budgets and Proposed Carbon Tax
The proposed sector exemption thresholds for scope 1 emissions under the carbon tax could be viewed as the carbon budgets for the respective sectors similar to the coverage of traded sectors under the UK system. For sectors not covered by the carbon tax such as certain industrial, agriculture, waste and households, there may be a case to develop carbon budgets for these sectors.

These carbon budgets were to be informed by technical work and analysis, and consideration should be given to developing a “2050 Calculator” for South Africa. It was important that South Africa pursued a climate change mitigation strategy that allowed for emission reductions at least overall cost to the economy, to help facilitate the transition to a low carbon economy.

The carbon tax was a means by which government can intervene by way of a market based instrument to appropriately take into account the social costs resulting from carbon emissions. A carbon tax sought to level the playing field between carbon intensive and low carbon emitting sectors. Although this option did not set a fixed quantitative limit to carbon emission over the short term, a carbon tax at an appropriate level and phased in over time to the “correct level”, would provide a strong price signal to both producers and consumers to change their behaviour over the medium to long term.

Two design considerations for Carbon Tax were tabled:

1. Carbon Emissions Tax – this entails the actual measured emissions
2. Proxy Tax bases

- Fossil Fuel Input: where fuels enter the economy based on the carbon content of the fuel
- Output Tax: applied at point where fuel is combusted, based on average emissions of production

The proposed carbon tax would be percentage-based rather than absolute emissions thresholds, below which the tax would not be payable. The tax would apply to carbon dioxide equivalent emissions calculated using agreed methods. Its other features included a basic tax-free threshold of 60% and maximum offset percentages of 5% or 10% until 2019/20 was proposed; a higher tax-free threshold for process emission with consideration given to the limitations of the cement, iron and steel, aluminium and glass sectors to mitigate emissions over the near term; and use of offsets by companies to reduce their carbon tax liability.

Additional relief would be considered for firms that reduce their carbon intensity during the first phase. The reduction in carbon intensity would be measured with reference to a base year or industry benchmark. A carbon tax at R120 per ton of carbon dioxide equivalent above the suggested thresholds was proposed to take effect during 2013/14 with an annual increase of 10% until 2019/20. Revenues from the tax would not be earmarked but consideration would be given to spending to address environmental concerns. Incentives such as the proposed energy-efficiency tax incentive and measures to assist low-income households would be supported. The overall tax-free allowance for an entity would be capped at 90% of actual verified emissions.

Border Tax Adjustments
This formed part of policy proposals by developed countries targeted at countries not participating in global emission reduction agreements. Border Tax Adjustments were taxing imports according to emissions associated with their production at the same carbon price as domestically produced goods and services. Imports would be taxed at a rate equal to the “domestic” carbon tax.

Border Tax Adjustments were seeking to achieve provision of competitiveness offsets for domestic producers, and addressing possible carbon leakage concerns, that is, reduction of emissions in a taxing country results in increases in emissions in other countries.

Border Tax Adjustments would impact negatively on countries that did not take appropriate action to price carbon, and on global trade.

Border Carbon Adjustments (BCA)
These were defined as adjustments to prices of traded goods based on some measure of the greenhouse gases embodied in the goods. Although politically controversial, it was an important option for addressing leakage and declining competitiveness caused by carbon pricing.

If Border Carbon Adjustments were to replace free allowances, then it would be necessary to show that they are both as or more effective than free allowance allocation at addressing leakage and to show that they would not provoke retaliatory action and a trade war with countries outside the European Union.

One way of resolving certainty about the legality of Border Carbon Adjustments was to deliberately choose to apply it early in a sector where this may be controversial. This could mean that a WTO challenge occurred earlier and a more definitive view of legality is obtained quickly.

Border Carbon Adjustments should first be introduced for goods for which direct emissions could be relatively easily determined such as less elaborately transformed goods for which there are a limited number of technologies for production.

