ROB LEWENSON: Environment minister George needs to clarify plans for climate policy

It’s been said before but bears repeating: SA is first rate at drafting policies but often falls short on implementation. Unfortunately, we don’t have the luxury to repeat this pattern when transforming our coal-driven economy, which piles significant expectations on the man at the helm, forestry, fisheries and & environment minister Dion George.

After the first 100 days in office of both the minister and his deputies, Bernice Swarts and Narend Singh, they have announced a review of the ministry’s regulatory frameworks to simplify procedures, but still little is known about his plans for climate policy. 

Climate watchers have been on tenterhooks since President Cyril Ramaphosa announced the formation of a government of national unity (GNU) in June, and George was installed as environment minister in July. Before taking up this position he had served as the DA’s federal finance chair, so detail of his climate reform policy is largely unknown. Yet these unknown hands have the power to transform SA or hold us back.

During an interview on SABC News in August, some of that uncertainty was softened when George discussed his priority wish list, starting with a commitment to implement the 2025 Decarbonisation Pledge and support the just energy transition towards a low-carbon economy. He also addressed his seeming lack of experience in this complex field, noting that he brought a fresh perspective and was consulting widely.

Importantly, he also addressed the delicate balancing act required when transitioning to greener energy, particularly around jobs and affected sectors. On this point the new minister is aligned with our position: we have long felt that any policy that ignores realities on the ground will come up short if it does not consider society as a whole. The ripple effects of any new policy must be considered systemically and through the lens of both environmental stewardship and social responsibility.

Only by strengthening the entire ecosystem will true social progress be made. But this is a tricky business, and George is certainly tasked with heading a multifaceted portfolio that can structurally shift our economy and shape how we live, work and manufacture in the future. The question in our new GNU reality is whose vision we are now following. And what we need from the new minister to drive a successful just transition in SA.

It will fall to George to enforce the Climate Change Act, which makes him one of the most critical ministers in the new GNU, both in terms of his vested powers and his ability to drive decision-making. The problem is that three months into the new GNU it is still hard to get a reading on George. Nonetheless, there are certain non-negotiable and urgent actions we need to see from him.

Intention 

While we feel our way around this new multiparty government we cannot lose the momentum created by this enabling climate change framework. It is a sad reality that not even a third of climate-related projects now under way in SA are even close to being finalised. There remains a lot of work to be done on issues such as electricity transition as well as increasingly pressing issues such as water supply and security.

What we have in the new Climate Change Act and the draft Taxation Laws Amendment Bill (which was released for public comment on August 1) are progressive signals towards wholesale structural reform. For instance, the Taxation Laws Amendment Bill includes a proposition to increase the threshold needed for renewable energy projects to become eligible for carbon offsets from 15MW to 30MW.

This represents a powerful incentive to get projects done and offers guardrails to responsible investors to inject much-needed funding to drive projects, from building dams to producing electric vehicle (EV) components and establishing a green hydrogen economy. If we start to see these grass roots shifts, trust will grow and optimism will bloom.

Unfortunately, we aren’t there yet. As responsible investors with a sincere commitment to the future success of SA we would like to see tactical interventions from the GNU, which in time will have a multiplier effect. There are no quick fixes to this complex just energy transition, which is why our new minister is wise to engage with as many stakeholders as possible.

However, talk needs to turn rapidly into action. We cannot stress enough how important a clear policy position is for our clients’ investments in terms of risk mitigation as well as opportunities to derive revenue and growth in the green economy — the economic potential is significant and there is enormous value to be created. 

From our perspective, a memorandum of understanding between George’s ministry and the department of public works to advance a strong water strategy is vital. We must tackle urgent repairs to our failing water infrastructure. We also want to see an unequivocal reaffirmation of SA’s commitment to a just energy transition and the Paris Agreement treaty, including long-term energy security through the accelerated adoption of renewable energy alternatives. This, along with the formal adoption of the National Business Initiative’s framework study on a just energy transition, will give funders the confidence they need to invest.

In 2023 we held robust meetings with policymakers such as the Treasury, the Financial Sector Conduct Authority, regulators and the presidential climate commission. We have consistently engaged with our country’s biggest polluters and stressed the need for a well-governed intervention. We stand ready to do more to play our part and make things happen to get our decarbonisation transition firmly on track, but the new minister and the GNU he forms part of need to lead the charge with clear action.

Given our recent fruitful engagements with other spheres of government and regulators, we would like to extend an invitation to George and his ministry to engage with us and other institutional investors to hear our views at this vital stage of SA’s economic development.   

• Lewenson is head of responsible investment at Old Mutual Investment Group.