Climate Change Bill: Minister & DFFE briefing; SAWS & SANParks Quarter 1 and 2 2021/22 Performance

Meeting report

The Chairperson asked if there were any apologies.

Apologies had been received from Ms Barbara Creecy, Minister of Forestry, Fisheries and Environment (DFFE), who would join later, Deputy Minister, Ms Maggie Sotyu, and the Director-General, Ms Nomfundo Tshabalala. Apologies were also received from the Chairperson of the South African National Parks (SANParks), Ms Pamela Yako.

Mr N Paulsen (EFF) asked to be excused from the meeting earlier because he had to go to mosque to pray for the country. He asked what the purpose of the meeting was if the Minister and the Chairperson of the SANParks board were not present.

The Chairperson said that the Minister had submitted her apology, and the SANParks presentation was led by the board, so Ms Yolan Friedmann, a board member, had been delegated to stand on her behalf. The Minister would attend after she was finished with another meeting. All the accounting officers of the presenting entities were present.

She asked who the leader of the delegation from the DFFE in the Minister's absence was because the majority of the people on the given list were not in the meeting.

The Committee Secretary said that she had raised the given list issue with the DFFE.

Mr N Singh (IFP) said that the attendance arrangement by the DFFE was tenuous. Could they focus only on the entities with representatives? The rest could be postponed when they had the relevant people.

The Chairperson said that the Committee could not be taken for a ride. She needed an explanation from Mr Nicholas Leontsinis (Stakeholder Engagement/ Research Consultant, DEFF).

Ms Skumsa Ntshanga said she was representing the Deputy Director-General (DDG) responsible for biodiversity and conservation. She had noted the serious concerns that were raised by the Portfolio Committee and would take the responsibility for communicating this issue with the Director General (DG).

Chairperson’s opening remarks

The Chairperson introduced the three presenting teams. The first two teams -- the South African Weather Service (SAWS) and South African National Parks (SANParks) -- would be presenting on their first and second quarterly and financial performance reports. The third presentation was by the DFFE on the Climate Change Bill, which aimed to develop an effective climate change response and a just long-term transition to a low carbon and climate-resilient economy and society for South Africa.

Poor people were the most vulnerable and worst affected due to adverse climate change impacts. Rising temperatures and extreme weather events were already taking a heavy toll on South Africa, especially through droughts and floods and a shortage of potable water. The negative effects of climate change on livelihoods would affect the poor and the most vulnerable, especially women, children and people living with disabilities. It was in this regard that the Committee had considered the tabling of the Climate Change Bill in its legislative programme.

SANParks performance and financial report

Ms Yolan Friedmann introduced the team from SANParks, and the presenters as Mr Dumisani Dlamini, Acting Chief Executive Officer (CEO) and Ms Irene Singo, Acting Chief Financial Officer (CFO).

There were four programmes at SANParks:

Programme 1 - Sustainable biodiversity and cultural heritage across land and sea.

92% of the targets were achieved, and 8% was work in progress.

Programme 2 - Improvised and diverse tourism.

20% of the targets were not met. No new and diverse tourism products were implemented to attract domestic visitors due to delays in the Kruger National Park (KNP) zonations required for the Punda Treehouse, the Shingwedzi Treehouse and the Pafuri Project. SANParks said that the KNP zonation would be approved in the third quarter.

Programme 3 - Sustainable socio-economic development programme that ensures delivery of benefits to land claimants, historically disadvantaged communities and the people of South Africa.

20% of the targets were not met. For the goods and services contracted for procurement above R500 000, only one of five exempt micro-enterprises (EMEs) and four out of five qualifying small enterprises (QSEs) were targeted due to late execution of the planned projects. SANParks would implement all the projects by the end of the financial year.

The 40% of the annual implementation budget for quarter one had not been achieved and would be finalised during a workshop in quarter three. The implementation plan would be approved by the executive committee in quarter three.

5% of activities in the beneficiation scheme plan in the KNP could not be implemented due to processes that were beyond SANParks's obligation. Therefore, the target was removed from the annual performance plan (APP) during the mid-term review.

Programme 4: Sustained and transformed organisation through revenue, people systems and business process.

14% of the targets were not met. R15.5 million of the R20 million revenue raised through resource mobilisation was achieved because some of the funding agreements were completed only at the end of quarter two, and the funds would reflect in SANParks's financial statement only in quarter three.

The projects in the Digital Strategy Development Plan were not done and had to be reprioritised because of the budget adjustments in quarter two. The plans would be submitted to the executive committee in quarter four.

For the six months ending 30 September 2021, SANParks realised a net cash deficit from operating activities of R254 million. The net cash deficit was mainly due to the decrease in government grant funding and other donations.

Ms Singo confirmed that SANParks was currently operating at a deficit level, but added that it hoped that by the end of the financial year, it would not have a deficit.

Discussion

Mr D Bryant (DA) said it was disappointing that an entity such as SANParks, in terms of conservation and the future of South Africa, was not efficient. SANParks needed to come up with creative and innovative solutions to deal with their issues, rather than always quoting COVID-19 lockdown restrictions for not meeting their targets. It was quite common to set stretch targets in the private sector, rather than easily achievable targets - could SANParks consider stretch targets to push the entity beyond a comfortable space?

