ALEXANDER PARKER: The unlikely, awesome power of DA’s Dion George

By reputation, forestry, fisheries & the environment minister Dion George is a serious, hardworking and well-intentioned man.

This is a good thing, because in signing the Climate Change Bill into law last month President Cyril Ramaphosa has handed more consequential power to him than people perhaps realise. Not to put too fine a point on it, George now wields some awesome sway over your company.

Rather amusingly, I am told by people close to the coalition negotiations after the election that this is all an accident. Apparently, the DA bagging the department of forestry, fisheries & the environment was a by-product of some other trade-off involving the FF+ and the ANC. There was no strategic intent on the side of the DA wanting the department but, as they say on the internet, here we are.

Under the act the minister, “following consultation” with relevant cabinet colleagues, is required to allocate carbon budgets not only by sector, but to individual companies — and these are enforceable in law. Given the carbon intensity of our economy, the minister’s determinations could be directly or indirectly existential for every company that contributes to emissions — and that’s basically all of them.

• The big interview: SA must be sensible about climate change, says new environment minister Dion George

Resource economists will throw bricks at me for saying this, but in allocating carbon budgets — in the medium term at least — George gets to allocate economic activity. Carbon budgets are allocated to countries signed up to the Paris Agreement on a global basis designed to keep global warming under 1.5°C. Every signatory must make its contribution to cutting carbon emissions.

There is more politics than science in this process as it considers a country’s historical responsibility for emissions and other factors too, such a colonialism and other forms of damage that have left countries vulnerable to climate change and in weak condition to adapt their economies away from carbon. As such, everyone has a story about why they are special, and SA is certainly among them. We have been allocated a large budget.

Difficult conversations

Once the national budget is allocated it is carved up among the sectors and, within them, individual companies. On the “sectors”, these are understood very much with government as the centre of gravity in the economic world, and essentially align with the various departments, so there is not too much point looking for complete sense.

In April the former minister Barbara Creecy gazetted a tentative series of sectoral carbon budget allocation proposals for consultation. On reading the gazette, published a month before the election, the intention to not rock the boat too much is apparent. The gazetted draft sectoral targets avoid some of the difficult conversations George must now engage in.

At almost 40%, electricity — principally from Eskom — is the big beast, followed by refining and Sasol. But oil and gas didn’t feature in the gazette, probably because the most difficult of all the discussions centres on Sasol, which is responsible for more than 13% of SA’s greenhouse emissions but also about 5% of GDP directly (and considerably more indirectly) and, by producing 30% of the country’s fuel requirements, protects our balance sheet to the tune of more than R70bn a year.

This means in the coming months George must consult Kgosientsho Ramokgopa (electricity), Gwede Mantashe (mineral resources & energy), Parks Tau (trade, industry & competition) and of course Enoch Godongwana (finance), among others, to agree sectoral allocations.

Now the act is law the clock is ticking, and George has only 11 months to finalise the emissions targets by sector. In doing so there will be difficult decisions. Do you accelerate the decarbonisation of Eskom to subsidise (with a generous carbon budget allocation) Sasol, for which decarbonisation is far more complicated? How do you swing that one past Mantashe and Eskom? In fact, in the lobbying game, what chance do the smaller sectors really have?

Stark choices

The debate about allocations will lay bare some pretty stark choices that have to be made if the country is serious about its Paris commitments — and will also probably renew furious debate about the agreement generally and require a view on those who are not party to it — Iran, Yemen and Libya.

If the consensus is that we have little choice other than to proceed — which is correct — it will also bring to focus the level of policy misalignment in our law that just thinking about makes the eyes water.

For example, in “transport” the sectoral allocations envisage a reduction in liquid fuel use due to an uptick in the use of electric vehicles (EVs), more people cycling to work, more people using trains to get to work and freight migrating back to rail. Each of those four interventions are nice ideas but feel practically far-fetched. Our trade policy explicitly targets EVs for gigantic border tariffs, it’s not safe to cycle to work and the railways are in a shambles. It can all be fixed, but it’s a lot.

These decisions will affect every business in the land — especially if you’re a livestock farmer, in logistics or haulage, involved in refining or liquid fuels in any way, in mining, iron or steel, in aviation, a manufacturer or importer, a fruit exporter, a retailer or even a lawyer — and it seems not well understood to what degree these allocations can be used to “design” the future of our economy, with all the risk and opportunity that this entails. I’m sure Dr George’s diary is full.

• Parker is Business Day editor-in-chief.