NATIONAL CLIMATE CHANGE RESPONSE GREEN PAPER
SUBMISSION BY BUSINESS UNITY SOUTH AFRICA (BUSA)
15 FEBRUARY 2011

1. BACKGROUND
BUSA is a confederation of business organisations including chambers of commerce and industry, professional associations, corporate associations and unisectoral organisations.  It represents South African business on macro-economic and high-level issues that affect it at the national and international levels.  BUSA’s function is to ensure that business plays a constructive role in the country’s economic growth, development and transformation and to create an environment in which businesses of all sizes and in all sectors can thrive, expand and be competitive. 
As the principal representative of business in South Africa, BUSA represents the views of its members in a number of national structures and bodies, both statutory and non-statutory. BUSA also represents businesses' interests in the National Economic Development and Labour Council (NEDLAC).
2. INTRODUCTION
BUSA welcomes the release of the Green Paper as a means to start the important national debate that is required in an effort to consider both climate change adaptation and mitigation actions.  BUSA is committed to working with Government to address the global challenge of climate change in a manner that does not compromise the achievement of national socio-economic development imperatives, particularly the reduction of unemployment and at the same time improve competitiveness.  In general BUSA believes that a mechanism needs to be established to develop an allocation of responsibility for the contribution and potential to reduce emissions.  It is only possible to evaluate the socio economic impacts of mitigation actions once this allocation has been done.
This submission covers the following issues of concern to BUSA:
•	Socio economic impact
•	Approach to Copenhagen commitment
•	Overall policy coherence
•	Objectives of paper
•	Expectations of White Paper
•	Implementation
•	Role of Business
3. SOCIO ECONOMIC IMPACT
BUSA is also concerned about the impression that is created in the Green Paper that the approach will contribute significantly to achieving employment targets that have been announced by Government.  There is no indication in the Green Paper of evidence to support such statements.  In addition the jobs that will be created in the so called “green economy” are more than likely to require higher levels of skills thus necessitating very specific skill interventions. 
BUSA wishes to emphasise the need to develop a response that is appropriate to South Africa’s emerging economy status and is consistent with the approaches adopted by other such economies including those of the BRIC countries.  This is considered imperative to ensure the sustainability of business, increased employment and industry competitiveness.
It is necessary to align changes in mitigation requirements and any economic instruments including carbon taxes with international actions to secure the relative competitiveness of South Africa internationally. Both being late or early in implementing mitigation action could have devastating impacts on sectors of the economy. The key is to improve or retain competitiveness and reduce carbon emissions at the same time.
Given the current energy intensity of the South African economy, time is required to move to a lower carbon economy in terms of energy generation and consumption.   In this regard, it is important to note that energy security is a key consideration for investors and that for the foreseeable future fossil fuel energy sources will continue to feature prominently in the energy mix. The importance of the energy sector to the economy as a whole means that the socio economic impacts of a lower carbon energy supply trajectory must be assessed before adoption.
Access to alternative low carbon sources of energy at the scale required by industry necessitates a more enabling regulatory environment than is currently the case.  BUSA is working with the Department of Energy to expedite the finalisation of the New Generation Regulations which will provide the basis for a new procurement process for independent power producers, which in turn introduces more renewable energy into the electricity supply mix.
4. APPROACH TO COPENHAGEN COMMITMENT
The so-called Copenhagen commitment needs to be unpacked as part of this allocation of responsibility.  This means that a more up-to-date Business as Usual trajectory has to be finalized and used as the basis for determining what the deviation from that trajectory means at a sectoral level.
BUSA believes that the terminology relating to emission reductions should be aligned to the language in the Copenhagen commitment and would prefer to have emission reduction goal based on “business as usual trajectories” rather than “baselines”. Ultimately, there should be supporting documentation available for any quantification that is undertaken. 
The conditionality of the Copenhagen commitment needs to be quoted in the document.  BUSA is concerned that such a sensitive document is almost always misquoted and believes that it is imperative that there be a consistent and accurate reference to it. In addition there is no indication how the conditionalities included in how the conditionality will be enforced. 
There needs to be a clear statement as to the consequences of failure of the international community to provide support as contained in the Copenhagen commitment. 	
BUSA recognises the fact that the international negotiations are at a very delicate stage.  In parallel, domestic work is ongoing to understand the true potential of a range of mitigation actions in contributing to achieving the overall deviation from the “business as usual trajectory”. 