Response to White Paper
The National Climate Change Response White Paper provided an important framework to ensure climate policy coherence and affirm the commitment of National Treasury to its voluntary pledge to reduce emission by 34% by 2020 and 42% by 2025 subject to adequate financial, technological and capacity building support from developed countries. Currently, support was provided for climate change through funding allocations for priority programmes on budget and via intergovernmental fiscal transfers in line with the budgetary process and within the Medium Term Expenditure Framework. Additional financing mechanisms were under consideration.

It was also important to develop a climate finance strategy that contextualised and integrated existing and emerging policy and financing instruments including the role for market-based instruments to achieve desired economic and social changes. It was recognised that public finance could support climate change through the procurement of sustainable technologies by government as well as developing catalytic projects and programmes.

◦ Considerations for environmental funding mechanisms:
Expenditures should be targeted to meet environmental priorities and promote projects with large environmental benefits relative to their costs. Environmental Funds should:
▪ play a catalytic role in financing, offering no more support for projects than is necessary and adapt to changing economic conditions.
▪ be used in conjunction with and reinforce other environmental policy instruments such as regulations or economic instruments.
▪ develop an overall financing strategy, and follow clear and explicit operating procedures for evaluating and selecting projects, and adopt effective monitoring and evaluation processes.
▪ not compete with emerging financial markets but should leverage financing from private sector enterprises and financial institutions for environmental investments
▪ ensure transparency and be accountable to government, parliaments and public for their actions.

◦ The Green Fund:
This had been allocated R800m for the period 2012/13 to 2013/14. The Development Bank of Southern Africa (DBSA) was responsible for implementing, operating and reporting on the objectives of the Green Fund to the Management Committee.

The Green Fund had the following objectives:
▪ promoting innovative high impact green programmes and projects
▪ strengthening institutional and technical capacity to mainstream green and climate issues into the economy and society
▪ reinforcing climate policy objectives through green interventions
▪ building an evidence base for the expansion of the green economy
▪ attracting additional resources to support the green economy development and climate change response of South Africa.

◦ Proposed Renewable Energy Fund:
National Treasury was developing a fund that would combine fiscal, concessional and commercial funding to provide cheaper finance and project preparation technical assistance to
Renewable Energy Independent Power Producers (RE IPPs). National Treasury was engaging in consultation with the DBSA on the establishment of the fund which would support the RE IPP procurement process overseen by the Department of Energy.

◦ Challenges for designing climate change funding mechanisms:
▪ donors willing to participate but they have their own terms and conditions, policy objectives and reporting requirements
▪ bilateral funding was relatively small compared to multilateral sources, and these require very different approaches to access
▪ grant-funding was relatively small especially compared to the large-scale funding requirements of areas such as renewable energy
▪ loans and concessional finance would be the main means of accessing large-scale finance, and this required a different set-up for both accessing and disbursing funds to that of grants, probably more like a banking structure.
▪ hybrid climate change funding mechanisms that could mix commercial loans, concessional loans, bilateral donor grants, multilateral funds, equity investment and fiscal grants were at an early stage of development globally. That was why the initiatives of South Africa were still at an embryonic stage and aimed at getting experience and learning best practice, and these would grow into larger, more sophisticated mechanisms capable of supporting bigger and more numerous projects

It was noted the government would establish an interim climate finance co-ordination mechanism to secure necessary resources for mitigation and adaptation priority programmes and to establish a climate finance tracking facility to track the use and impact of funds. Further, the government would create a transitional tracking facility for climate finance mechanisms and climate responses that would monitor and coordinate existing climate finance flows. An interim arrangement was giving consideration to ensuring that climate finance flows through the RDP for tracking purposes.

It was concluded that in order to facilitate the transition to a low carbon economy, both domestic and international support was needed. In the short term, it was important that current climate related expenditure programmes were evaluated in terms of their mitigation potential and consideration given to up-scaling or reforming these initiatives in line with the White Paper. The Green Fund and the proposed renewable energy fund presented key funding mechanisms that could be used to support low carbon programmes and attract possible international support. As an interim arrangement, the flow of climate finance could be reviewed to ensure that funding was recorded.

