It is no secret that South Africa’s industrial economy is energy intensive and coal dependent. This fossil fuel dependence has had a negative externality and South Africa is ranked as one of the 30 largest emitters of greenhouse gases globally and amongst the highest per capita carbon emitters in Africa.
The bulk of Greenhouse Gas (“GHG”) emissions in South Africa come from the energy sector, which contributed 78% of South Africa’s total Green House Gases in 1994, and more than 90% of carbon dioxide emissions. As a result, we have adopted a proactive approach so as to ensure that South Africa is playing a leading role in combating the global challenges associated with climate change.
We simultaneously recognise our commitment to the creation of decent jobs and economic growth. Our policy objective is therefore to make a fair contribution to the global effort that seeks to stabilise greenhouse gas whilst being cognisant of the outcome, because we do not want to impose undue burdens on our citizens and the rest of the economy given our social challenges.
At the COP 15, President Jacob Zuma conditionally committed South Africa to achieving a 34% deviation below the ‘business as usual’ (BAU) emission trajectory by 2020, and 42% deviation by 2025. This commitment is conditional upon Annex One countries providing appropriate and adequate resources to support our mitigation efforts.
In pursuit of this goal and the green economy, South Africa has finalised its National Climate Change Response Paper. This White Paper serves as Government’s vision for an effective climate change response and the long-term transition to a climate resilient and low-carbon economy and society. It has two key objectives include:
- Making a fair contribution to the global effort to stabilise greenhouse gas concentrations.
- Effectively managing unavoidable climate change impacts through interventions that build and sustain South Africa’s social, economic and environmental resilience and emergency response capacity.
As the shareholder ministry of some among the major South African emitters, my department has completed a process of defining a policy to guide SOCs in our portfolio in their engagement with the climate change and green economy challenge. This was completed just prior to South Africa’s hosting of COP 17.
I am pleased to launch this Framework today. The overarching objective of the Framework is to optimise the impact of the SOCs on the reduction of carbon emissions and development of the Green Economy without compromising SOC financial viability. There are four key design principles informing the policy:
- Firstly, the SOCs need to focus on optimising the overlap between commercial, economic, developmental and environmental objectives whilst carefully managing areas where these objectives conflict; they need to manage the trade-offs very carefully – a pragmatic balancing act indeed.
- Secondly, it is expected that over time, climate change, broader environmental and green economy considerations will be integrated into the heart of SOC planning, procurement and operational processes - however this will be an on-going process or learning and continuous improvement, rather than a big-bang.
- Thirdly, each SOC requires flexibility in the way it responds to the challenges of climate change given the diversity of sectors within which the SOC operate, and
- Finally, the development of the green economy requires a high level of collaboration across SOCs, as well as between SOCs and government; with the shareholder representative playing a facilitating role in this regard.
The focus of the policy is thus to start the process of integrating climate and green economy considerations into the SOC planning processes and to facilitate a high level of collaboration between the SOCs and government to enable the efficient implementation of green economy initiatives.
As a starting point, the Policy aims to ensure that the SOCs begin a process of systematic and continuous learning around how to engage with the opportunities and risks associated with climate change and gain an in-depth understanding of climate change. As a result, the policy requires that each SOC will develop and submit a strategic plan around how it will engage with the climate change arena.
The SOC climate change response plan must have the overall objective of optimising the impact of the SOCs on the reduction of carbon emissions and development of the green economy without compromising SOC financial viability. Over time, it is expected that this will be integrated into the standard SOC planning cycle.
The plan will need to provide an outline of the concrete initiatives that the SOCs will take to achieve these objectives in the context of the risks and opportunities related to climate change that they are facing. In addition, the plan needs to provide an outline of how broader government support and resources can be used to accelerate or enhance the implementation of the plan. Through our monitoring of the implementation of the plan, the department will be able to track the SOC impacts and learning processes related to the climate change challenge.
I recognise that the policy has not set targets relating to SOC emission reduction or for the investment they promote in green economy initiatives. As a starting point, we would like the SOCs to set their own targets based on what they believe they can achieve. In this way, we can demand a high level of accountability. We also understand that we are all in a learning phase but we are not taking a laisser-faire approach.
SOC emission reduction activities can catalyse green economy initiatives which will require a high level of SOC and government collaboration. SAA intrinsically operates in the global market and is consequently extremely vulnerable to policies in countries that it operates that impose penalties and taxes on carbon emissions. In the short term, SAA is exploring the implementation of a voluntary carbon offset project that can support the development of forestry in the region.
Indications are that SAA will require that bio-fuels make up half its fuel supply by 2020 in order to avoid future penalties. This will create a pressing demand for an extremely large quantity of bio-fuels which can form a base-load against which a fully vertically integrated bio-fuels industry can develop in South Africa and in the region. South African Forestry Company Limited (SAFCOL), an SOC that has considerable experience in forestry, has been developing intellectual property which can support this process.
The Department of Public Enterprises (DPE) has convened a supply chain and a technical working group involving the SOCs and relevant government departments and agencies to specifically develop a strategy for meeting aviation bio-fuel requirements. We expect an initial strategy to be released in the third quarter of this year.
As part of our commitment to sustainable development, today we will be signing the DPE SOC onto the UN Global Compact. The UN Global Compact is the world’s largest voluntary corporate citizenship initiative. Companies join the UNGC so that they can share the conviction that business practices rooted in universal principles contribute to a more stable and global market and help build prosperous and thriving societies. An outstanding feature of being a member of the UN Global Compact is that it not only commits the company as a whole, but specifically its leadership to prioritising sustainability issues.
The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption, thereby advancing sustainable development. By doing so, business as a primary driver of globalisation can help ensure that markets, commerce, technology and finance advance in ways that benefit economies and societies everywhere. To maintain the company’s status of being a responsible corporate organisation a “Communication on Progress” (COP) report is required annually by the UNGC.
Our department takes pride in acting as a leader in this space of ensuring SOCs make the transition to green development, low carbon economy and are committed to the philosophy of sustainable development and its principles.
I ask that respective Chief Executives and Chairpersons join me now in the symbolic ceremony that commits your SOC to this Global Compact and in pursuit of a better tomorrow.
I thank you.