He said the targeted 4 000 hectares to be added to the national parks was very low. How did SANParks arrive at this target? What was the target for the next five years? Could they provide a list of the management effectiveness tracking tool (METT) corrective actions referred to in Slide 6? What was the total number of degraded hectares of land that would require rehabilitation? What percentage of land was currently under rehabilitation? What was the total area requiring rehabilitation?

Mr Bryant asked for more details on the following:

The total area of the degraded wetland that requires rehabilitation and the areas of the wetland that was under rehabilitation.
The completion date for assessment of all the parks in terms of climate change vulnerabilities.
The basis of the numbers used to calculate the percentage of the annual increase of the rhino populations in the KNP. He said that Dr Luthando Dziba had recently said that SANParks did not know how many rhinos there were in the KNP.
The setting of the number of rhinos poached. Would it not make sense to look at how many rhinos were saved, rather than poached? Also, why a fixed number, why not a percentage?
Which unfilled posts at SANParks were budgeted for in terms of current KNP funding?
What did "resource mobilisation" mean?
On the target of the R4 million in revenue raised through wildlife sales, who was sold the white rhinos at KNP?
What was the human capital and management strategy?

Mr Bryant asked why it was necessary to review the business processes and reengineering of programmes, because according to the presentation, things were running smoothly at SANParks. What would the business review achieve? Was there a fully staffed audit team at SANParks? What was the target for the quality of internal audits? What was the current maintenance backlog? What were the pressing recapitalisation issues faced by the SANParks? When would the draft five-year maintenance and recapitalisation plan be approved? Why was the Committee getting conflicting reports on SANParks's resources - sometimes they were told that they were adequate, while at other times they were told that they were thin. Did SANParks have adequate resources to spend? Why had the percentage in the reduction of water consumption in KNP been removed as a target? How did SANParks invest its cash?

Mr Paulsen said that SANParks was heavily reliant on tourism for income, mostly from the international market. During the COVID-19 pandemic, South African citizens were encouraged to explore their own country. Was the current revenue from local or international tourists? He agreed with Mr Bryant that South Africa was affected by geopolitics, and asked if a survey was conducted to establish why, or why not, South Africa was a favourite travel destination for tourism.

He said that the issue that affected tourism lay outside SANParks's hands. For example, tourists were concerned about crime, the environment and road conditions. What were the issues that tourists were concerned about regarding South Africa? If this was known, was this information fed to the relevant ministry, such as the Department of Transport? Why did they require the land to be rehabilitated? Was it routine rehabilitation or because of neglect? What was being done by SANParks to address the shortage of employment in South Africa?

Mr Singh asked what SANParks did to encourage and incentivise local South Africans to visit the national parks because the private game reserves had reduced the accommodation prices drastically from dollar to rand-based charges. He asked for information on the additional funds SANParks had got during this pandemic. were there any particular circumstances that caused the two managers to leave the wetlands programmes at the same time? How far were the investigations on the suspended former CEO, Mr Fundisile Mketeni?

Ms A Weber (DA) repeated the need for an update on Mr Fundisile Mketeni’s investigation.

Ms T Mchunu (ANC) asked SANParks to adjust their budget, rather than taking an accumulated deficit into the new financial year.

The Chairperson asked about the implementation of the KNP beneficiation scheme - was the target removed because SANParks could not implement it? Why were the funding agreements completed only towards the end of the second quarter? How did they plan this target without anticipating the challenges? SANParks had been asked to achieve a zero target for elephant poaching, considering the number of resources to curb rhino poaching. Why were they not winning this war together? Was it due to a lack of human resources? Did it make sense that SANParks was being outwitted by poachers, considering the KNP budget was the entire budget of the environment agency? How could animals die under SANParks, when the entity existed to protect them?


SANParks's response

Mr Dlamini said that issues that were not responded to in this meeting would be responded to in writing.

Census methodology calculated a rhino population reduction as a fixed number, rather than a percentage. It was difficult to put a percentage, as opposed to a fixed number. SANParks used a baseline to determine how many rhinos were lost, based on the statistics of the previous year to set anti-poaching targets. The nature, size and limited resources at KNP made it impossible to monitor all the rhinos. There was insufficient intelligence in terms of knowing where the poachers were going to hit, even though they were working with other law enforcement units such as the South African Police Service (SAPS). The introduction of new technology would aid in achieving the zero poached rhinos target.

He said there were about 87 ranger posts vacant in KNP, with 51 and 36 posts remaining vacant for the past five and three years respectively. There was currently no budget to fill ranger vacancies in SANParks, including the coming financial year. They had lost a number of people in the organisation, and could not replace them due to insufficient money.

SANParks had a small unit of about four people in the finance division who contacted local and international resources to conduct mobilisation research. They set a target on how much funding they were able to mobilise, and then develop a number of activities that would help us to reach that particular target. Not many people pour money into public entities like SANParks. The money came mostly when they were dealing with particular courses, such as anti-poaching or the conservation of a specific area. Funding also depended on the objectives of the donors, so investments occurred when there was a mutual objective between SANParks and the donors. SANParks had a resource mobilisation strategy approved by the board in terms of fund sourcing. The pandemic had made it very difficult for the entity to raise more money because most donors and philanthropists were focusing more on humanitarian, rather than conservation courses.