Department of Transport submission
Mr Thamsanqa Mohlomi, Special envoy to the Minister on Climate Change: Department of Transport, acknowledged that the transport sector was one of the fastest growing sources of green house gas emissions. At the same time, this was also vulnerable to the impacts of projected climate change, particularly on infrastructure. Emissions in this sector were predominantly from road transport including private, freight and public transport vehicles. The Department of Transport was determined to contribute its fair share to the National Climate Change Response through implementing appropriate policies and flagship programmes.

The Department of Transport had developed a database for the analysis of emission trends and record keeping, and these would offer more detailed information for road transport emissions. Currently, the Department was updating the Green House Gas Emissions Inventory. This was being done under the 2006 IPCCC guidelines. The Inventory would assist the Department in identifying additional areas for mitigation interventions across all modes of transport.

The Department was in the process of developing an economic model that would assist with the reduction and monitoring of green house gases in the sector. It was also currently in a process of implementing a number of practical measures in the form of projects and strategies that would have positive climate change co-benefits.

Flagship Programmes
Climate change mitigation flagship programmes have been identified in order to give effect to the Climate Change Response White Paper:

▪ Bus Rapid Transit (BRT) – the programme had been rolled out to 12 major cities/metros.
▪ Taxi Recapitalisation Programme – the roll-out had been countrywide.
▪ Integrated Transport Network Development
▪ Shifting from Road to Rail – an investment of R300 billion had already been ear-marked for rail infrastructure development and refurbishing, for passenger and freight transportation.
▪ Promotion of Non-Motorised Transport including the Shova Kalula project.
▪ Proposed High Speed Rail on the Johannesburg-Durban Corridor
▪ Cleaner Fuels: Compressed Natural Gas conversion of public transport vehicles in conjunction with the South African National Energy Research Institute and metros.

The Department was also considering implementing a policy intervention in the form of:
▪ Green Procurement of government motor fleet which would be required to meet certain specifications including energy efficiency and air quality standards.
▪ Fuel switching: the department was looking at promoting vehicle fuel switching and upgrading. This move required collaboration with other departments and stakeholders including car manufacturers, oil refineries and the Department of Energy as it had the main mandate on fuel specifications.

He concluded that most transport mitigation measures were long-term measures and would require major shifts in the current transport system. All future programmes, projects and policies would be aligned with the objectives of the “National Climate Change Response to White Paper”. Public awareness regarding transport energy efficiency and climate change would be increased through the October Transport Month initiative which would also include a “Car-Free” day promotion.

Economic Development Department (EDD) submission
Dr Kamalluddien Parker, EDD Chief Director, said the transition to greener growth was economically costly for South Africa because alternatives to externalities-intensive production were few and expensive. The policy should focus on reducing negative externalities of economic activities through the development and diffusion of low carbon technologies.

Three areas were identified as key designated areas of the green economy.
▪ Energy generation pertained to the generation of energy from sustainable, renewable and alternative sources with low or no carbon emissions;
▪ Energy efficiency, which captured initiatives aimed at reducing energy consumption through green buildings, solar water heaters, industrial equipment, public transport and others;
▪ Emission and pollution mitigation, which related to the utilisation of technologies aimed at reducing the harmful emissions associated with highly polluting industries including air pollution control, electric vehicles, cleaner stoves, recycling, carbon capture and storage and water treatment.

EDD was increasing its activity and function in national projects and programmes under the purview of the NGP in activities such as the South African Renewable Energy Initiative with dti and DOE as part of the oversight steering committee; strategic support for the Provincial Climate Innovation Centre by Gauteng for SMME and green innovation incubation; and evaluation of solar farm bids as part of the bid team through the Central Energy Fund (CEF).

The EDD had signed the National Green Economy Accord pledged by business, labour, government and communities at COP 17 in December 2011. The Green Jobs Report commissioned by the Independent Development Corporation (IDC) and DBSA was launched in December 2011 and it outlined key job areas in green economy over the next 20 years including renewable energy generation, energy efficiency activities and waste and water technologies.

