South Africa’s climate is known to have a high degree of variability at all timescales and is highly susceptible to climate risks. Furthermore, the degree of occurrence of severe weather events has increased in recent decades and might further increase in the future. The loss of life, damage to infrastructure and other impacts of adverse weather and climate events have recently not only presented unprecedented challenges to the government, but particularly to vulnerable communities. The damage costs due to extreme weather-related events (floods, fires, storms and droughts) are found to be significantly elevated over recent decades and have put basic services and infrastructure under threat. These climate damages on infrastructure and economic sectors, in turn, strain public budgets and reduce the attractiveness for private investors. If not addressed, climate-related risks could jeopardise South Africa’s economic growth and financial stability, while disproportionately affecting poor and vulnerable groups. Effective disaster finance is increasingly important as part of the transition towards a climate-resilient economy and sustainable infrastructure. A recent diagnostic report by the National Treasury and the World Bank estimated the average funding gap for financing disaster response in South Africa at R2.3 billion. Developing a national disaster risk financing policy, including strategic priorities for financing disaster response.
South Africa has laid a solid foundation of policies to support the climate change agenda. The National Development Plan (NDP) provides a ‘2030 vision’ to guide South Africa’s sustainable development and advocates for a transition to a low-carbon, resilient, and just society. The NDP recognises that achieving South Africa’s climate change response goals will require a massive and comprehensive mobilisation of financial, human and technical resources. Government has committed to mobilising the resources necessary for an effective climate change response covering both mitigation and adaptation, at all relevant scales and; drawing on private and public sectors resources has highlighted resource mobilisation as one of the strategic priorities of South Africa’s climate change response strategy.
In 2021, South Africa committed to a mitigation target range of 398 to 510 Mt CO2eq in 2025 and 350 to 420 Mt CO2eq in 2030. The country has also made reference to an ambition of achieving net zero in 2050 in the Low Emissions Development Strategy. South Africa’s Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) states that its ‘’implementation and ambition will be enabled by finance, technology and capacity building support’. The NDC indicates that the key challenge to South Africa’s climate change response is the economy-wide catalysis of financing and investment in the transition to a low carbon and climate resilient economy and society.
Our NDC has been framed in the context of the country’s national circumstances, as a developing country and is characterized as ‘’a conditional NDC” whose implementation will be enabled by the provision of adequate financial support and means of implementation. To this end, access to predictable and adequate climate finance support will offer South Africa a clear pathway towards the shared aim of attaining a more prosperous, inclusive, equitable and secure future, in which the national priorities of eradicating poverty and reducing inequality are addressed. The extent to which South Africa is able to achieve this ambition, within the context of a broader global programme, is premised on access to adequate and timely finance and technology and capacity building support from the international community.
South Africa is implementing several policy instruments to inform climate finance resource mobilisation strategy. The National Development Plan (NDP) has prioritised the mainstreaming of climate change into the fiscal planning, budgetary process and decision-making across all sectors of society, including government, private sector and civil society. In order to augment this vision the South African government has undertaken to create an enabling environment in which government, the private sector and civil society collectively respond to the economic, environmental and social challenges facing our country. Further to this Government is steadfast on promoting the green economy as an effective investment in climate change response and to secure resources to support climate change and green economy interventions at scale.
The Department of Forestry, Fisheries and the Environment (DFFE) and the Department of Trade, Industry and Competition (DTIC) completed work on the National Employment Vulnerability Assessment (NEVA) and Sector Jobs Resilience Plans (SJRPs). The aim of this work was to ensure that the resulting economic and social burdens are not shifted onto vulnerable people and communities. The vulnerable value chains identified in the NEVA were coal, metals, petroleum-based transport, tourism and agriculture value chains. The National Employment Vulnerability Assessment provided a detailed analysis of the capacity of vulnerable communities, workers and businesses to adjust to climate-change related impacts. For the development of resilience plans, the NEVA indicated both where developments warrant a programmatic response and the needs of vulnerable groups as they seek a viable adjustment. The SJRPs were developed for coal, metals, petroleum based transport, tourism and agriculture value chains to protect vulnerable groups whose jobs and livelihoods will be impacted because of the transition towards low carbon, climate resilient economy and society.
The DFFE in partnership with Indalo Inclusive and through collaboration from the German government, represented by GIZ, seeks to pilot and support entrepreneurs to develop and implement innovations within the coal mining value chain, specifically in the nexus of catalytic industrial technological interventions designed for sustainable energy, water purification and provision, as well as regenerative agricultural interventions within and alongside current (pending closure) and closed mining operations in the four municipalities and host communities of the Mpumalanga Province. A scaled up financing programme will be required to for full implementation of the Sector Job Resilience Plans once lessons learnt from the pilot project has been concluded.
