SA may lag in a greening world

PTHE RISK OF MOVING TOO SLOWLY IS THAT SA IS LEFT BEHIND WITH OUTDATED TECHNOLOGY

resident Cyril Ramaphosa will this month receive recommendations from his Climate Change Commission on SA’s carbon reduction commitments, known under the Paris Agreement as “nationally determined contributions” (NDCs).

The greatest part of the commission’s recommendations are already known. At its meeting two weeks ago, which was open for streaming to the public, the commission evaluated the draft proposal developed by the department of forestry, fisheries & the environment and decided that it was not ambitious enough.

While the government proposed achieving a target range of 398-450 megatonnes of carbon dioxide equivalent emissions by 2030 — not really a stretch for SA — the commission will recommend adjusting the range to 350-420 megatonnes. This is a modest reduction of 6.6% on the new upper limit.

The rationale was not so much the environmental concerns — SA is the world’s 12th-biggest emitter and its per capita emissions are higher than China’s or India’s — but finding a comfortable level for the economy to adapt to without negative consequences.

So to reach the new targets will not be much of a stretch. But it will entail a faster timetable for the decommissioning of Eskom’s coal power stations than set out in the Integrated Resource Plan. There are lots of incentives to do this. Apart from the greenhouse gases emitted and the impact on human health of the poor air quality on the eastern highveld, faster commissioning will open the door to the concessional green financing that both the government and Eskom have had their eye on for some time.

But there are large problems — beside the health and environmental ones — with adopting such singularly unambitious NDCs. The first is a moral one. As the large emitter it is, is SA doing its fair share to curb global warming? The objective of the Paris Agreement is to keep the global rise in temperature to 1.5°C. This means by 2050 the world must have net zero carbon emissions.

Modelling work by the Climate Equity Reference Project, which was commissioned by the Centre for Environmental Rights, found that anything in the range of 400 megatonnes of carbon dioxide equivalent is nowhere near SA’s fair share. A range of 286 to 360 would be more where SA should be.

The second problem is the risk of moving too slowly. While SA might decide that a gradual change is better for the country — NDCs are self-imposed — the rest of the world is moving much faster to decarbonise. Governments are under pressure from citizens and the courts, and corporations are under pressure from shareholders and the courts. More and more firms are being propelled into ambitious decarbonising timetables to meet the net zero commitment and have to switch to renewable energy. Technology is changing. The risk of moving too slowly is that SA is left behind with outdated technology.

Maintaining a high-carbon economy out of step with competitors and trading partners will lead to economic punishment. The EU, for instance, is already talking about a carbon tax border adjustment mechanism, which would add a carbon price into goods imported into the EU. A new study by Standard Chartered found that multinational companies plan to cut suppliers that fail to curb carbon emissions. For SA companies, says the study, this could mean a loss of export revenue of $33.7bn.

The value of companies and investments could be affected if SA fails to decarbonise faster as investors move away from carbon-intensive stocks, investment banker JPMorgan has warned. Consultancy Intellidex recently warned about the risk posed to SA government bonds, which on a global scale “stick out like a sore thumb” for their embedded carbon intensity.

The dangers of going too slowly may already outweigh the dangers of going too fast. While it is absolutely important that noone — especially the workers and communities around coal mines and coal-fired power stations — are left behind in the energy transition, a lot more urgency is warranted.