In light of this, BUSA believes that it is possible for South Africa to demonstrate the leadership that is expected of a host country to a COP, without including numerical sectoral targets in a White Paper.  This exclusion will not imply a less ambitious approach to reducing emissions if clear direction on how the country intends reducing GHG emissions is reflected.  Any numerical approach must be based on sound facts that are accepted by emitting sectors and Government.  At the same time it is important to understand the extent to which the support contemplated by Government will be required to achieve a range of mitigation actions. It is therefore proposed that the approach to mitigation goals in the White Paper should be addressed as follows:
Principles
•	Contribute to employment and economic growth
•	Build on existing initiatives
•	Response to actual emissions profile
•	Make changes gradually and announce them well in advance
•	All potential actions must be subjected to impact analysis primarily focusing on employment and economic growth
•	Based on understanding of resources required and where they will come from
•	Allocation of responsibility to sectors based on contribution to inventory
•	Policies on mitigation action to remain responsibility of relevant departments
•	Take note of challenges faced by specific sectors when setting targets.
5. OVERALL POLICY COHERENCE
BUSA is concerned at the apparent lack of alignment to other relevant policies and legislation in the Green Paper.  The Green Paper does not take into consideration existing strategies and policies, where in many cases significant progress has already been made. Where relevant policies exist or are under development they should be referenced in the White Paper.
BUSA is concerned that the priority accorded to climate change policy in terms of Government’s overall policy imperatives is not clear.  There is no doubt that significant investment will be required to implement the actions contemplated in the document.  The idea that these investments will lead to increased employment is not necessarily considered correct.  While it may be true that such investment may lead to increased employment it is unlikely to make a significant dent in the unemployment numbers in the unskilled and semi skilled categories, without very focussed interventions in skills development. In addition, it is likely that some activities will stop because of prohibitive costs or distortion of competition resulting in a decrease in employment.  In general the Green Paper does not provide a “no regrets” development pathway for South Africa in light of current development challenges.  
Alignment between Climate Change Responses and Economic Development Policies (such as the New Growth Path and IPAP2 is considered critical. Socio economic impact assessments of the proposals must be undertaken before finalization of the White Paper. 
Prior to development of the White Paper, Government should give attention to the present regulatory framework underpinning climate change responses in an attempt to identify potential obstacles and gaps in the regulatory framework.  By way of example, the regulations in respect of co-generation and independent power production. 
In order to achieve policy coherence BUSA believes that the responsibility of the Department of Environmental Affairs is to ensure that a holistic and integrated approach to climate change is reflected in the White Paper.  This does not mean that all adaptation and mitigation actions must be dictated by the Department but rather that all line departments must take responsibility for their policy area.
5.1 Departmental responsibility for mitigation actions
Energy
The Green Paper deals only with electricity instead of energy which is what is required for the White Paper.
In addressing mitigation action in the energy sector the following broad sector categories ( which is in line with the Intergovernmental Panel on Climate Change (IPCC) inventory reporting requirements) to mitigation action can be adopted.
•	Electricity generation
•	Liquid fuel production
•	Energy consumption
On this basis the White Paper needs to recognize the work which is being undertaken in this area, namely the Integrated Resource Plan for Electricity (IRP), the Integrated Energy Plan and the National Energy Efficiency Strategy.
Both the Integrated Resource Plan and the National Energy Efficiency Strategy contain mitigation actions and it is anticipated that the Integrated Energy Plan which is about to be developed will do the same.
Industrial processes and product use
According to the IPCC this sector contains seven subsectors of which only the three largest, namely minerals, chemical and metals are covered by the 2000 inventory. In addition the three sectors are not complete in the 2000 inventory in that all processes are not included.  BUSA has initiated a process to develop a more complete inventory in order to facilitate a preliminary approach to mitigation actions in this sector.
Transport
Overall this section does not provide any idea on how the actions will be undertaken plans.  Many of these ideas have been recognised  as best practices for years and yet very little progress has been made towards implementation.
There is no indication as to how the sector will contribute to achievement of a trajectory of peak, plateau and decline. Road transport represents about 21.6% of total national emissions and the absence of a comprehensive mitigation plan will exert impossible pressure on other sectors if national commitments are to be achieved 
Although BUSA has been engaged with the Department of Transport on a number of initiatives relating to a more sustainable transport strategy including movement of freight from road to rail, very little progress has been made.  As this is the most significant sector for which no practical climate response seems to be under development, BUSA intends to engage more intensively with the Department of Transport in respect of potential mitigation actions.
Waste 
The inclusion of waste management in the climate change response paper is welcomed.  
Examples presented such as landfill gas extraction, waste composting, energy and material recovery in terms of the high temperature thermal treatment policy can all have a GHG mitigation benefit but must also be seen in relation to the challenges presented by being regulated as waste management activities under the NEMA: Waste Act.