The Green Growth Economic Cluster Committee was formed in the first quarter of 2012 with the objective to formulate an economic green growth strategy including the implementation of the national climate change response strategy with dti, DEA and EDD.

Solar Water Heaters
The EDD was working together with the IDC, DBSA and Eskom in exploring alternative sources of funding for the Solar Water Heater (SWH) industry. The work of the EDD in this regard had included the use of carbon credits and possible synergies from the national mitigation framework.

The EDD had, through working with dti, initiated the designation study for Minister of Trade and Industry to approve designation for SWH-related components for special consideration. This legislation was approved in December 2011.

The EDD was also working together with the Department of Higher Education and Training in developing a training and skills development plan for SWHs. Another partnership had been developed with the Department of Labour for developing a strategy for managing sectoral shifts for workers into the solar industry.

The EDD had teamed up with the Department of Rural Development and Land Reform to develop a strategy into how the one million SWHs project could be used to stimulate the rural economy. The work of EDD in this regard would include the use of co-operatives as a delivery vehicle.

The EDD and the Government Communication and Information System (GCIS) had developed a marketing and communication strategy for the one million SWHs project and for SWHs in general. The objective of the campaign was to change consumer behaviour and stimulate demand for SWHs in order to create a sustainable industry.

The EDD had assisted Phyto Energy Ltd to develop a biofuels project in the Eastern Cape. The rationale for the involvement of EDD in this project was that the project was expected to stimulate the rural economy and SMME development as smallholder farmers were expected to supply feedstock for the project.

The IDC had aligned its sectoral focus areas with the requirements of the Industrial Policy Action Plan (IPAP2) and the New Growth Path. The IDC would use a value chain approach with the emphasis on industrial development and job creation. The role of the IDC in growing the Green Economy would be through investments in: biofuels, emission and pollution mitigation, energy efficiency, clean production and clean energy.

The IDC had created an enabling environment by securing cheaper funding with long debt tenures to act as a catalyst in the Energy Efficiency Markets, and had proactively sourced and developed projects for Renewable Energy.

There were a significant pipeline of projects that were bidding under the Renewable Energy Independent Power Purchase Procurement Programme (REIPPP) introduced by the Department of Energy on a capped tariff basis.

Department of Cooperative Governance submission
Mr Justice Mohlala, Senior Manager, said COGTA was seeing its role in climate change as that of facilitating mainstreaming of climate change into municipal development planning processes and programmes. As a result, COGTA had developed a climate Change Response Toolkit in partnership with the DEA and South African Local Government Association (SALGA).

The Toolkit was aimed at supporting municipalities to integrate climate change response in development planning and performance management processes. The Toolkit would assist in the integration of climate change risks and opportunities into municipal planning.

It would also guide municipalities through a process to integrate climate responses in all phases of planning, problem analysis to operations and review, and help municipalities to identify sectors most at risk from the impacts of climate variability and changing climate and explore opportunities for adaptation and mitigation.

The Department would coordinate other sectors with regard to the strategies and programmes to support municipal functions such as supporting energy efficiency of buildings; encouraging development not to take place in flood or storm vulnerable areas; promoting greater efficiency and increased use of renewable energy; and foster better management and encourage recycling of materials.

The review of policy and legislation on local government powers and functions with respect to climate change as required in terms of the White Paper would commence in the current financial year through the assessment of current policy and legislative framework for local government. This review would be undertaken in consultation with relevant stakeholders such as DEA, SALGA and South African Cities Network (SACN).

Flagship Programmes
Community Works Programme – this project was defined as a non-state sector component of the Expanded Public Works Programme under the Department of Cooperative Governance. This programme was offering opportunities for job creation, poverty alleviation and other positive socio-economic benefits which also co-benefit climate change response. Plans were to explore further opportunities of climate change response co-benefits while fulfilling the primary objectives of job creation and poverty alleviation.

