Recent policy shifts• Presidential commitment to reduce South Africa’s greenhouse gas emissions compared with business as usual (34% by 2020 and 42% by 2025)• National Climate Change Policy White Paper published in 2011 and sets the framework for regulating carbon in the South African economy.• National Treasury: carbon pricing policy paper published in 2011. It sets out the proposed introduction of a carbon tax in South Africa• DTI & Treasury: grants and incentives available for R&D (including energy and carbon), a number of grant programmes support development of large-scale renewable energy (CIP), and some manufacturing grants now demand in-built energy efficiency.• Eskom: security of supply (keeping the lights on) and electricity price escalations.• NERSA Renewable Energy Bid Process: significant drive to establish independent power production capacity in SA with a view to feeding RE into Eskom’s grid. Lowering the carbon footprint of SA and assisting with securing supply whilst accelerating economic development in local communities. 3 725 MW.• King III: places sustainability firmly at the centre of good corporate governance (Integrated Reporting)
National Budget Speech 2012/2013Carbon Tax• Second version of a draft policy paper on carbon tax will be released in 2012.• Carbon tax will be introduced in 2013/14.• First phase will run to 2019.• The carbon price will be R120 per ton CO2e in 2013/14 and increase by 10% per year.• No clarity on what scopes of emissions will be taxed.• Companies will need a verified carbon footprint each year.• All companies will be given a tax-free threshold of 60% so they only pay for 40% of their emissions, until 2019.• Some sectors will get additional tax-free threshold percentages – trade exposed sectors and sectors with process emissions that cannot be reduced in the short term (cement, paper etc.)• In phase 2 (2020 to 2025), the tax free threshold will be reduced or removed completely.• Offsets are allowed into the carbon tax and will reduce the impact of a carbon tax for companies.• Revenue will not be ring-fenced.
National Budget Speech 2012/2013Electricity Levy • The electricity levy generated from non-renewable sources will be increased by 1c/kWh to 3.5c/kWh. • The additional revenue will be used to fund Eskom energy efficiency initiatives such as solar water heater programme. • This will replace the current funding mechanism that is incorporated into Eskom’s annual tariff application. • The net impact on electricity tariffs should be neutral.
National Budget Speech 2012/2013Fuel LevyIncrease by 20c/l with effect from 1 April 2012.Infrastructure The Budget Review lists 43 major infrastructure projects, adding up to R3.2 trillion inexpenditure. R300 billion of this is in the energy sector. Uncertain whether any of this isring fenced for alternative or renewable energy investment.Green FundGovernment will initiate a national green fund in April 2012, with capitalisation of R800million over two years to support green-economy activities.Likely to fund low-carbon projects, but will also come with additional requirements likeminimum contribution to job creation, skills development and economic development in localcommunities.
Minimising burden & maximising opportunity• Educate yourself – existing and pipe-line regulations and incentives could pose risk or present opportunity for your business. Education is key to avoiding risk and identifying opportunities.• Define „sustainability‟ for your own organisation – establish where the risks and opportunities are in your business and establish which economic, social, environmental indicators are material to your organisation.• Start measuring material sustainability indicators – mandatory carbon reporting is here… and it isn’t simple. Integrated Reporting requirements are here… and they’re not straightforward. Get on the learning curve early.• Understand your organisations role in the value chain – can your organisation have a positive impact on material sustainability issues of your customers? Or worse… could the way you service your customers create an additional burden for them?
Minimising burden & maximising opportunity• Understand the supply chain – are there emerging liabilities in the supply chain which are likely to be passed on to you at some point? Are your suppliers pro-active in identifying risks and opportunities for you?• Engage in the policy-making process – The time is now. Legislation, policy and regulations are still evolving. Business must mobilise to engage in this process to ensure that structures for carbon reduction and sustainability reporting are appropriate. Business needs to do their own assessments on impact of carbon tax etc.• Begin with the end in mind – revisit business strategies & practices, capital projects, product development and supply chain decisions to identify risks and opportunities – ensure grants and incentives are built into decision making process.
Minimising burden & maximising opportunity• Get buy-in from the top – it is essential the CEO & Board understand the implications for their business & provide their staff with a mandate to respond to risks and opportunities.• Adopt an integrated approach – sustainability is no longer a matter for sustainability or green specialists on the sidelines, it should be central to your business’s vision and strategy.• Communicate with all stakeholders – talk to customers, investors, staff & suppliers. Keep it relevant and substantive and listen to feedback.
Start now• Get to grips with the implications of the carbon tax for your business in the immediate, medium and long term. Look at your value chain, your supply chain and your organisations role in wider supply chains.• Understand the requirements around mandatory reporting on carbon – look for the risk areas and distil the potential opportunities.• Begin the journey towards an integrated report.• All new projects should aim to qualify for carbon credits, capital grants & incentives, R&D tax allowances (11D), energy savings allowances (12L). Include this as part of initial due diligence on investments.• Start identifying future projects which will result in energy savings. Energy price escalation combined with carbon taxes can create shut down situations for many businesses
Contact us Lee Swan Manager : Sustainability & Climate Change Strategy email@example.com 072 812 0751