SANParks had thousands of employees, therefore the human capital strategy provided a reference for the entity to lead effectively. There were many elements to the human capital strategy, such as succession planning, staff wellness, organisational culture and workforce. There were different elements to the business process and the re-engineering of programmes -- for instance, revenue generation. Their expenditure exceeds their budget, therefore they want to deal with what they believe could be efficient in terms of procurement. The new board had introduced vision 2040, which aimed to improve the functioning and efficiency of SANParks within the control of the entity.

Mr Dlamini said the capital development plan document indicated that the maintenance was in different forms. SANParks used the money they got from the DFFE to prioritise maintenance. In the last two months, they had embarked on physical verification of infrastructure. Because of the nature and extent of the exercise, SANParks focused only on the above-ground infrastructure. Including underground infrastructure would have required more money and would have taken more time. There was a draft report that proposed the maintenance plan for management's consideration.

Apart from the DFFE grant, SANParks’s revenue relied on close to 100 % domestic tourism since the beginning of the pandemic. He was not aware of any survey that had been done to ask for feedback from the international tourists. However, tourists took into consideration how long it would take to get to South Africa and usually went to a closer national park from their point of departure. South Africa was also competing with other African countries in attracting tourists. The tourism products in each country also offer the tourist the key deciding factors to go to a particular country.

Land rehabilitation was routine management, so the presentation had indicated what portion of land would be covered in a particular year, based on the available funding. Most of the rehabilitation processes at SANParks were covered by the expanded public works programme (EPWP), rather than an internal budget.

SANParks was a labour-intensive organisation, but it requires skills in information communication technology (ICT). There had been a huge departure of skills in supply chain management (SCM), marketing, finance and technical services. The challenge was that many people who were coming to the entity demanded a bigger salary, so SANParks failed to retain or attract different skills due to budget constraints and salary levels.

There were massive discounts of up to 40%, to encourage the locals to come to SANParks. They had launched an "Office away from an office and a home away from office" campaign to encourage people to come work in an environment that encourages productivity.

SANParks had received R9.61 million in 2020 when COVID hit the country to evacuate the visitors and had closed all the parks. This amount had helped them to bridge the gap because they had lost about R2 billion in revenue. Without assistance from government, they were not going to be able to pay any salaries because the salary bill was about R1.3 billion. They were just fortunate that SANParks had R600 million in free cash flow before COVID hit, therefore the funds came in handy when the financial resources were about to be depleted.

Mr Dlamini said that the fiscal deficit at SANParks was concerning, and the only way to reduce it was through a capital injection for operations and infrastructure, and long term financial stability.

He would check the KNP beneficiation scheme target removal. They were currently working towards a signed beneficiation scheme for implementation. The resource mobilisation had been completed at the end of the quarter because the process required negotiations, and the completion relied on the donor’s timelines.

He said it would be very difficult to commit to a zero rate of poaching, as he could not even imagine what kind of human capital and financial resources would help SANParks reach this target. They had lost fewer than five rhinos in other national parks in the past five years because the areas were small and manageable. KNP was very large and very hard to manage, coupled with the limited number of rangers. 50% of the KNP budget went towards staff salaries, while the remainder went to park management. The KNP was also a serious strategic business unit, so it cross-subsidises many other parks within the organisation.

He said that animals died for different reasons -- for example, through poison and traps. The veterinary services made sure that fewer animals died, but there were uncontrolled causes that they could not prevent. They could learn only from the causes, and then improve how they could prevent further animal deaths.

Ms Jill Bunding-Venter, General Manager: Strategy, said that SANParks was planning to include 163 000 hectares for the next five years to contribute to the national land inclusion plan. METT stood for management effectiveness tracking tools and was used in conjunction with the DFFE to look at the effectiveness of the management of particular parks.

SANParks planned to conclude climate change vulnerability assessments by 2030. It seemed like a long time, but they were building capacity and were aiming to complete the parks in 2025.

She said the water reduction method had been removed from the APP because it had been moved to the green energy strategy that had already been completed. The green strategy would encompass water and fossil fuels reduction and waste management.

She added that SANParks appointed small, medium and micro enterprises (SMMEs) and full-time staff including women and people living with disabilities to address unemployment. SANParks also attracted domestic visitors through the Away for Repair series on TV, and stokvel and travel club campaigns.

Ms Singo highlighted that SANParks had not received new money in the current year. They had converted the infrastructure budget into an operational budget. SANParks was not allowed to keep a huge amount of surplus without the National Treasury’s approval. Their investments were short term and were governed by policies. COVID-19 had made it difficult to invest cash due to the reduced generated revenue. To decrease the deficit, SANParks had stretched its revenue target for the upcoming financial year.

Ms Friedmann said that the investigation involving the suspended CEO was being dealt with before the new board, and the process was being run by an independent chairperson. The deliberations had been concluded and they were now waiting for the decision of the chairperson.

She added that the two white rhinos had been sold to private owners through rigid and controlled agreements.

Follow-up discussion

Mr P Modise (ANC) asked how far the investigation of the suspended CEO of SANParks had proceeded.

Ms Friedmann said that she already replied to that question. All the criminal charges had been dropped, but there were disciplinary management requirements from SANParks. The previous board had initiated the ongoing secondary process.

Ms Weber asked how much it had cost SANParks to have three people on six-months special leave.

Mr Singh asked SANParks to assure the Portfolio Committee that they would inform the Chairperson as soon as the suspended CEO matter was concluded.

