In latest climate change development news, President Cyril Ramaphosa has officially signed the Climate Change Bill into law. This Act introduces a range of Greenhouse Gas (GHG) mitigation measures planned for implementation. Perhaps most importantly, it serves as the basis upon which future regulation will be released meaning that we can expect to see more climate-related regulation in future. Key highlights of the Act are given below:
i) Mandating Carbon Budgets:Provision is made in the Act for the introduction of mandated carbon budgets. Up till now, carbon budgets have been strictly voluntary, with no associated penalties for exceeding allocated budgets.
In fact, those companies voluntary participating have been allowed 5% off their carbon tax liabilities. This will all change. We anticipate that, now that the Climate Change has been signed, regulation will be released governing who is subject to these budgets, how the budgets are set and what penalties are incurred for exceeding the budgets.
Already, in the 2024 Budget Review, National Treasury makes mention of a R640 penalty for every tonne CO2e emitted above the allocated budget, significantly more than the carbon tax rate. This penalty will most likely be built into the Carbon Tax Act and the 5% carbon budget reduction or allowance currently in place for those with a voluntary carbon budget will be removed.
ii) Mitigation Plans: Companies who have been allocated a carbon budget must prepare and submit a GHG mitigation plan to the Minister for approval. This plan should describe the mitigation measures which the company proposes to implement to remain within its allocated carbon budget. This is similar to the Pollution Prevention Plans currently in place. However, we will probably see greater alignment between carbon budgets and mitigation plans in future.
iii) Sectoral Emissions Targets: Some sectors will also be allocated sectoral emission targets. Within one year, the Minister of DFFE is required to list the GHG emitting sectors and sub-sectors that will be subject to sectoral emissions targets. The Ministers responsible for the administration of these sectors or sub-sectors will be responsible for implementing the targets through planning instruments, policies and programmes. As such, companies in these sectors will probably see more emission reduction requirements in future.
iv) Listed greenhouse gases and activities: The Minister of DFFE must publish a list of GHGs which the Minister reasonably believes cause or are likely to cause or exacerbate climate change. Those companies releasing these GHGs may be assigned a carbon budget, if they exceed certain thresholds. They will also be required to submit mitigation plans to the Minister.
v) Phase-down and Phase-out of Synthetic GHG Emissions and Declaration: The Minister of DFFE must declare certain GHGs to be synthetic GHGs and specify whether these gases are required to be phased out or phased down and by when. In addition, the Minister of DFFE can also prescribe thresholds for use of these synthetic GHGs. The Minister may also allocate a carbon budget to companies that conduct activities that result in synthetic GHGs.
vi) Sector-Specific Collaboration: Within two years, the Minister of DFFE is tasked with developing a national adaptation strategy which requires collaboration with other ministries and departments such as water resources; agriculture and food production; forestry and fisheries; human health; energy generation; industry; human settlements and migration; disaster management; biodiversity and terrestrial ecosystems. Each sector will devise its own adaptation plans as part of a unified national strategy.
vii) Transforming the Presidential Climate Commission (PCC): Under the new law, the PCC will transition into a statutory body which will oversee South Africa’s national climate efforts and ensuring alignment with international commitments.
viii) Role of Provinces and Municipalities: The Bill places more obligations on provincial governments and municipalities. The Provincial and Municipal Forums on Climate Change would be tasked with coordinating climate change response activities within the relevant province or municipality. Each Municipal Forum on Climate Change would be required to provide a report on its climate change response actions to the relevant Provincial Forum on Climate Change. The Provincial Forums on Climate Change would then be required to provide a report to the President’s Co-ordinating Council regarding the climate change response actions and considerations in the various provinces.
Catalyst Solutions is closely monitoring these developments and will keep our clients updated. Please reach out to us if you would like to discuss how these changes may impact your business and where Catalyst Solutions can provide support from a general GHG emissions, carbon budgets, mitigation plans or carbon tax management point of view.
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