Projects with climate change co-benefits implemented by communities included the clearing of alien plants along the Cata River in Keiskammahoek, rehabilitation of the Umtata River, rehabilitation of dongas in Mbizana, and repairing of water pipes and storm water drains in Pefferville.

Mr Mohlala, regarding institutional arrangements, indicated that COGTA was actively participating in the Intergovernmental Committee on Climate Change to ensure the fulfillment of objectives of the White Paper in terms of relevant mandate. An internal Climate Change Response Coordinating Committee had also been established to coordinate climate change response actions and programmes within COGTA.

Challenges
Current local government policy and legislative framework was not explicit on climate change response. There was a gap and inconsistency on matters of planning at provincial level. There was a lack of mainstreaming and integration of climate change into the municipal planning process especially category B and C municipalities, and there were limited resources to respond to climate change.

In closing, Mr Mohlala said climate change impacts and responses were cross-cutting in nature and the Department would work cooperatively with other relevant stakeholders to mainstream climate change in municipal planning and programmes as guided by the National Climate Change Response White Paper; Intergovernmental Committee on Climate Change Programme of Action; Declaration at the South African Mayoral Conference on Climate Change held in September 2011; and Durban Climate Change Adaptation Charter for Local Governments as adopted at COP17 in Durban.

Department of Trade and Industry (dti) submission
Mr Gerhard Fourie, dti Chief Director:
Green Industries, emphasised that climate change mitigation was an imperative from both a climate and trade and industry perspective. South African production and trade would become increasingly vulnerable to carbon sensitive policies and private standards, some of which were being deployed with protectionist intent.

Adapting to climate change required a massive technological shift in the SA economy from a capital intensive resource dominated economy to a relatively more value-adding, labour intensive and less carbon-intensive economy.

Adapting to climate change was a transition that would not happen automatically with the introduction of “one size fits all” instruments across the economy, and it would require more instruments than a carbon tax and carbon budgeting with a need to ‘front load’ measures to promote relatively value-adding, labour intensive and lower carbon-intensity manufacturing.

This process would also require measures to manage the transition of our traditional resource-processing sectors so that they do not collapse under increasing electricity prices and carbon tax.

The electricity and capital intensive resource processing sectors could make this transition work by rebating carbon tax if only they introduced globally leading mitigation technology and processes; supported downstream sectors through shift from import parity pricing to competitive pricing relative to developing country competitors; and invested themselves in diversification into green technologies and sectors.

Secondly, value-adding, labour-intensive and less energy-intensive sectors could make the transition work by promoting increase in their share of overall manufacturing through addressing currency overvaluation and volatility constraint; lowering rail and port rates and higher operational efficiencies; investment in freight rail and public transport linked to localisation; and investment in resuscitating water treatment and distribution linked to localisation.

Thirdly, transition could be realised when green industries or energy efficiency sectors promoted rapid growth when investment in green energy, industrial energy efficiency and demand side management was linked to localisation; through componentry into green electrical generation and demand side management equipment; through goods and services related to industrial, commercial property and household energy efficiency; and by supporting research and development and commercialisation of green products and materials such as organic food and bio-composites.

If value-adding, labour-intensive and less energy-intensive sectors and green industries or energy efficiency sectors were front loaded this would ensure that transition was seeing the light of day.

Existing Programmes
▪ IPAP
▪ Minimum local content requirements on renewable energy projects
▪ Designation of Solar Water Heaters
▪ Building regulations
▪ National Cleaner Production Centre
Manufacturing Competitiveness Enhancement Programme (MCEP).

Department of Energy (DOE) submission
Mr Thabang Audat, DOE Chief Director: Electricity, said that looking at the energy situation in South Africa, the country was well endowed with renewable energy resources with the potential to produce energy from biomass, wind, solar, small-scale hydro and waste. These resources remained largely untapped, hence the stand to intensify the energy mix of the country. The energy sector accounted for approximately 80% of South African Greenhouse gas emissions which made the country and the sector one of the largest emitters of greenhouse gases in Africa. The vision of the energy strategy of South Africa was to contribute towards affordable energy for all and to minimize the negative effects of energy usage upon human health and the environment.