Mr Modise asked for rough estimates of the timelines for the decision to conclude the matter on the suspension of the three people.

Ms Friedmann said she did not have the numbers with her, but committed to submit them in writing by early next week. They had to allow the independent chairperson to run their own process, therefore we would submit the recommendations to the Committee only once SANParks received the report.

SAWS performance and financial report

Ms Feziwe Renqe, the newly elected Chairperson of the South African Weather Service (SAWS),
said that SAWS had seen commendable performance for the current financial year, and had realised achievements in each of the quarters presented today. It had managed to achieve 84.62% of its targets. Through the implementation of its annual performance plans, SAWS had ensured that life-saving weather information critical for individual decision making and various sectors was accessible and disseminated as required. SAWS contributed towards various international conventions, inclusive of those that addressed international civil aviation and safety of life at sea.

Programme 1 - Weather and Climate Services.

The work done in the above area had translated to achievements of all its targets under in the first two quarters. SAWS, as a scientific institution, continued to generate scientific insight and innovation relating to meteorological products and services. The expansion of knowledge and intelligence related to atmospheric sciences remained their priority.

Programme 2 - Research and Innovation.

They had missed the target of generating a certain number of research outputs in the second quarter. Despite this, management was confident that this would not be compromised. The foundation of SAWS was infrastructure, technical capacity and technological competitiveness.

Programme 3 - Infrastructure and Information Systems

Optimal management of infrastructure and information systems was key to SAWS' value chain. Two targets had been missed, but the management of SAWS continued to apply corrective measures to remedy the infrastructure challenges as well as reassuring the recapitalisation of its critical infrastructure. Radar infrastructure availability had increased from 61 % in the first quarter to 76% in the second quarter. SAWS management had ensured that supporting infrastructure to the radar network was adequately maintained to ensure its optimal operation and the continued improvement of its availability. They had continued to experience challenges with the priority areas at air quality stations entrusted to SAWS due to instrument failure caused by intermittent power failure surges. The recapitalisation of these station networks was ongoing, including continuous stakeholder engagements.

Programme 4 - Administration

SAWS continued to work towards sound cooperative governance that created an environment that was conducive to high performance, career development, and attracting and retaining critical and scarce skills. The generation of revenue from multiple sources remained a key objective for the functioning of SAWS, given fiscal constraints. There was a slow generation of unregulated commercial revenue in quarters 1 and 2 . SAWS management had developed a revenue turnaround development strategy as part of its commercial strategy that aimed to increase revenue and tap into other markets. Successful implementation of this plan was aimed at increasing the achievement of the sector in subsequent quarters and years to come.

SAWS also targeted people living with disabilities to ensure that there was inclusiveness and representativity and that the employment equity targets were met. It was pleasing to note that there was a drive towards active recruitment of women for management positions, to have a balanced representation according to the Employment Equity Act.

The presentation of the SAWS quarterly performance reports were delivered by Mr Ishaam Abader, CEO, and Mr Norman Mzizi, CFO.

Presentation summary

Only the targets for weather and climate services were achieved, while the rest of the programmes’ targets were partially achieved.

11 of 13 research outputs were achieved under the Research and Innovation Programme due to the slow processing of publications into journals. SAWS would place the outstanding publications in physical journal editions.

75% of the targeted 85 % availability of global atmospheric watch Infrastructure was achieved under Infrastructure and Information Systems due to (a) no ozone soundings due to depletion of stocks, (b) old ultraviolet B (UVB) sensors at Irene and Cape Town International Airport, and (c) nitrous oxide instrument failure. SAWS would procure the ozone-sounding stock upon completion of the tender process and would obtain a nitrous oxide instrument. Also, 69 % of 85 % of priority areas' quality stations available on the South African Air Quality Information System (SAAQIS) met minimum data requirements due to ongoing power failures, instrument failure and damage. SAWS said that there was an ongoing network recapitalisation process.

93% of 2% persons living with disabilities were hired under Programme 4 (administration) because of the lack of response to vacancy advertisements. SAWS vowed to keep on continuously stating preference for people living with disabilities in vacancy adverts.

SAWS had reached R6.2 million out of the targeted R7.5 million of unregulated commercial revenue under the administration programme due to a lack of revenue from the regional training centre and lower revenue from information fees during the dry winter season. SAWS would ask the National Treasury to increase the limit for repairs linked to commercial contracts.

The total actual revenue for the period ending 30 September 2021 had amounted to R194.65m against the budget of R216.73m, resulting in a negative variance of R22.08m for the period. Expenditure incurred for the period, excluding depreciation and amortisation, amounted to R210.47m, which was 0.6% above the budget of R209m.

Discussion

Mr Singh asked SAWS to expand on its donor funds.

The Chairperson said that SAWS had done well in the first quarter. When were they reporting the partial achievement of 69% of priority areas' air quality stations available at SAAQIS meeting minimum data requirements, they should also indicate the number of monitoring air stations for the sake of clarity and completeness. For example, 69% of what number? Why were they not planning for 100% radar availability? If radar infrastructure availability was critical for local and international aviation, what could have gone wrong with only 70% radar infrastructure availability? Did this mean that for 30% of the time when radar infrastructure was unavailable, they did not know what was happening in South Africa’s air space? What could have happened during the time of radar unavailability? What was unregulated commercial revenue? How could revenue be unregulated?