5.2 Departmental responsibility for adaptation actions
Water
Broadly BUSA believes that climate change has to fit into the bigger water sector picture and requires the mainstreaming of climate change into a coordinated national response to water management.  Planning for the provisioning of water resources requires the consideration of many uncertainties, including the extent and nature of future requirements and knowledge of both rainfall and runoff and future demand projections.  Climate change is one factor that increases this uncertainty and which places additional stress on South Africa’s already very strained water resources which suffer from large losses (both theft and leaks), growing demand, inefficient use, infrastructure shortcomings and contamination.  Well considered Investments in water infrastructure can generally be regarded as “no-regret” investments in adapting to climate change.  It is vitally important that the monitoring of rainfall and runoff be continued rigorously, and the hydrological monitoring network improved to ensure that yields from our large and complex inter-basin transfer schemes can be accurately determined.  This is required so that well considered water resource management measures that facilitate adaptation in the broad sense are timeously put in place. 
Forestry and agriculture
The sections of the Green Paper covering the Forestry and Agriculture sectors are broadly supported.  The policy presents some good actions, although implementation continuous to be the main challenge.  In many instances (also described below) there are actions led by forestry and agriculture which are being implemented that can be classed as climate change adaptation measures but they are being done solely on economic grounds.  Escalating costs and inefficiencies (including inefficiency in government), which are eroding competitiveness, are considered larger risks to the sector then climate change impacts.  Taking this view does not lessen the focus on climate change as a risk but seems to provide a more useful approach to addressing the challenge.
The general view on climate change impacts is one that is not nearly as negative as presented in the Green Paper. This is particularly important when the issue of declining competitiveness is taken into account.  The Green Paper provides for a renewed focus – an opportunity to have a different look at such issues.
In respect of research in the agricultural sector,  the focus on research is supported.  However, in many instances it’s not about initiating new research programmes but advancing existing structures, particularly supporting private sector research initiatives which have made great advances in plant breeding, improved agronomic practices, etc. (which make the sector more resilient to climate change).
It is also important to note that in this regard the “National Agriculture Research and Development Strategy”, October 2008 has been developed by the National Agricultural Research Forum (NARF) and officially adopted by the Government.  (This is an example where the policy should refer to the research strategy).
Agriculture cannot compete with other sectors in terms of cost efficiency in reducing GHG emissions, unless there is inclusion of the carbon sequestration and displacement potential.  Agriculture can potentially achieve a significant reduction in the risk of climate change by using soil and land use change as a carbon sink along with energy efficiency improvements and supply of renewable energies embedded within the agricultural sector.
There is a need to establish voluntary carbon credit systems to reward farmers for their contributions to climate mitigation through carbon sequestering activities and other agriculture emission reductions.  Securing GHG-savings and energy supply through sustainable bio-energy and other embedded renewable energy technologies should be included in the accounting rules.  In addition, funding mechanisms are required for vulnerable farmers to assist them adapt to climate change. 
6. OBJECTIVES 
BUSA supports the objectives of the Green Paper as presented but would also add the following additional objectives namely:
•	Enhancing South Africa’s ability to achieve its long term sustainable development potential and its attractiveness as an investment destination.
An evaluation of how the Green Paper meets the objectives set in the Green Paper is presented in Appendix 1.
7. EXPECTATIONS OF THE WHITE PAPER
The structure of the Green Paper does not reflect any current applied approach to categorisation of sectors, such as ministerial mandates, industrial classification or the national greenhouse gas inventory.
In view of the complexity of the response in respect of allocation of responsibility it is proposed that as far as possible the structure of the White Paper follow the lines of ministerial mandates and that mitigation actions be aligned with the national greenhouse gas inventory classification for emitting sectors.
Using this as the basis, BUSA presents a preferred structure for the White Paper in Appendix 2.
8. IMPLEMENTATION
BUSA believes the White Paper must place greater emphasis on the realistic implementation of the strategy and in particular focus on performance measurement, as well as provide clear indications on the roles and responsibilities that are specifically linked to implementation.
The development of the implementation plan including timelines, and roles and responsibilities should be undertaken in a consultative manner. 
9. ROLE OF BUSINESS
BUSA welcomes the recognition of the need for partnerships with stakeholders but does not see the National Committee on Climate Change as an appropriate structure to deal with the stakeholders as partners.
In BUSA’s view there should be a distinction made between the role of the private sector as a partner and the advocacy role of organised Business.  In respect of the latter BUSA believes consideration should be given to the establishment of a statutory committee under NEMA.
As to partnerships with the private sector , BUSA believes that this requires a greater openness on the part of the both Government and the private sector to working together in the interests of  RSA Inc.

APPENDIX 1

EVALUATION OF GREEN PAPER AGAINST STATED OBJECTIVES
Strategy	Coverage in green paper	
Taking a balanced approach to both climate change mitigation and adaptation responses in terms of prioritisation, focus, action and resource allocation.	There is limited prioritisation, focus, action and resource allocation. It is agreed that this should be included in the White Paper.	
