Rabinowitz Legislative Proposals: Establishment of Feed-in Tariff to finance use of Renewable Energy; & Proposal for outlawing use of transfats in food for sale to public: Discussions & referral of principles to Speaker

Meeting report

Rabinowitz Legislative Proposals:
Proposal on outlawing the use of Transfats in food prepared for sale to the public
Mr Dries Pretorius, Director: Food Control, Department of Health, apologised that the Director General was not in a position to attend, as he had to attend a Cabinet meeting.

The Chairperson welcomed them but said that the Committee would usually prefer more senior officials also to attend, which he should convey to the Director General.

Dr R Rabinowitz briefed the Committee on her proposal on outlawing the use of transfats in food prepared for sale to the public. (the Transfat proposal). She noted that South Africa was concerned about regulating health. However, it must be noted that there was increasing incidence of obesity in children and adults, .with the added problems of diabetes, strokes, coronaries, and increased incidence of cancer, and in South Africa also a  high rate of infection from TB, HIV/AIDS and others. She noted that in the food industry, artificial transfats were used, that the body could not cope with. She did not necessarily believe that the existing regulations around food labelling were effective; she believed that the most effective way to help people was simply to outlaw transfats, as was already being done elsewhere in the world. There were alternative processes and it was up to the Department to advise whether it should be regulated. She had been waiting for the Food Labelling Act for a long time, but noted that nothing was moving in this area..

Mr Dries Pretorius said the Department had studied the document and had submitted comments. He said that the Department fully agreed with what was captured in the proposal, in terms of the limitation of the negative health effects. The possibility of banning use of transfats should be considered. However, having agreed with the principle, the Department of Health said that the way to take this forward needed further consideration. The Department already had legislation, such as The Foodstuffs Cosmetics and Disinfectants Act, Act 54 of 1972, which already provided that the Minister of Health could publish a notice in the Government Gazette related to the prohibiting of any substance in foodstuffs. The Department still needed to fully apply its mind to whether that was the only option, or whether it could be incorporated elsewhere. The Department did not believe that there was a need for a completely separate bill.

The Chairperson noted that the Department agreed with the principle but differed on the way forward.

Discussion
Mr H Bekker (IFP) welcomed the positive input by Mr Pretorius indicating that the Department was committed to becoming involved. However, the Committee had unfortunately had some experiences in the past where, even after one or two years, nothing would come of the statement that departments would deal with issues. If the Committee accepted the Department’s view, then he suggested that deadlines and real commitment be noted. He agreed that if this proposal could be embodied in existing legislation, either by amendments or by regulations being published, so as to achieve what Dr Rabinowitz was suggesting, that could be the better way forward. His main concern was whether this would happen, when it would happen and what commitment would be made.

Mr G Morgan, (DA) also welcomed the legislative proposal. He had had the privilege of working on the 2006 amendments in relation to foodstuffs and cosmetics, and was familiar with the fact that use of certain substances could be regulated, and urged that this be done. He supported Mr Bekker’s call for commitment by the Department. He noted that over half of those over fifteen years of age were either overweight or obese. He felt that it was necessary to get a commitment to engage with the Portfolio Committee on Health and asked how the Department would indicate its commitment.

Dr Rabinowitz asked for clarification as to when the legislation on labelling would come about, whether that could be included, and whether the Department could give a firm commitment that would tie them down.

The Chairperson noted that there was a shared agreement amongst everyone that the matter warranted attention. She suggested that the Department recognise the contribution of Dr Rabinowitz.

Mr Pretorius fully agreed but said that the Legal Department would have to advise whether naming any amendments after Dr Rabinowitz would be legally correct. He said, in answer to the questions around the time frame and commitment, that the Department had not fully applied its mind to how to achieve the proposal. He agreed that there had been delays in the Draft Labelling Regulation published last July for comment, saying that this process, and the international comment, had taken about six months. The Department was in the process of working through all the details. One issue that had emerged was that South Africa needed a nutrient profiling model to evaluate products that, for instance, should be included in the list of foodstuffs not essential for a healthy diet. The issue of transfats had already been discussed. There were already draft regulations to indicate those fats on the labels. However, the decision whether to ban them went further; the labelling issue would fall away because the substance would no longer be in the product.