Ms S Mbatha (ANC) said she was concerned about the disturbances that occurred during data collection because of load shedding. How were they planning to permanently correct that?

SAWS' responses

Mr Abader said that SAWS had a process underway and had procured some uninterruptible power supply (UPS) to deal with the issue of intermittent power supply. Every time the power went out, the instrument was impacted. Subsequently, there was a power surge when the power came back which impacted the calibration. The machine then got sent off for recalibration and that was when SAWS lost data. He was not sure if there was any permanent solution for calibration issues.

Mr Abader said that there were significant changes in the current weather patterns - there had been extreme weather events developing. The national framework for climate services, in collaboration with the DFFE, would feed into the overarching issues contained in the Climate Change Bill, with specific reference to climate adaptation. There were several international donors that the CFO, or Dr Mary-Jane Bopape, would reflect on.

Although the performance in quarter one had dropped, it was still above 80%. The 69% was referred to in the presentation as an area that had not been achieved. Several stations were reported under the DFFE and were fed by SAWS stations. There was usually a report presented by the DFFE to indicate the number of stations that belonged to the state and the private sector. The information could be supplied or reported to via the DFFE or SAWS.

Mr Abader said targets were set in terms of international conventions for countries in relation to the achievement of some of the reporting targets. South Africa had managed to stay above the minimum threshold in terms of the targets. SAWS did not aim for 100% radar availability because no country achieved 100%. SA was amongst one of the better performing countries in its targets and achievements. He added that he thought 70% radar availability gave SAWS sufficient information. It also used alternative measuring abilities when radars were down through satellite feeds. SAWS was internationally connected to European satellites to supplement radar information.

Regarding unregulated commercial revenue, the Act allowed SAWS to operate their own revenue. The distinction had been drawn because aviation revenue regulations indicated how much revenue they had to earn, and the processes to calculate that revenue. The commercial revenue was not as stringent, so there was a bit of latitude in terms of how they earned that commercial revenue.

Mr Mnikeli Ndabambi, Executive: Infrastructure and Information Systems, said South African predicted weather patterns were showing changes as compared to many years ago. There was an increase in severe weather events (intensity and frequency). The dry spells were predicted over longer periods. For the last five years, summer areas had been getting less rain, although the La Nina period from spring last year had relieved the country. There were hailstorms, floods and storm surges which had indicated that the weather predictions were more reliable in South Africa. However, the rainfall onset was uncertain - rain sometimes came early or too late, which affected crop production. The grazing land was decreasing from the west as predicted.

He said 180 stations were reporting to SAAQIS, of which136 were owned by the state and the remaining were owned by the industry. The satellite measurements overlap with the radar network at about the 200-300 km range. The radar was very important because it offered more details and real-time data information than satellite observations. With radar, SAWS was able to offer exact weather warnings when there was a storm.

Mr Ndabambi concurred with Mr Abader that power outages were not a concern for calibration. Some of the radar equipment took time to stabilise after the power came back, meaning that one did not get quality data immediately the power was back. He added that SAWS was enhancing the backup systems -- for example, through UPS -- to build redundancy. Hydrogen generators also supported the radar system during power outages. The only challenge with the hydrogen systems was the increased consumption of diesel when there were longer power cuts.

Dr Mary-Jane Bopape, representing Dr Jonas Mphepya, Executive: Weather and Climate Services, said that SAWS had funding from European governments, such as Netherlands government projects. Other projects were funded by the European Commission, the Water Research Commission, the National Research Foundation, the Department of Science and Innovation, De Beers Mining and the United Kingdom (UK) government.

DFFE presentation on Climate Change Bill

The Chairperson said that South Africa was one of the world's most carbon-intensive economies. The economy of the country relied on coal for electricity generation. She welcomed the Minister and her team.

Minister Creecy said that the Climate Change Bill was long overdue. Since 2019, when she was appointed Minister for this portfolio, one of her priorities had been to bring the Climate Change Bill to Parliament. Scientific research had indicated that Sub-Saharan Africa was one of the regions in the world that was vulnerable to climate change. Climate variability posed a threat to human population and biodiversity.

Over the last two years, South Africa had installed considerable infrastructure to combat greenhouse gas emissions, to deal with the impact of climate change on the several vulnerable sectors of the economy, and to put in mechanisms for domestic and international financing for all the changes and investments that would be required. The Climate Change Bill would offer a legislative framework for all of the South African work on climate change. Until the Bill was effective, they could rely only on cooperation and goodwill to implement all of the measures that they were working on. The local and provincial governments had cooperated very well with them, allowing the DFFE to make the strides they had made. She understood that the changes required were difficult and would force everyone to change their daily routines for the next 20 - 30 years. These changes required an overarching legislative framework that guided how those changes needed to be implemented and how governments at different levels must operate to effect the changes.

Mr Tlou Ramaru, Chief Director: Climate Change Adaptation, DFFE, said the National Environmental Management Act, 1998 (Act No. 107 of 1998) (NEMA) required the Climate Change Bill to be read, interpreted and applied in conjunction with that Act. The Bill would be a specific environmental management act, as defined in the NEMA.

