Climate fight to hit firms

The Paris Agreement, adopted by the negotiating parties at COP21, has been hailed by many as a historic step in addressing the risks posed by global climate change. South Africa’s representative at COP21, in a statement made at the closing meeting of the negotiations in Paris, stated that it “can mark the turning point to a better and safer world.” While optimism remains high, the agreement is not beyond criticism. The most common criticism is that the Paris Agreement consists of only ‘promises or aims’ not firm commitments; that the compliance mechanism is not strong enough in that it is non adversarial and punitive; and that a vast amount of work will be required to implement the agreement at an international and national level.

The core aim

The core aim of the Paris Agreement is to enhance the implementation of the United National Framework Convention on Climate Change (UNFCCC) by holding the increase in global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. In order to achieve this aim, the Paris Agreement provides for a mechanism to achieve a global reduction in greenhouse gas emissions (GHG). States that ratify the Paris Agreement will be obliged to submit Nationally Determined Contributions where they will set out their contribution to achieve the aims of the Paris Agreement.

South Africa’s commitment

Prior to the commencement of negotiations at COP21, South Africa submitted its Intended Nationally Determined Contribution (INDC). This INDC, which may be reviewed prior to ratifying the Paris Agreement, sets out South Africa’s plan on what it is able and willing to contribute to reduce global greenhouse gas emissions in line with the Paris Agreement and the UNFCCC, based on the principle of common but differentiated responsibilities provided for developed and developing countries.

Adaptation and mitigation

South Africa’s INDC sets out both adaptation and mitigation components. In terms of the adaptation component, South Africa is developing a National Climate Adaptation Strategy and Plan that will be integrated into all relevant sector plans. South Africa’s mitigation component moves from a deviation from business-as-usual commitment to a commitment to a peak, plateau and decline in GHG emissions. South Africa’s GHG emissions are expected to peak between 2020 and 2025, plateau for a decade, and then decline. Therefore, South Africa’s total GHG emissions are only set to reduce from approximately 2040. Various policies and measures will be introduced to achieve this by 2040. These measures include the proposed carbon tax, sector specific desired emission reduction outcomes, company level carbon budgets, and regulatory standards and controls for specifically identified GHGs and GHG emitters.

Priority pollutants

One such mitigation measure is the declaration of GHGs as priority air pollutants in terms of the National Environmental Management: Air Quality Act, 2004. On 8 January 2016, the Department of Environmental Affairs (DEA) published notice of its intention to declare six GHGs as priority pollutants. The intended GHGs are carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.

Pollution prevention plans

Once the GHG declaration is promulgated, businesses which emit any of the declared GHGs in excess of 0.1 megatonnes annually, or which undertake a production process listed as a primary activity will be required to prepare GHG pollution prevention plans. The activities listed as production processes include coal mining, crude oil production or refining, electricity production, production of liquid fuels from coal or gas, and production of various goods such as cement, glass, and pulp and paper. The range of industries targeted by the intended declaration is therefore wide and will affect a significant number of companies operating in South Africa.

Criminal sanctions

It is intended that the GHG pollution prevention plans will be required to establish specific reduction targets aimed at reducing GHG emissions over a five-year period. Annual monitoring on the implementation of the plans will be undertaken and the plans will be updated every five years, presumably to ensure that reductions targets are revised to maintain decreasing emissions, which will eventually result in the absolute decline of GHGs throughout South Africa. A person will be guilty of an offence for failing to submit a pollution prevention plan or annual progress report; supplying false or misleading information in respect of the plans and reports; and failing implement a plan. A person convicted of the offence may be liable to a fine not exceeding R5 million and or to imprisonment for five years.

Desired emissions reductions to be specified

At this stage, no industry-specific desired emissions reduction outcomes have been specified by the DEA. However, the five-year targets set out in GHG pollution preventions plans of individual emitters will need to be informed by national government policy considerations, which will need to recognise the outcomes agreed to in terms of the Paris Agreement and South Africa’s INDC.

Reduction planning

Therefore, industries identified in terms of the proposed declaration of GHG as priority pollutants are going to have to start planning to reduce GHG emissions in the immediate future. Reductions may be achieved in several ways, including by the fitment of abatement technologies where feasible; closure and replacement of plants where abatement is not feasible; and moving to the use of cleaner feedstock. The costs and risks associated with achieving reductions are therefore significant, and should be planned for sooner rather than later.