Mr Pretorius indicated that there still had to be a process of consultation with the food industry, and the banning of transfats would have to be published for comment, as also to allow for comment under the World Trade Organisation (WTO) Free Trade agreement. That would not be a fast process. He could not really thus give timeframes for when this might be brought into law. He noted that there must also be a grace period for implementation by the food industry.

The Chairperson said that this illustrated why officials able to make high-level decisions were needed at these meetings. Dr Rabinowitz had already recognised in her own proposal that lengthy time frames might be necessary.

The Chairperson noted that the Department and the Members agreed with the importance of dealing with the issues as proposed by Dr Rabinowitz. The Department had made a commitment that they would look into these issues. She requested Dr Rabinowitz to assist her in drafting a letter to the Speaker, pointing out that it was the view of the Committee that it was desirable for South Africa, led by the Department of Health,  to look into this issue. The Members’ commendation to Dr Rabinowitz for proposing this should also be recorded. It should be pointed out that since the Department had intimated that it did not at this stage have a final idea of the best way forward, Members recommended that the Department must communicate to the Speaker the processes being dealt with, and how long this would take. The proposal by Dr Rabinowitz, whilst accepted, would be held in abeyance during this process, but the way should still be open to Dr Rabinowitz to proceed with it, should the Department not do so in an acceptable way. Finally, it should be recorded that the Committee fully agreed with the necessity and urgency of dealing with the transfat issue.

Mr Pretorius mentioned that the Minister of Health could make a final decision in terms of the Foodstuffs Cosmetics and Disinfectants Act option was for the Minister of Health to make a final decision in that regard.

The Chairperson explained the process of legislative proposals. Dr Rabinowitz’s proposal had been sent to the Minister. She congratulated Dr Rabinowitz for raising this important issue.

Rabinowitz Legislative Proposal for Establishment of Feed-In Tariff to finance the use of Renewable Energy;
Mr Nkosi Madula, Director: Industrial Strategy, Department of Trade and Industry, apologised that the Director General of the Department of Trade and Industry (dti) could not attend as he had to attend a cluster meeting in the Presidency.

The officials from the Department of Minerals and Energy also apologised that their Director General was unable to attend.

Dr Ruth Rabinowitz presented her legislative proposal. She noted that global warming was a major problem in South Africa. Eskom was hovering close to crisis for much of the time. In her capacity as a mother, a doctor and a Member of Parliament she wanted to promote a healthy Earth. She noted that she and others had formed the EREACT group (Eparliament Renewable Energy Activists) and decided to take the matter forward. They had attended another Eparliament hearing and were given a toolkit for Members of Parliament around the world to promote the Renewable Energy Feed In Tariff. They were not acting as individuals or from a political party standpoint. This group had received an overwhelming response and support from members of the public.

She noted that the objectives of the proposal included to reduce the carbon that was pouring into the atmosphere, to improve the quality of the environment, reduce South Africa’s dependence on coal, diversify energy supply, bring about energy security in the country, release South Africa to some degree from the vagaries of currency fluctuation, create jobs, improve the social and economic conditions of people in the rural areas, and foster investment in innovation and get research and development into alternative energy happening throughout South Africa.

She noted that already forty-six countries had Members of Parliament looking at this issue and most of them were drafting legislation although twenty-one of them were already implementing it.  In answer to the Chairperson’s request to name these countries, she noted that the developed countries were Australia, Austria, all the European Union countries, g Japan, Korea, Israel, Ireland, Britain, the Czech Republic, Cyprus, Croatia, Italy, Hungary, Greece, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Portugal, Slovak Republic, Switzerland, Ukraine and the United States. The developing countries were Algeria, Argentina, Brazil, China, Costa Rica, Ecuador, India, Indonesia, Kenya, Nicaragua, Sri Lanka, Thailand, Turkey, and Uganda. Exploring countries were Australia, Canada, Cuba, Israel, Macedonia, Malaysia, New Zealand, Singapore, Thailand, South Africa and the United States.

She noted that the response from the Department of Minerals and Energy (DME) and Eskom had been that they did not support the idea of new legislation, saying that there was already legislation that covered the issues. There was an Energy Bill and an Electricity Act. She said that DME spent a lot of their time and energy on minerals. There was a feeling that renewable energy should be part of a new Energy portfolio, and that overarching legislation should be created to deal  only with renewable energy.