Cabinet had approved the establishment of the Presidential Climate Commission. The Bill was published on 8 June 2018 for public consultation, for a period of 60 days. It was consulted through the National Economic Development and Labour Council (NEDLAC). NEDLAC would like the term "adaptation" to be modified so that it referred to industry and economic adaptation. The definition must not be regional but must be consistent with the United Nations Framework on Climate Change (UNFCCC) definition.

(Please consult the presentation for more information on the Climate Change Bill.)

Discussion

Mr Singh said that he shared the excitement with the Minister regarding the Climate Change Bill. “Maybe our grandchildren will have an earth to live on that is not destroyed by the greed of capitalism." He was also pleased that once the legislation had been considered through various consultation processes, there would be elements that would have to be applied by the government and state enterprises to ensure that they did not have to wait for legislation to do some of these things because they did not have the luxury of time. The Climate Change Bill had been publicised in 2018 for 60 days, but it had taken years to get here.

Mr Singh said that it was the responsibility of the Portfolio Committee, on behalf of Parliament and the people of South Africa, to ensure that within the next few days, or by the time they had the next meeting, they came up with firm time frames on how they were going to deal with this Bill as a Committee in terms of public consultations, and oral and written representations. He said they could develop all sorts of legislation, but if they did not provide in the legislation the ability to enforce it, and the ability to ensure that there were funds that followed the functions, then they would really not be achieving their objectives. He said that they had to be realistic, and he hoped that some of the points he had made were taken on board by the Portfolio Committee as they moved forward with the Climate Change Bill.

Ms Weber said in the briefing from the Minister and the team, she could see that the DFFE had already consulted public participation for an intensive 60 days, but understood that this bill was going again for public participation. Could they perhaps ensure that these in-person hearings in all regions and metros focus on areas such as Mpumalanga, Newcastle and Limpopo, which contribute significantly to climate change through coal utilisation? Could they ensure there were correct translations and interpreting services available at public participation venues so that everyone could actually understand what this was about? She realised that virtual meetings reached only a certain small number of people. Meeting invitations must be clear and very broad to the community, especially the vulnerable communities that had been affected by climate change.

She said that timelines and due dates were extremely important for setting carbon budgets and sectoral emission targets in the Climate Change Bill. What were the plans for the timeous implementation of these important mitigation mechanisms? Did the DFFE have any plans to support the initiative to accelerate the implementation of climate change adaptation measures more urgently than those provided for it in the Bill? Could the Department provide clarity on the carbon tax as a mechanism for enforcing carbon budgets? Why was there a failure to provide a greenhouse gas mitigation plan -- the only offence in the Bill? What about the contributions of other provisions of the bill or actions that contribute to the objections to this bill?

The Chairperson asked what difference in functionality was between the Presidential Climate Commission and the inter-ministerial committee on climate change. Did the presidential climate commission (PCC) have some other structures? Was the PCC not supposed to be housed at the DFFE? Why did they separate? Why was it heading towards an entity or another structure? Why did the Climate Change Bill take so long to come back to Parliament?

DFFE's response

Minister Creecy thanked the Portfolio Committee for supporting the processing of the Climate Change Bill in record time. The Minister said that when she arrived at the DFFE, she was informed that the bill was stuck in NEDLAC. The issues and concerns were on the relationship between the carbon budget and the carbon tax. There would have been a desire from the private sector to be sure that there would not be double dipping with regard to that, so it took time to resolve those issues. She had had a number of meetings with NEDLAC partners, and they had made significant progress in unblocking the issues.

The Minister said that the carbon budgets were mechanisms required by the UNFCCC. When countries made their nationally determined contributions (NDCs) to reduce greenhouse gases, they gave themselves a carbon budget. The targets were achievable on one hand by working out how a country’s carbon budget was divided amongst everybody who creates carbon gases. On the other hand, one could work out how the reduction of greenhouse gases was divided amongst the different sectors of the economy that were responsible for emitting greenhouse gases, given the scientific reports and the fact that NDCs indicated that the country’s greenhouse gas reduction would begin in 2025.

The Minister said that the important questions to ask were what the carrots and the sticks were that would motivate for change. “I think it was the view of National Treasury that through the carbon tax mechanism, the country would have both a carrot and a stick. Emitters would be incentivised to reduce their greenhouse gases and if they did not, they would face increased production costs.” She said the carbon tax represented a domestic financing mechanism for change because collected carbon taxes supported the transition process. “I think that what is really important is how the carbon tax and the carbon budgets will synergise, and that was important work which we had agreed when it was going through NEDLAC  -- that there needed to be that important synergy."  They had already begun the voluntary process of allocating carbon budgets, even though it was a complex process because South Africa had not counted their emissions. They also had not had to report in the public domain about their emissions -- not just as sectors, but as individual enterprises.

She thought the decision by National Treasury to postpone phase two of the carbon tax until 2026 would give them time to work on all of those mechanisms. They would also have to look at the transitions because as a country they had a broader commitment to a just transition. They wanted to make sure that as they transitioned they did not have a negative impact on jobs, production, and the economy, because they understood the complexities that existed in that area.

Minister Creecy said that the Climate Commission would become a statutory body. It was currently an emergent organisation, but it would become a statutory body and as such, it would have a life of its own as a statutory body. DFFE saw itself as the midwife of that statutory body, and they had begun a process of enabling its development. She highlighted that the Climate Commission would not take over the role of government, because the role of the government was to regulate society and to ensure that government policies and programmes were implemented. The role of the Commission was to bring together divergent interest groups in society to reach as close to sufficient consensus as possible on the very complicated issues that would confront all of them as they transitioned to a climate-resilient society and a low-carbon economy.

