What South Africa’s new climate change laws mean for businesses
The Climate Change Bill was recently signed into law by President Cyril Ramaphosa – which is set to greatly impact the private sector in South Africa with penalties for non-compliance.
“The Act establishes, for the first time, a comprehensive South African legal framework for the regulation of the impacts of climate change, with the ultimate overall goal of achieving net-zero by 2050,” explained legal experts at Bowmans Claire Tucker and Marga Jordaan.
Broadly, South Africa is looking to act on its various international climate agreements, which aim to limit global temperature increases to below 2°C, seeking a target of 1.5°C by transitioning toward a low-carbon economy.
Current laws require industries to report annually on their pollution prevention efforts if they emit significant greenhouse gases.
Now, the new laws shake things up.
As Ramaphosa describes, it “enables the alignment of policies that influence South Africa’s climate change response, to ensure that South Africa’s transition to a low carbon and climate resilient economy and society is not constrained by policy contradictions.”
Some of the key provisions of the Act include:
- Mitigation: Establishing a national greenhouse gas (GHG) emission trajectory, requiring several Ministers to develop and implement measures to address climate change through sectoral emission targets, and mandating major emitting companies to comply with mandatory carbon budgets.
- Adaptation: Involving cooperation with provincial and local governments and communities to address climate adaptation challenges.
It is important to note that the Act will only come into operation on a date fixed by the President by proclamation in the Government Gazette.
Sectoral emissions targets
“The most significant impact of the Act for the private sector is the framework for the regulation of greenhouse gas emitting sectors,” explained Tucker and Jordaan.
The Act provides that the Minister must:
- Within one year, sectors and sub-sectors emitting greenhouse gases to have published emissions targets;
- Develop sector-specific emissions frameworks and targets in consultation with relevant Ministers;
- Publish a list of greenhouse gases contributing to climate change;
- Assign a carbon budget for a minimum of 15 years to entities involved in emitting listed greenhouse gases.
“Carbon budgets have been contemplated since the publication of the National Climate Change Response White Paper in October 2011 and will finally come to fruition in the Act,” explained the legal experts.
A person to whom a carbon budget has been allocated must prepare and submit to the Minister, for approval, a greenhouse gas mitigation plan.
Industries with pollution prevention plans will be considered as having greenhouse gas mitigation plans for the first five-year cycle, with current regulations remaining effective until amended or repealed.
Offences and penalties
The legal experts outline that the Climate Change Act includes the following noteworthy penalties.
The Act makes it an offence to fail to:
- Provide accurate data, information, documents, samples or materials to the Minister as required;
- Submit a greenhouse gas mitigation plan if allocated a carbon budget;
- Follow the Minister’s notices on synthetic greenhouse gas reduction;’
- Adhere to measures for reducing or eliminating synthetic greenhouse gases.
If convicted of an offence, a person is liable to a fine not exceeding R5 million or to imprisonment for a period not exceeding five years.
This is increased to R10 million and 10 years for a second or subsequent conviction.
“Missing from this list of offences is any consequence for a failure to achieve a carbon budget or sectoral emission target,” said Tucker and Jordaan.
“This would arguably do the most to assist South Africa to achieve emission targets necessary to achieve net-zero,” they added.
The Act mandates reporting on measures to stay within carbon budgets, but doesn’t penalize for exceeding them. However, under the Carbon Tax Act of 2019, higher greenhouse gas emitters will face increased carbon tax liabilities.
Now considered a specific environmental management act under National Environmental Management Act (1998), failing to meet emission targets or carbon budgets may lead to compliance notices that enforce adherence.
Way forward
“The Act is a welcome attempt by the Government to reduce greenhouse gas emissions and achieve the ultimate goal of net zero by 2050,” said Tucker and Jordaan.
“However, without stricter penalties for a failure to comply with the emission targets and carbon budgets set for the specific sectors, its real effect may still leave net-zero some way off.”
“Until the sectoral emission targets and carbon budgets are published, businesses should continue to submit progress reports on their pollution prevention plans, which will form the basis for the greenhouse gas mitigation plans in terms of the Climate Change Act,” added the experts.
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