Eskom’s Komati coal-fired power station. Independent Power Producers are targeting to secure 70GW of renewable energy by 2030. SUPPLIED
South Africa’s industry has to adapt to the requirements of the Carbon Border Adjustment Mechanism (CBMA) and reduce greenhouse gas emissions or lose the more than 550 000 units of exports market to the European Union (EU).
This was a warning issued by Rudi Dicks, head of the project management office (PMO) in the Private Office of the President, on Wednesday.
CBMA is a carbon tariff on carbon-intensive products such as steel, cement, and some electricity imported to the EU and legislated as part of the European Green Deal, and it takes effect in 2026 with reporting starting in 2023.
Dicks said the line had been drawn in the sand on the standards for the EU exports market, which should also serve as a benchmark for production for the domestic market.
“If we don’t deal with CBAM, if we do not reduce our carbon emissions, we must forget about the EU markets in 2035,” Dicks warned.
“We export about 550 000 units. Our biggest market is the EU. If we are not able to show that we are reducing, then we are in trouble.
“South Africa’s total exports are expected to fall by 10.1% in 2050, and GDP declines by 9.3% by 2050 if more EU countries adopt a CBAM. This number rises to 2.6 million (units) if all exports are subject to a CBAM.”
Dicks was speaking during the Trade and Industrial Policy Strategies (TIPS) hybrid development dialogue on the role of Masterplans in South Africa.
Industry players questioned the co-ordination of government departments on the Masterplans, citing the establishment of the sugar tax, which happened while the industry was engaged with the government on stability and growth.
The National Treasury implemented the tax while some industry players felt that consultation had not been extensive enough and said it had led to the loss of 16 000 jobs.
However, Dicks dispelled the thinking about the role of the Presidency in all the government projects as being to provide a silver bullet, saying that departments still had to fulfil their functions.
“I think some people misunderstand presidential co-ordination and the role of the Presidency,” he said.
“The Presidency can’t take over, that is the the reason why we have departments. We can help with technical capacity issues, the ability to coordinate stuff. The Presidency will always play a coordination function, it will support implementation, period. It will not take over implementation, it will not take over responsibility.”
Dicks pointed out that there were a lot of adaptations that had to be made in directing industries to utilise opportunities for the benefit of the local market, citing the National Transmission Company and South Africa’s target to build up to 14 500km of grid networks by 2030.
He also pointed to Transnet’s more than R100 billion backlog in rail and ports developments along with the Independent Power Producers (IPPs) target to secure 70GW of renewable energy by 2030, saying these initiatives would require a correlation of the various Masterplans to benefit the economy.
BUSINESS REPORT