She said that government could regulate, but the change did not happen inside government. The change happened in the private sector and the communities, and it happened for workers, so no one in society was not impacted or who was not a part of this change process. DFFE believed that a transition to a low carbon economy and a climate-resilient society must be a just transition that actively involved everyone who was going to be affected by the transition.  This was because it was possible that the climate transition could be an unjust one, and that communities and workers who had made the least contribution to greenhouse gas emissions could actually pay an economic and social price.

The Minister stressed that South Africa needed to be a carbon-neutral economy and society by 2050. At the moment, 90% of the country's energy was generated from coal. The direct jobs in the coal value chain were close to 90 000, and the indirect jobs would be three or four times that number. They understood that from Delmas to Nelspruit, there was an economy that was dependent on the coal value chain. DFFE had to ensure that as they transition and as they met their targets to reduce greenhouse gas emissions, they did not throw these workers into the street, and did not create ghost towns in these communities. There must be justice, and the definition of justice could not be that somebody somewhere in government had made a decision about how this transition would happen and then imposed it on these communities, or somebody somewhere in the private sector had made these decisions and imposed them on their workers. DFFE believed that workers, communities, the private sector and non-governmental formations had to be an active part of researching, developing and implementing the just transition that must govern society. “

That was what the Climate Commission was there for - it was the mechanism to enable the implementation of a just transition. The Commission would visit the communities in the fossil fuel chain over the next couple of months, and these communities would be engaged on their understanding of climate change and how they would like to be included in the transitional processes. The government would implement government policy laid down clearly in the Climate Change Bill. They were already implementing this Bill, but they realised that unless one had a legislative framework, anybody could come along tomorrow and say they were not going to do this anymore. That was why the legislative framework was very important, to ensure that there was policy certainty and a proper legislative environment to govern the processes that would be taking place.

The Minister said that Cabinet had various sub-committees, but felt that one did not have to legislate that there must be inter-ministerial committees because the Cabinet system made provision for that. However, it was always possible within the Cabinet system to have ad hoc committees that would report to the President on any matter that he considers to be important. For example, there was a committee that was looking into the feasibility of the US$8.5 billion offered to DFFE by some of the developed countries at COP26. The ad-hoc committee would involve DFFE, National Treasury, the Department of Mineral Resources and Energy, Public Enterprises, etc. The ministries would be part of it because they had an important role to play in understanding how this process would operate if the Cabinet were to accept the offer.

Mr Ramaru said that the Inter-Ministerial Committee (IMC) had been one of the key points of engagement during the NEDLAC process. This had been clarified, so it was no longer in the current version of the Bill. The issue around the synergy between the carbon tax and the carbon budget was one of the key areas of engagement, where they had agreed in principle that the penalty mechanism would be through the carbon tax, where the companies were emitting above the allocated carbon budget. He added that the technical details would be clearly articulated in some of the regulations because the DFFE would be developing a set number of regulations.

Follow up discussion


The Chairperson asked if the country had a clear understanding of how much emissions would be reduced once the Climate Change Bill became law. She was raising these questions relative to existing instruments such as the carbon tax, energy efficiency strategy and so on, as the Portfolio Committee needed to be assured -- were they just making laws irrespective of their mitigation and adaptation plans? She added that the bill needed to be clear on how the carbon budget and the tax were aligned. The country could not have two instruments -- a carbon budget and a carbon tax -- to achieve one thing, which was reducing greenhouse gases.

Mr Singh asked if there had been any kind of socio-economic impact assessment report done. If every section of the Bill that it proposed became law, what would the socio-economic impact be? He highlighted that there was a give and take in terms of a just transition -- one could not lean to one side at the expense of the other. Justice had to prevail at the end of the day. The government had to be responsible for their decisions so that when people lose employment in one sector because they want to have a clean environment, they must be able as government, the public sector and corporations, to provide alternate ways for them to earn a living.

Ms Weber asked if the Portfolio Committee could have a timeline for the public participation meetings so that the Members could confirm and attend them as the invitations went out to the various provinces. Was the Climate Change Bill using the 2015 NDC's target as an interim greenhouse gas emission trajectory? She said that it was currently not aligned with the country’s commitments under the Paris Agreement.

DFFE's response

The Minister said that it was important to understand that the country's commitment to reduce greenhouse gas emissions did rely on the Climate Change Bill. In terms of the Paris Agreement, to which South Africa was a signatory, the country had to submit revised NDCs to reduce greenhouse gas emissions to the UNFCCC every five years. In October last year, a revised NDC had been submitted. The upper limit of the revised NDC was consistent with the 2 degree temperature change target, and the lower limit was compatible with the 1.5 degree target. What SA had said to the UNFCCC was where they got to in that range would depend on the availability of financing, investment, technological support and capacity building that SA, as a developing country, was able to access. It was stated very clearly in the Paris Agreement that developed countries had an obligation to assist developing countries to meet their climate targets. The offer that was made by the developed countries in Glasgow was part of some of those developed countries saying they thought they could honour their obligations in this manner by supporting South Africa. SA was still researching the offer to understand whether it was compatible with its Treasury regulatory environment, debt trajectory affordability, and so on.