Dr Rabinowitz said that the changes she proposed would allow municipalities, not only Eskom, to participate in the procedure, not only Eskom. There would be provision for mini grid and distribution systems, not just the giant grid that Eskom operated.

The proposal was expanded to cover incentives for renewable energy uptake. One of the most important was the solar heating option. Currently the legislation between local and national level was contradictory and for some time local municipalities had wanted to introduce incentives or laws but had not been able to. This proposal now included a requirement that the issue of contradictions would be rationalised by the DME within one year. The proposal also provided for regulation of reverse metering, which was being done illegally.

The documents showed why Eskom needed help. They also demonstrated results from a number of studies that showed that South Africa was very energy intensive for its gross domestic project, and was the twelfth largest carbon polluter in the world. Targets for reducing emissions were included in the proposal.

Dr Rabinowitz said that Eskom had said that cost was a very important reason why South Africa continued to use coal. However, comparative costings showed that wind and solar energy were relatively similar to coal energy. Eskom, on current offerings, was not getting particularly good uptake for the national co-generation plan. By contrast, when the renewable feed-in tariff was introduced in Germany, it had resulted in an explosion of development, employing 240 000 people and generating seven billion Euros in business.
The Commission of European Committees in Europe had estimated that the feed-in tariff was resulting in 477 kW hours of renewable energy in 2006, with a target of 49% by 2020. Germany set a target of 14% by 2020 but already achieved that by 2008.

The South African target was proposed at 10 000 GW hours by 2012; at present not even 500 MW hours came from renewable energy sources. South Africa would save 350 million tons of carbon dioxide emissions being produced if it reached a target of 15% renewable energy by 2020, which amounted to 7 billion Euros. This was costed in Euros because the carbon market was priced in Euros.

The Chairperson asked who had compiled the REFIT document, and noted that these could be distributed not by the Committee but by Dr Rabinowitz herself in her own name.

The Chairperson asked for comment by the departments as to whether they were in support of the legislative proposal.

Mr David Mahuma, Director: Mineral Policy and Regulation, DME,  responded that his Department supported all the principles on the issues of climate change, global warming, and renewable energy. However since there were existing pieces of legislation addressing these issues there was no need for additional legislation. The National Energy Regulator Act empowered the Regulator to manage the whole process in the electricity supply industry. Incentives were already in place.

The Chairperson asked if the regulations were sufficient to deal with the issues.

Mr Mahuma responded that the provisions in the Act were sufficient but regulations would automatically flow from legislation. As far as the Nuclear Energy Act was concerned, the Department was in the process of drafting those regulations.

Mr Nkosi Madula then said that the Department of Trade and Industry agreed with the principles, given the energy constraints that South Africa was facing, the fact that the proposal was designed to increase supply and address global warming. However, the targets were unrealistic in aspiring to reach 10% of renewable energy by 2010, 15% by 2015 and 20% by 2020. In addition there were problems of clarity around the smaller producers, and whether they would be allowed to trade directly and not feed into the grid. In any event, the dti agreed with the DME that existing legislation could be used.

Dr Rabinowitz interjected that that document had been realigned and was more an overarching bill.

The Chairperson noted that there was a practical problem. This Committee would deal with proposals forwarded by the Speaker, but it had not received any correspondence from the Speaker’s Office, apart from Dr Rabinowitz’s own submissions to the Committee Secretary, and she noted now that it appeared that the proposal had been reworked. The Chairperson asked what would happen if the targets were not reached, and she pointed out that the proposal before the Committee still did contain those targets.

The Chairperson noted that the intentions were very good, but there was a need to check whether this was not addressed elsewhere, or could not be addressed, in other regulations and laws, and whether the targets were realisable and realistic and could be built into law.