In responding to the Climate Change White Paper, the Department of Energy was expected to lead the development of the Energy and Climate Change strategy for the sector taking into account emissions allowance in the short, medium and long term. These allowances would have to be cascaded down to sub-sectors and get a full account of all the role in the sector. In addition, these strategies had to outline how to implement the proposed mitigation programmes through existing and future programmes in the short, medium and long term. The Department had already started addressing climate change impacts through the implementation of various programmes although not in a coordinated and integrated approach.

Programmes addressing climate change
In March 2011, the Cabinet approved the Integrated Resource Plan (IRP 2010) which was promulgated on 6 May 2011 with the primary objective of determining long term electricity demand and detailing how this should be met in terms of generation type of sources, timing and cost. The IRP2010 also outlined 6% would be imported hydro which would contribute as one of the climate change mitigation programmes.

On 9 October 2009 the Department signed a Memorandum of Understanding with the Clinton Climate Initiative to prepare a pre-feasibility study assessing the potential of developing one or more Solar Parks in SA. The collaboration produced a Solar Park Pre-feasibility Study Report which was approved by the Department in May 2010.

The report concluded that solar power could be deployed in SA in large quantities over the next decade at costs that could become competitive with coal-fired power, providing the country with clean and secure energy to help meet its growing demand. The creation of one or more Solar Parks in the country could also generate significant economic development and new employment.

The Department had set an annual target of installing 10 000 Solar Home Systems. This programme had got support in a form of government subsidy. Regarding liquid biofuels, the Department intended to achieve a blending ratio of 2% by 2013, and had set a target of installing one million SWH systems by the end of the financial year 21014/15.

The South African Renewables Initiative (SARi) had been established by the SA government to support the rapid and ambitious scaling of renewables in SA in a manner that would deliver economic, social and environmental benefits without imposing unacceptable costs on the citizens and economy of the nation.

The Energy Efficiency Accord of 2005 had now been reviewed into the National Energy Efficiency Leadership Network (NEELN) which was launched in December 2011 during COP 17. The NEELN would see business or industry building in energy efficiency measures into their day to day activities.

The Department was continuing with the implementation of the National Energy Efficiency Strategy (NEES) and was instituting measures with municipalities to robustly implement EE initiatives such as lighting technologies.

The Energy Efficiency Demand Side Management programme was done in terms of the Division of Revenue Act (DoRA). This programme was funded through the fiscal allocation and tariff. The fiscal phase of the programme was implemented in the following municipalities: Tshwane, Naledi, Sol Plaatjie, Umsobomvu and Musina. The rebate programme by Eskom and other organisations was spread across the country.

Successes and challenges
Given the huge untapped potential of renewable sources of energy, increased production and use of renewable energy and improved energy use efficiency were becoming key priorities of the energy strategy of the country. Although renewable sources of energy have been promoted by the SA government, the production and consumption of energy based on the renewable energy technologies in the country had however been low.

South Africa was endowed with excellent solar radiation that could be used to provide energy services such as space and water heating, thermal energy for industrial processes, and power generation. However, appreciation of the potential for harnessing solar energy to provide useful energy services was low and therefore solar energy application remained limited.

Major challenges remained the high capital costs and capacity building to deal with installation, maintenance, and development of local market and business.

Government had so far created potential opportunities for skilling people and ensuring that they get absorbed into the energy sector market either through energy auditing, in particular the localisation value chain. This was done through various stakeholders such as government departments, business, civil society and academia through scientific and technological research, education and training.

Awareness and understanding of the potential of renewable energy was still limited in the country.

Discussion
Department of Environmental Affairs submission
Mr S Huang (ANC) asked how was the government going to coordinate all these mitigation factors, and what the potential of carbon sequestration was in land use.

