Transcript the national climate change response white paper

Parliamentary Portfolio Committee Presentation
on the National Climate Change Response White Paper
8 November 2011
presentation overview
1. The South African and Sasol context
2. Our approach to climate change
3. Comments on the implementation of the National Climate
Change Response White Paper
4. Notion of a carbon budget is impractical and unworkable in view
of the IRP2
5. Concluding remarks
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the south african and sasol context
... global potential for GHG reductions is dominated by
the policies of the top five emitting countries ...
Million tons CO2
0
1,000
China
USA
Russia
India
Japan
Germany
Canada
UK
Iran
Korea
Italy
Mexico
Australia
Saudi Arabia
Indonesia
France
Brazil
South Africa
Spain
Ukraine
Source IEA - Top 20 CO2 Country emitters, 2008
2,000
3,000
4,000
5,000
6,000
7,000
60% of emissions are
produced by the
top 5 countries
1.1% of total
Global emissions
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south africa’s top emitters
Source: CDP 2010
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south africa versus other countries that have
implemented a form of a carbon tax
Source: International Energy Agency Data
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south africa versus other middle income and
commodity producing countries
South Africa is far more dependent on coal than
this peer group
Source: International Energy Agency Data – Sasol analysis
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our approach to climate change
our approach to climate change mitigation (1/2)
 Sasol supports the transition to a lower carbon economy which takes into
account South Africa’s critical developmental challenges
 As a significant contributor to the economy, Sasol has an important role to play
in this transition
 As a strategic step in responding to the need for development of lower carbon
energy, Sasol New Energy was established to broaden the company’s business
activities
 Sasol has engaged in major initiatives to mitigate GHG emissions, including:
 an across the board efficiency improvement drive
 exploration of additional gas resources, displacing coal as a feedstock
 projects in renewable energy
 CCS from research to commercialisation
 To reduce carbon emissions will require significant capital expenditure and time
to implement the mitigation and adaptation steps and are influenced by
exploration uncertainties, commercial and political risks
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our approach to climate change mitigation (2/2)
 Furthermore, climate change policies are being introduced at a time when other
environmental regulations (Air Quality Act and Clean Fuels 2) require significant
investment to comply with
 Climate change policies should not constrain but should rather play a supporting
role to enable Sasol to reduce its carbon footprint, grow its business and
continue meeting the needs of all its stakeholders
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the national climate change response white paper
overarching comments

The White Paper is significantly different to both the Green Paper and the
draft White Paper , which if remains unchanged will lead to a material
difference in the implementation of the policy and the impact of the policy
on key South African sectors

Our comments focus on the following areas, which raise concern:

Peak-Plateau-Decline (PPD) emissions trajectory

Copenhagen commitment and the mitigation approach

Interplay between a carbon budget and the proposed carbon tax

Competing policy drivers

Timeframe for implementation

Ongoing application of the IRP2 reduces industry’s carbon space
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peak-plateau-decline emissions trajectory
 A proposed national emission profile with emission numbers for the PPD trajectory has been
included in the White Paper. These were not reflected in the Green Paper nor the draft White Paper
 The trajectory is presented as a range with upper and lower limits, whereas in the draft White
Paper it was referred to in broad terms as an initial trajectory, understood to be aspirational, as part
of an ongoing review process
 A trajectory requires a comprehensive review before it can be used as the ambition against which
regulatory monitoring and evaluation is to be undertaken. This has, as yet, not been completed
 The ambition needs to be based on at least two key elements:
 an accurate national greenhouse gas inventory
 the range of mitigation actions that can be undertaken having considered what is technically
feasible and the international support that will be required to fund and implement these actions
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copenhagen commitment and the mitigation
approach
 Although the White Paper reflects the Copenhagen commitment, the conditions
attached to the Copenhagen commitment are not included in the approach to
mitigation set out in the policy paper
 By fixing firm emission numbers in the policy paper, the conditionality of the pledge
linking the extent of mitigation action to financial, capacity and technological
support has been lost
 Implementing the policy paper in its current form could serve to prejudice South
Africa’s negotiation position during COP17 and beyond
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interplay between a carbon budget and the
proposed carbon tax
 Implementation of a carbon budget and carbon tax will require close policy coordination.
This is presently not apparent in the White Paper or any other documentation
 A carbon tax is a market-based mechanism which sets a carbon price and needs to take
into account specific national and sector characteristics to ensure effective implementation.
 A carbon budget sets emission allocations across the economy and will have the effect of
impacting sector characteristics
 The proposed carbon budget and the envisioned carbon tax are thus applied in the same
domain. Uncoordinated it can lead to perverse outcomes such as crippling burdens on
sectors and/or misalignment in emission reduction targets
 Currently in combination, these policies will lead to companies or sectors being committed
to reduce emissions, at the same time being subjected to a tax, thereby reducing the
capacity to develop mitigation and adaptation steps
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timeframe for implementation

In light of the further work required, including extensive engagement with
government and key stakeholders, the two-year timeframe allocated to
understand the implications of and formulate the proposed carbon budget for all
sectors and sub-sectors in South Africa is impractical.
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notion of a carbon budget impractical and
unworkable in view of the IRP2
the implementation of the IRP2 will lead to a
proportional reduction of industry sectors
2025
2020
All Other
Sectors
60%
All Other
Sectors
58%
872 Mt CO2
All Other
Sectors
57%
- 42%
749 Mt CO2
- 34%
2025
2020
2010
All Other
Sectors
46%
All Other
Sectors
40%
506 Mt CO2
All Other
Sectors
54%
491 Mt CO2
542 Mt CO2
275 Mt CO2 from IRP2
293 Mt CO2 from IRP2
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conclusions
 The White Paper addresses both mitigation and adaptation. Whilst our
commentary is focused on mitigation, we recognise the importance of adaptation
and that it needs to be given higher priority in climate change policy development
 Our primary concern is centred around the introduction of fixed numbers for the
PPD, which fundamentally changes the way in which climate change policy will be
implemented nationally, and is also likely to negatively impact the international
negotiations
 Furthermore, if implemented as proposed, the policy will become an impediment to
economic growth in South Africa with serious socio-economic consequences
we look forward to a constructive engagement with government departments
and the portfolio committee to work towards finding a workable solutions to
transition to a lower carbon economy
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