Ms Neliswa Magubane, Deputy Director General, DME, emphasised that the intentions of the proposal and what it sought to achieve were laudable and should be supported. However, various instruments were needed to address renewable energy, and the feed in tariff was only one of the instruments that could be utilised to achieve that. The Department had recently taken the Electricity Pricing Policy to Cabinet and were encouraging the Minister of Finance to come up with tax incentives. It was also necessary to ensure that a clean development mechanism was published and that the renewable energy strategy was reinforced. The Regulator had been asked to promulgate rules within the next quarter, and would make sure that the methodology on feed in tariffs would be work-shopped properly. The Department was not only looking to produce more renewable energy, but needed to determine the quantum of the feed in tariffs that would be needed to feed into the regulator. With the rise in prices of electricity, some of the projects for renewable energy that had, in the past, not been deemed viable, now would be reconsidered. She stressed that efforts must be concentrated on all the instruments that could be put in place to ensure that renewable energy was actually realised.

The Chairperson asked Dr Rabinowitz what the 46 other countries mentioned were doing and whether separate legislation was being drafted.

Dr Rabinowitz replied that this was being done as a separate law that covered the renewal energy feed in tariff.

Mr Morgan said it was heartening to hear the Department speak so positively about renewable energy, although he pointed out that it had been doing so for many years. He supported Dr Rabinowitz because he thought that Parliament must take ownership of the REFIT, renewable energy and other incentives. There was great urgency and if the Department was speaking positively about such issues, then they must happen. Clear signals must be sent to the market and encourage it to invest as it would be viable to participate in this sector.  South Africa, which had the potential to be a leader in renewable energy, was not yet in the race.  and was not in that race yet. He found it hard to believe, given the state of electricity, that South Africa had not already encouraged this, taking pressure off Eskom, because they clearly did not have sufficient own funds or international investments. He believed that if this was to be pursued through existing legislation, it must be done urgently.

Ms S Rajbally (MF) also supported this important proposal, urging that serious thought be given to it.

Mr J Gogotya (ANC) also supported the proposal. He was concerned that the solar energy companies wanted government to support them, instead of going to the free market and marketing themselves. However, solar energy was one of the most expensive commodities, and this was the reason that the pricing tariff for this must be interrogated.

Mr L Greyling (ID) said the most expensive form of energy in South Africa was in fact not solar energy, but the gas turbines that were running off diesel, running for 50% of the day, and costing at least R2.80/kW hour. South Africa, because of the shortage of energy, was having to use a very expensive form of energy. Renewable energy posed all the costs up front, so that any investor wanting to invest in it would need certainty of pricing and work out the rate of return. This proposal sought to do just that and to mandate actual tariffs so that certainty in the market was created. He had mentioned in every budget vote that not enough was being done for renewable energy. It had already been said that South Africa was falling way short of the target of 10 000 GW hours, and the proposal that 75% of that target be reached by use of biofuels had now changed. He asked if the Department believed the target could be reached.

Mr Greyling said that in fact the targets were not as important as creating certainty in the market thereby encouraging overseas investors to come to South Africa, and allowing local investors to set up businesses to feed into the grid. This might even result in exceeding the targets. The right incentives must be created. It was possible to produce most components in South Africa and thus contribute to job creation. 

Ms J Chalmers (ANC) also fully supported the proposal of Dr Rabinowitz. She heard the Department’s view that this was but one of the instruments, but she noted that fixed feed--in tariffs were being increasingly recognised worldwide and 18 or more countries were already using this as the most effective system for promoting renewable energy regeneration. She said that there was no time to wait. South Africa had been awaiting Eskom’s proactive response on renewable energy for literally years. This was a proven way to accelerate the rapid, low cost, technologically diverse deployment of renewable energy. This was also extremely labour intensive, and would have an incredible effect on creating jobs, especially in the rural areas, making a real difference to communities. This was a tried and tested model that did work. 

Mr Bekker also indicated his support for the idea in general.

The Chairperson noted that all Members recognised the merit in the proposals. A report would be written that set out the Departments’ concerns, including the issue of targets and the fact that some of these issues may be covered in existing legislation. She asked that the Departments summarise briefly in writing their major concerns so that she could incorporate these into the letter to the Speaker. She would also note that this Committee felt it desirable for Parliament to look into this matter, and proposed that an ad hoc committee be formed to work with Dr Rabinowitz and all the relevant Portfolio Committees, Departments and ministries to look into the issue. She would try to arrange that the ad hoc committee report to Parliament before Parliament ended its term. 

The meeting was adjourned.