The Climate Change Act: What you need to know
On Tuesday 23 July, The Climate Change Bill was signed into law by President Cyril Ramaphosa making it an official Act. We’ve put together a summary of the key implications of this new Act. This means that South Africa now has a law that is specifically aimed at developing a national response to climate change.??
Key takeaways?
The purpose of the Bill is, “To enable the development of an effective climate change response and a long-term, just transition to a low-carbon and climate-resilient economy and society for South Africa in the context of sustainable development; and to provide for matters connected therewith.” (Read the full Bill here).??
South Africa’s national climate mitigation plan consists of six components – of which five are addressed by the Bill. The sixth, a carbon tax, is administered by National Treasury. These components are:??
Providing for a coordinated, nationwide response?
The Minister of the Environment is now tasked with coordinating with ministers from other sectors such as agriculture, energy, and human settlements, to determine sectoral emissions targets and mitigation plans. There are also implications for provinces and municipalities who will now have obligations to assess and map climate risks and vulnerabilities, such as extreme climate events like the KZN floods in 2022.??
Additionally, under the Act, the Presidential Climate Commission (PCC) will be made into a statutory body that will help formalise the institution and potentially give it a greater political voice.??
What does this mean for business??
Companies that are deemed to be high emitting will be allocated a carbon budget. The bill does not prescribe any penalty for exceeding this budget but the DFFE and National Treasury plan to amend the Carbon Tax Act (CTA) so that companies exceeding their budgets will be expected to pay a higher rate of tax on those excess emissions.??
Some criticisms of the Act??
This last point has been criticised by Just Share, who say that the penalties for exceeding carbon budgets are inadequate. They also point out that amendments to the CTA could take years to take effect and already the CTA allows for a significant amount of carbon emissions to be tax free or taxed at very low rates. This means that there is little to no impact on emissions despite the harm these emissions cause to the environment.?
In summary?
Overall, the Climate Change Act seems to promise a truly coordinated national response to climate change. It gives enhanced powers to the environment minister to work across government sectors to ensure that multiple industries contribute to climate change adaptation and mitigation. The additional obligations for provinces and municipalities also help to ensure a multi-level national response. It remains to be seen exactly which businesses will be affected by the allocation of carbon budgets and what the tax implications will be.??
Other sources used for this article:?
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Brooke L. : Brooke Leaf-Wright, sits within the ESG team at RisCura and each week she will bring you stories highlighting key issues and themes in the world of Responsible Investment that have caught her attention.
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