Ms Beaumont replied that the DEA had a responsibility to provide a coordinating and leadership role in these efforts of mitigation. It had to see to it that all departments were pulling in one direction. On the issue of carbon sequestration, she explained that from the forestry sector the coverage of forestry was low and dominated by commercial forestry and that meant sequestration was very low. There was no coverage on wetlands. Quantification of sequestration on wetlands and grasslands was still in its infancy in SA. Work was being done by institutions to research on carbon sequestration on cultivated lands.

National Treasury submission
The Chairperson remarked that Treasury, in future, should ask for more money during its budget planning in order to pull out all the climate change issues in the business plan.

Ms Hemraj replied by saying the figures put together were for estimates. They provided a good guide for priorities.

She further commented on Border Carbon Adjustments that there was nothing in the international arena that said biggest polluters should play a role in the mitigation issue. So it was important that we asked ourselves about incentives that could be put in place to pressurise those polluters so that they could put pressure on their governments to introduce some tax incentives. The whole issue should be pushed forward to the international arena and that role players should strive for a better formula on how to take it forward as this would pressurise countries which did not take climate change seriously to consider the matter.

Mr M Mathebe (ANC) asked what monitoring mechanisms were in place regarding greenhouse gas emissions.

To which Ms Hemraj said everything would be done through the GHG Inventory. Once the DEA had got a system in place, Treasury would be able to take the matter up. A proposal was on the table to do this through the Air Quality Act. It was a matter that was still under discussion.

Department of Transport submission
The Chairperson advised that the Department should start developing a plan that would actualise its ideas so that it could reach its long term goals.

Ms M Wenger (DA) challenged Mr Mohlomi by saying potholes were the major sources of greenhouse gas emissions, not the transport sector. Failure was on road maintenance. She was remarking on the comment made by Mr Mohlomi that the transport sector was the source of greenhouse gas emissions. She further wanted to know about time frames for changing from road to rail and if enough research had been done regarding BRT.

To which Mr Mohlomi said the potholes have been there for long. It was a question of maintenance. R6 billion had been set aside to deal with potholes and maintenance. The challenge was only on regional and local roads as that was not the responsibility of the National Department.

About the time frames and BRT research, he explained that the change from road to rail would be done in the next five years. A budget was in place to do that. Research had been done by the cities and metros regarding BRT, and many people in areas like Johannesburg had already moved to buses to ease traffic congestion.

Mr S Njikelana, Chairperson of the Portfolio Committee on Energy, enquired about the extent to which the Department had gone in convincing the Department of Energy about fuel switch because there was a lot of resistance from fuel manufacturers. He asked how were the disabled going to be accommodated during the “Car-Free Day”.

On the issue of the fuel switch, Mr Mohlomi explained they were engaging with fuel manufacturers to upgrade their refineries, and incentives were in place to encourage them. It was going to be a drawback to continue using E2 Standards when fuel manufacturers could be persuaded to move to E5 Standards.

Regarding the disabled and the “Car-Free Day”, he said the Department did not have a plan yet for disabled people but they would not be discouraged to abandon their mode of transport. The abled would be discouraged. The Department was also encouraging buses and BRT to accommodate the seating structure for the disabled.

Mr Mathebe asked Mr Mohlomi to explain the confusion of wanting taxis to convert to natural gas while preaching fuel switching and rail transportation.

Mr Mohlomo stated the Department was encouraging taxis to use Concentrated Natural Gas while encouraging people to use trains. Taxis would always be there but would be used in conjunction with rail. Already new rail carriages were being introduced.

Mr Huang wanted to find out how far the Department was in its implementation of the Shova Kalula (pedal easy) project because there was one dedicated for kids and the other was for the general public.

In reply, Mr Mohlomi explained the project was successful in North West. A million bicycles have been distributed already. North West was the flagship because it was flat compared to KwaZulu-Natal. The distance still stood at 5km if learners stay far away from school.

Department of Energy submission
Mr Huang wanted to know if the Solar Park Initiative was connected to other programmes, and enquired about the status quo regarding BBBEE participation in the bids.