Minister Creecy said there was no incompatibility between the two mechanisms of a carbon budget and a carbon tax. In some countries, the tax applies only if one exceeds one's carbon budget, while in other countries, there is a lower level of tax that would apply if one was within one's carbon budget and a higher level of tax that would apply if one exceeds one's carbon budget. She stressed that the two mechanisms work together. The one sets the parameters within which one could emit, and the other acts as a carrot or a stick. If one emits fewer greenhouse gas emissions, one is either exempt from the tax or not taxed at all. If one emits more, one was taxed at a higher level. The compatibility of these instruments could not be answered today in this Committee. This was part of the Committee oversight process, where it would have to call National Treasury, together with DFFE, because the carbon tax fell within the international treasury domain while the carbon budget fell into the DFFE domain. The Minister said that they had discussed the issue with National Treasury and the understanding was that the instruments had to synergise so that they worked together to prevent a double burden for the private sector.

Mr Ramaru confirmed that the DFFE had undertaken seven sector vulnerabilities through a socio-economic study for the Climate Change Bill when it was undergoing Cabinet processes. The study had demonstrated some of the social and economic benefits of implementing climate change interventions. The current extreme events were coming fast and had socio-economic implications, destruction of property and infrastructure. Therefore any intervention measures would also derive a social and economic benefit. The study had also highlighted what further resources would be required to put some of the system in place, such as the greenhouse inventory. DFFE indeed had an inventory that tracked progress on how they were doing in terms of the emission interventions that had been developed and submitted to UNFCCC.

Minister Creecy advised the Portfolio Committee to visit the Komati Power Station to see the prototype of the transition. The station had conducted a socio-economic study and was repurposing the power station for renewables. How were they going to create new jobs in new value chains? How were they going to reskill and upskill existing workers to work in a renewable power station as opposed to a coal-fired power station? The Minister said that there was also a study going on at three of the other power stations that were scheduled for decommissioning in the next few years. She thought Members would find it absolutely fascinating because all the issues that they were really concerned about were being experimented with.

The Minister said that e-cars incentivisation was a very interesting issue. Her counterpart in the Department of Trade, Industry and Competition (DTIC) was extremely passionate about it. However, the issue that they were confronted with as a country was that they were committed to localisation. The vehicle manufacturing sector in SA was big and was responsible for a huge number of high quality jobs. They had to ensure that they were not importing electric vehicles, and were transitioning SA's own automotive manufacturing so that it could produce electric vehicles in their own country. She thought that part of what SA had said to the developed countries that had made the offer, was that there were three areas where they would want to utilise the money: (a) ESKOM transition; (b) development of a green hydrogen economy; and (c) research and development to support the development of an e-vehicle industry in South Africa. Towards the end of last year, Toyota launched the first hybrid vehicle manufactured in SA. DFFE was interested in transitioning the whole industry to e-vehicles.

The part of the socio-economic studies that Mr Ramaru was referring to had indicated that South Africa was experiencing a transition risk. The European Union (EU) had decided that from 2035, no internal combustion engines could be imported into the EU. All of the SA-produced vehicles at the moment had internal combustion engines, meaning that SA had to transition its automobile industry. The Minister highlighted that the automobile industry was just as complicated as the coal transition.

She said that the timeline schedule for climate change participation would be run by the Portfolio Committee, not DFFE. The climate change policy had an outdated greenhouse gas trajectory. However, the Climate Change Bill gave the Minister the authority to reset the trajectory every five years.  Until the Bill was passed, she did not have the authority to reset that trajectory.

Mr Ramaru said that the adjusted numbers in the updated NDC were trying to fast-track the implementation of the trajectory. They were within the trajectory, and the NDC numbers could be updated for a five-year period, whereas the overall peak, plateau and decline (PPD) were until 2050. Therefore, they needed to be understood in terms of their arrangement and synchronisation.

The Minister said that the current NDCs had brought forward the decline of the PPD trajectory.

Mr Ramaru said that the socio-economic study had identified the risks and vulnerability for the sectors, and the national employment vulnerability assessment (NEVA). NEVA demonstrated the impact in terms of people's jobs in various value chains. He highlighted that the socio-economic study was one of the requirements to be fulfilled for the Climate Change Bill Cabinet processes.

The Minister said that in her introductory remarks she had commented that the country had achieved a lot of voluntary cooperation. There would come a time when there would be conflicting opinions and conflicting interests. With conflicting interests, it would not be possible forever to rely on voluntary cooperation. If it failed, one would need an enforcement mechanism to replace voluntary cooperation. The Climate Change Bill would be important in such cases.

She said industry and civil society had been ahead of the government, but that did not mean that that would always be the situation. One could find a situation where there were emerging pockets of resistance. Hence, the Climate Change Bill was very important because it then gave the government the ability to enforce policy decisions rather than rely on cooperation.

Closing remarks

The Chairperson said that the Portfolio Committee was going ahead with the public participation on the Climate Change Bill. The Bill would be advertised for a month upon getting the codes. She called upon those at the meeting to participate in the public hearings when the opportunity arose. Depending on the number of submissions, there would be public hearings once the bill was advertised. It was the commitment of the Portfolio Committee, together with DFFE, to ensure that at the end of the day, the Climate Change Bill got enacted.

The meeting was adjourned.