Minister Pravin Gordhan delivered his much anticipated budget on 26 February 2014. In his speech, Minister Gordhan made specific reference to further investment in renewable energy and support for the transition to a low-carbon economy, which is most welcomed. However, although the budget built on the foundations that were laid on the 2013 budget, from an environmental and emissions reduction perspective, there still appears to be little concrete evidence that the government is taking climate change and its effects seriously.
The main areas covered were as follows:
Carbon Tax
Of concern is that the minister has delayed the implementation of a carbon tax to 2016. This will place further pressure on government to meet the targets that government has committed to the international community during the COP processes.
Unpacking this delay however, it has to be recognised that this is understandable following consultation with business and government over that past 12 months. It is clear that a package of measures is needed to address climate change and to reduce emissions, however what required clarity is how this will be achieved in a financially constrained environment.
Good news for business is that there is still time to construct carbon mitigation strategies as it is clear that the holiday period is not going to last forever.
Regulatory “improvements”
Minister Gordhan mentioned that government has been engaging with business (specifically mining) on steps that can be taken
to make it easier to do business in our country. As a result the government will be streamlining the regulatory and licensing approvals for environmental impact assessments, water licences and mining licences. Based on track records in this space, this is considered a serious cause for concern from an environmental perspective.
The budget also made mention of the fact that regulations had been put in place to deal with the environmental consequences of acid mine drainage. To complement current efforts and ensure that the mining sector makes its fair contribution towards continuing acid mine drainage expenses, consultations will be initiated on an appropriate funding mechanism. This is a most welcome development as water security is of continuing concern in our country.
Renewable Energy
To alleviate pressure on the grid and to embrace renewables, contracts for 47 renewable energy projects were concluded in 2012 and 2013, many of which are already under construction. These will add 2 460 MW of power capacity, and investment of R70 billion. A further R45 billion in investment will be contracted this year. Again this is welcomed but more needs to be done around grid security. In this respect no mention was mentioned around a Nuclear build program which has to be considered as the lesser of two evils when compared to coal.
Fracking
The minister mentioned that in the medium term the government would pursue the exploration of shale gas to provide an additional energy source for our economy. This raises significant red flags around what fracking is going to do to the Karoo and our water supplies.
In summary, the budget added little concrete evidence that the government has a plan in place to meet its emissions reduction commitments and significant work needs to be done by the fiscus to demonstrate environmental stewardship within the international community. This budget does little to safeguard our environment, if anything, it just raises further concerns around securing our future.