Ladies and gentlemen
I am pleased to report there is evidence of success in our collective effort to transition South Africa towards the shared low carbon economy and climate resilience vision. This is evidenced by our updated NDC where we have made an incremental commitment to reduce our emission consistent with our national development plan imperatives. The latest GHG Inventory covering the period 2000-2020 shows that the net emissions in 2020 were at a figure of 442 million tonnes, which is not far off from the 2030 upper target of 420 million tonnes. I wish to thank all our collaborating partners including finance institutions, civil society groups, public-private partnerships, research institutions for contributing towards this shared goal. Let us keep this momentum as we navigate our noble of the Just Transition.
Esteemed delegates
Government is working on a number of policy instruments to build a systematic climate finance architecture, which includes monitoring and evaluation frameworks. The department of Forestry, Fisheries and the Environment (DFFE) has institutionalised the Climate Change Information System (NCCIS). The NCCIS offers a series of decision support tools to inform policy and decision-making and tracks mitigation and adaption measures including information on climate change financial flows to inform investors amongst others. The department is currently in the process of developing a climate finance-tracking framework, which will serve domestic policymaking and help in fulfilling South Africa’s commitment on climate finance reporting internationally.
Work is also in progress nationally to develop common principles for tracking climate finance, which includes a taxonomy for aggregation and disaggregation of information, key principles from the Climate Budget Tagging, Green Taxonomy, and a Just Transition Framework championed by the National Treasury and the Presidential Climate Change Commission, respectively. These frameworks will quantify and track expenditure on climate relevant activities. They will also classify and tag public expenditure according to its expected contribution to climate change (mitigation (i.e reduced greenhouse gas emissions) or adaptation (i.e. increased resilience and reduced loss and damage from climate change). The Green Taxonomy framework will define a sustainable finance stream in South Africa and contains technical indicators for climate change mitigation and adaption, as well for biodiversity. These tools will play an important role in identifying and quantifying climate finance inflows into the South African economy, and to identify gaps, needs, and opportunities for financing climate action in the country.
Ladies and gentlemen
I am pleased to report on progress in the implementation of our mitigation system to transition our country towards a low-carbon economy. Government is making headway in institutionalization of the Carbon Budget, which is one of the means for regulating the emissions of greenhouse gases in the economy. A carbon budget sets a maximum volume of greenhouse gas emissions that an entity is allowed to emit over a certain period. Carbon budget allocation for the mandatory period (2023-2027) is underway and is expected to be concluded this year. Companies allocated Carbon Budgets will be required to submit mitigation plans to indicate how they intend to reduce their greenhouse gas (GHG) emissions, hence industry mitigation plans will support the implementation of Carbon Budgets. The allocation of mitigation plans to industry for the period 2021-2025 was concluded in 2020, and progress reports on implementation have been submitted annually from 2021 onwards.
Ladies and gentlemen
As we all know South Africa has developed a Just Energy Transition Investment Plan (JET-IP). This was another milestone following shortly after we had put forward a Nationally Determined Contribution (NDC) that is 1.5 degrees compatible. We have developed this plan with the full understanding that each country must develop its own development pathway. The objective of our Just Transition is not to decarbonize the economy as an end-goal in itself, but rather to help achieve sustainable, inclusive and equitable development.
The JETP-IP outlines the enormous scale and nature of investments needed to achieve our decarbonisation goals while leaving no one behind. According to the plan, South Africa will need an investment of approximately US$ 98 billion over the next five years to enable part of the just transition and achieve the ambitious targets we have set out in our Nationally Determined Contribution (NDC) to the Paris Agreement.
The government is working hard to implement the plan. Government has identified a set of key measures in our electricity and transport sectors, and measures to invest in the hydrogen economy. These include rapidly scaling up investment in renewable energy, and in our transmission grid and balance of system to enable this, a phased programme of retiring our coal power plant fleet, and the relevant measures to ensure that our transition is just and that it leaves no-one behind. This will also include green industrialisation, a focus on green minerals, and investment in the hydrogen-ammonia value chain.
The South African government has always emphasised that as we shift to more sustainable methods of electricity generation, mining and transport, we need to ensure that the vulnerable of our society are not left behind. The just transition must be people-centred and provide job security for those working in vulnerable sectors. What this means in a practical sense is equipping workers in affected sectors to with new skills as their industries are transformed.
What is clear is that South Africa, in common with other developing countries, cannot achieve an ambitious outcome by itself. Our sense is that we can achieve these goals through partnerships and this investment summit provide us with an opportunity to bring more investors on the table.
In other words, this summit is an opportune moment to grow the cycle of investors that can assist us in fully implementing the JET-IP.
Esteemed delegates
May I conclude by thanking you and to invite you to extend your continued collaboration as we seek a scaled-up climate finance investment in our country to benefit current and future generations.