Prioritising the development and maintenance of the science-policy interface and knowledge management and dissemination systems to ensure that climate change response decisions are informed by the best available information.	It is agreed that the importance of this should be highlighted in the White Paper.  It has not been adequately addressed in the Green Paper, particularly in relation to the green house gas inventory and the sources of emissions	
The short-term prioritisation of adaptation interventions that address immediate threats to the health and well-being of South Africans including interventions in the water, agriculture and health sectors.	While it is agreed that there are short term interventions required in these three sectors they should not be seen as primarily climate drive. 	
The prioritisation of mitigation interventions that significantly contribute to a peak, plateau and decline emission trajectory where greenhouse gas emissions peak in 2020 to 2025 at 34% and 42% respectively below a business as usual baseline, plateau to 2035 and begin declining in absolute terms from 2036 onwards, in particular, interventions within the energy, transport and industrial sectors.	The White Paper needs to present a much more comprehensive picture on how and at what cost this peak plateau and decline trajectory can be achieved.  For example the draft IRP reflects this but it is not even mentioned in the Green Paper.  	
The prioritisation of mitigation interventions that have potential positive job creation, poverty alleviation and/or general economic impacts. In particular, interventions that stimulate new industrial activities and those that improve the efficiency and competitive advantage of existing business and industry .In order to accurately identify these sectors and the job creation, industrial development potential of these, work will be done in order that the White Paper provides a clear understanding and prioritisation of these and their potential.	This objective is not addressed in any meaningful way in the green paper.  The White Paper needs to reflect this much more clearly but should reflect accurately on the mandates of other departments.	
Prioritising the development of knowledge generation and information management systems that increase our ability to measure and predict climate change and, especially extreme weather events, floods, droughts and forest and veld fires, and their impacts on people and the environment.	This is dealt with but could be strengthened in the White Paper	
The mainstreaming of climate change response into all national, provincial and local planning regimes.	Not addressed at all except to state the need	
The use of incentives and disincentives, including through regulation and the use of economic and fiscal measures to promote behaviour change that would support the transition to a low carbon society and economy.	Focus is on carbon tax.  Limited attempt to reflect a balance between inventive and disincentive	
Acknowledging that, with the energy intensive nature of the South African economy, the mitigation of greenhouse gases is generally not going to be easy or cheap and that Government must support and facilitate the mitigation plans of, in particular, the energy, transport and industrial sectors.	No indication at all of how the energy, transport and industrial sectors will be supported by Government	
The recognition that sustainable development is also climate friendly development and that that; the more sustainable our development path is, the easier it will be to build resilience to climate change impacts.	Statement is made	
Recognise that measures taken by developed countries in their efforts to respond to climate change may have detrimental effects on high carbon and energy intensive economies such as South Africa. These response measures may include trade measures including border tax adjustments, and could be reflected in a reluctance to trade in goods with a high carbon footprint. South Africa’s climate change strategy must recognise and address this and also create mechanisms that will give high carbon sectors the support and time to move to lower carbon forms of production.	No indication of how this will be done.	
Recognise that South Africa’s response to climate change will have major implications for both the Southern African region and for Africa as a whole and ensure that national responses are aligned to, support and operate as part of a broader regional response.	No indication of how this will be done	

APPENDIX 2
THOUGHT STARTER FOR DISCUSSION ON PREFERRED STRUCTURE OF THE WHITE PAPER
SECTION HEADINGS	
BACKGROUND 	
Short punchy background of the salient features of the national socio-economic environment which could be affected by climate change or influence responses	
National GHG inventory	
SECTORS VULNERABLE TO CLIMATE CHANGE AND ADAPTATION MEASURES	
Water	
Agriculture	
Health	
Biodiversity	
Human settlements	
GHG EMITTING SECTORS AND MITIGATION ACTIONS	
It is proposed that the emitting sectors be reflected as set out in the National Greenhouse Gas inventory and attached for convenience in Appendix 1.	
POLICY MECHANISMS	
This section should cover all state interventions of a cross cutting nature which will be used to achieve the objectives of the climate change response strategy and will include regulatory measures as well as support measures	
Regulatory measures	
Mandatory reporting of GHG emissions	
Requirement for mitigation plans	
Financial Instruments	
Support mechanisms	
This section should be address all potential mechanisms to support implementation of adaptation and mitigation actions identified above	
Skills development	
Education	
Public awareness raising	
Disaster management	
Incentives	
PERFORMANCE MANAGEMENT	
This section must address performance management  in respect of adaptation and mitigation actions identified above	
Monitoring and evaluation of adaptation measures	
Measurement, reporting and verification of mitigation actions	
INTERNATIONAL ACTIVITIES	
This section should set out the international activities relating to IPCC, UNFCCC and Protocol issues that South Africa participates in and how this relates to national imperatives	
INSTITUTIONAL ARRANGEMENTS	
This section should deal with the institutional arrangements that would facilitate implementation of the actions identified above and the international activities.	
IMPLEMENTATION 	
White Paper should include actions with resource allocation and timeframes