Mr Audat explained that the Solar Park Initiative was still in its early stages. It was parallel to other programmes the Department was running. It had nothing to do with the number of MW bought.

About BBBEE participants in bids, he said there was not a single bid that was 100% South African because this was a new industry in South Africa. So the Department was working on partnerships between foreign companies and local ones. At the initial stages the products were imported and later they had to be produced locally. Such things were stipulated in procurement contracts.

Mr R Morgan (DA) asked how much of carbon space, as far as energy was concerned, had been taken up because the White Paper was not clear on this issue, and wanted to find out how often the Department was planning to update the IRP Programme because it was outdated.

Mr Audat, with regard to carbon space, explained that the IRP assumed that the number was in alignment with the document developed by DEA. If the information was changed during the IRP review, then that meant that number had to be changed.

About updating the IRP, he explained when the IRP was developed there were many documents that had an input on the plan. The IRP document stipulated that IRP would be reviewed every second year. It was a policy document. If it could be revised, it would unsettle the market. Therefore, it should be allowed to run its course until such time the climate was good for it to be revised.

Ms P Bhengu (ANC) enquired why the Department was putting so much money on solar radiation in the eastern parts of the country.

Mr Audat explained that those areas of electricity supply in the eastern parts that received so much money, belonged to the municipalities. They were indicated to the Department by the municipalities for funding. Those areas were vast in nature. They were not going to be funded by the Department, but by the municipalities.

Department of Cooperative Governance submission
Ms M Wenger asked the Department to simply explain what the toolkit was all about, and enquired about the role of municipalities and traditional affairs in this matter.

Mr Mohlala explained that the toolkit would be part of the IDP process. It would point out where the developments were happening, provide information and research, and would state how other stakeholders could get involved. The Department involved municipalities not to support them but only to involve them in the development of the toolkit, and its rollout would cover all municipalities. The Traditional Affairs section of the Department was not involved in the matter and that was an oversight on the part of the Department. The toolkit would be made available to all stakeholders once it was approved and signed.

Ms J Manganye (ANC) commented that the toolkit should not solely belong to the municipalities because some of the land in rural areas belonged to traditional leaders or chiefs.

To which Mr Mohlala said the Integrated Development Plan (IDP) process was accommodating the issues of traditional leaders and this was integrated into the toolkit.

Conclusion
The Chairperson said the three-day hearing, as an information gathering exercise, “was a Comrades Marathon”. All had learnt tremendously. He has happy with the process. He was very unhappy that the Department of Mineral Resources had cancelled at the last minute due to another engagement. He saw this as an insult to Parliament. There was no respect for the process of Parliament. This would be mentioned in the letter sent to all Ministries. He was very pleased with the Department of Environmental Affairs, particularly the Climate Change Unit. He was impressed with the calibre of the work. The takeover by Ms Beaumont had been seamless. It had done well as the lead department, showing a very clear understanding what needs to be done. He had absolutely no criticism. So congratulations.

The Chairperson said he would like to caution DEA that what was needed now was to spend more time with your colleagues in the other departments so that the methodology starts seeping and flows to them. You can choose how to do this, be it workshops or conferencing; otherwise one would find a fragmented response. Pay the same attention to their projects and “keep them close”. Sit down and spend time with them, especially at the beginning during the next few months. The implementation plan was vital, one needed a tick box of responsibilities and deadlines because there were so many departments involved. One had to be able to see what tasks had to be done during which specific phase. The implementation plan would be the lodestar. In the fourth term of Parliament they would revisit this. Hopefully they would have the implementation plan before then. He advised DEA to communicate with the Committee on an ongoing basis. One must keep one’s stakeholders and partners close – you do not want a gap. All important documents should be sent to the Committee as DEA completed them: the updated report, the implementation plan, the inventory next year – keep that link and notify the Committee. The Chairperson ended off by saying that “the future of our children and baby rhinoceroses are in good hands”.

The meeting was adjourned.

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