Programme Director, Ms Thami Nkadimeng,
Minister of Energy and Electricity, Dr Kgosientsho Ramokgopa,
Deputy Minister of Finance, Dr David Masondo,
Ministers and Deputy Ministers,
Ambassadors and High Commissioners,
Representatives of multilateral institutions and other development partners,
Representatives of the South African Local Government Association,
Representatives of business, industry and civil society,
Members of the Presidential Climate Commission,
Delegates, guests,
Ladies and gentlemen,
This Climate Resilience Symposium is taking place at a time when we are witnessing first-hand our extreme vulnerability to the impacts of a changing climate.
The storms that hit parts of the Western Cape over the past week have caused devastation to homes, communities, businesses and infrastructure.
These adverse weather conditions temporarily brought container ship traffic to a complete halt at the Port of Cape Town.
Rough seas resulted in cargo vessels losing containers overboard and others being extensively damaged.
The Port of Cape Town has the country’s second largest container terminal. Though it handles a variety of cargo, the biggest exports from the port are agricultural products.
Having perishable agricultural products stuck in the port or in transit for an extended period results in financial losses for exporters.
This in turn impacts the agricultural sector, and given its importance to our economy, there is a knock-on effect on the economy as a whole.
This is just one illustration of the fact that climate changes is as much an economic issue as it is a scientific, social justice, human rights and development issue.
It has a direct and material impact on activity across the economy.
Disruptions caused by climate change increase the cost of doing business, undermine competitiveness and dampen employment growth.
These disruptions result in lower tax revenue and increased expenditure on disaster relief, health care and social support for affected communities.
Extreme weather causes damage to infrastructure like roads, bridges, railways, power lines and ports, all of which incur substantial repair and recovery costs.
The resultant strain on public finances then necessitates the reallocation of funds from other essential services.
To manage the higher expenditure and lower revenues government may then need to increase borrowing, leading to higher debt levels and interest payments.
This limits government’s ability to invest in other critical areas.
The National Treasury is therefore central to our response to both the shocks of climate change and the potential opportunities to use the just transition as a springboard to build a more inclusive, resilient and sustainable economy.
I want to commend the Minister of Finance and the National Treasury for convening this symposium together with the Presidential Climate Commission and other partners.
This symposium will focus on the integration of climate goals into macro-fiscal and finance policy and mainstreaming climate change considerations into the intergovernmental fiscal system.
It is society’s most vulnerable who bear the brunt of climate change because they have limited means to prepare for, cope with, and recover from, climate-related adverse events.
Just as it is the countries of the Global South that feel the effects of climate change most, despite being least responsible historically for global emissions.
It is critical that we strengthen systems for adaptation and mitigation, build resilience in communities and accelerate our decarbonisation efforts and the pace of the just energy transition.
The reality we must confront is that the carbon-intensity of our economy is unsustainable.
For decades our reliance on coal was a competitive advantage because it allowed us to produce electricity cheaply.
But the world has changed and this dependency has come to pose significant risks.
As the world moves towards greener economies, our trading partners will take measures to ensure that their own climate actions do not undermine their economies.
Instruments like the European Union’s Carbon Border Adjustment Mechanism, which has the potential to cause great damage to developing economies, signal the inevitability of carbon pricing in global trade systems.
Our emissions-intensive energy system is likely to increasingly undermine our competitiveness in global markets.
I have repeatedly said that South Africa will decarbonise at a pace and scale that is affordable to our economy and society.
If we act too fast, we risk damaging huge sections of our economy before we have built alternative energy and industrial capabilities.
At the same time, not acting now risks our economic stability.
We must embrace a managed transition to a low-carbon economy, not only to safeguard our people and our environment, but to ensure our economic resilience and growth.
We are facing a climate emergency.
Indecision and slow action are not an option. We must act decisively and swiftly to mitigate the effects of climate change and ensure a just transition for all South Africans.
We must pursue a green industrial agenda that will create jobs and grow the economy.
Investments in green infrastructure, renewable energy and climate adaptation measures can be costly, requiring careful financial planning and prioritisation.
That is why we have prioritised inclusive growth.
We are hard at work implementing the urgent reforms needed to lift growth and pursuing a fiscal strategy that protects the sustainability of our public finances.
Operation Vulindlela has been an extremely successful partnership between National Treasury, the Presidency and a wide range of government departments.
It has enabled significant reforms in areas like energy, water, telecommunications and transport, making our economy more competitive and increasing our productive capacity.
Our strategy involves preparing ourselves to withstand the economic risks posed by climate change while taking full advantage of the opportunities of the energy transition.
This is no easy balance.
South Africa aims to reach net zero emissions by 2050.
Our revised Nationally Determined Contribution balances our developmental needs and economic realities.
It takes into account the feasibility of undertaking a climate response through a set of just transition pathways.
Importantly, it notes carbon tax as a vital component of our mitigation strategy to lower greenhouse gas emissions.
By internalising the cost of carbon emissions, the carbon tax incentivises companies to reduce their carbon footprint and invest in cleaner technologies.
The carbon tax also generates revenue for climate initiatives.
These funds can be reinvested in renewable energy projects, energy efficiency programmes and social support mechanisms.
We have launched a number of other initiatives to meet our emissions targets.
The Renewable Energy Independent Power Producer Procurement Programme has been a success, attracting over R209 billion in investment and adding much-needed capacity to our electricity grid.
The Integrated Resource Plan, which outlines the country’s energy mix, is in the process of being updated. It sets out a viable energy mix over the medium and long term to achieve our decarbonisation objectives.
The Just Energy Transition Investment Plan sets out a quantified investment plan of some $98 billion. This will drive huge investments in the electricity grid, green hydrogen, electric vehicles, economic diversification and skills development, amongst others.
We continue to explore opportunities to meet our emissions reduction targets in minerals extraction, in green hydrogen production, in new power infrastructure, in electric vehicle manufacturing, and economic infrastructure upgrades.
It is crucial that the transition to a low-carbon economy is just and inclusive and that no worker or community is left behind.
The growth of clean tech, renewable energy, battery storage, green hydrogen and minerals for the future low-carbon economy must result in opportunities for affected sectors, employees and communities.
We are investing in retraining programmes, creating new job opportunities in renewable energy and supporting small enterprises in affected areas.
Climate finance is crucial for our transition.
We need substantial investments to build sustainable infrastructure, develop green technologies and support social programmes.
One looks for example at the issue of disaster funding, where there is a substantial gaps between available disaster funds and the cost of disaster response.
Even as we have taken proactive measures like setting up a Climate Change Response Fund, we need to think seriously about the urgent financial and policy measures needed to address these shocks, and how to strengthen the National Treasury’s disaster financing response.
The Department of Forestry, Fisheries and the Environment is already working with the Presidential Climate Commission on recommendations for the Climate Change Response Fund and an Adaptation and Resilience Investment Plan to accompany it.
Mitigation and adaptation financing remains a challenge, and we call on our international partners to fulfil their commitments to finance both.
We have already seen positive steps with the establishment of the Green Climate Fund, the Loss and Damage Fund, and other global mechanisms.
However, we need more innovative financing solutions that mobilise private capital and incentivise sustainable practices.
The National Treasury’s Climate Finance Strategy is pivotal in this regard, outlining how we can leverage public and private finance to achieve our climate goals.
We must not underestimate the importance of our own domestic capital and financial markets to innovatively mobilise and deploy capital towards our just transition.
The Just Energy Transition Funding Platform will be launched in the next few months.
It will be an important precursor to a broader Just Transition Financing Mechanism, proposals for which are being developed by the Presidential Climate Commission.
We call on South African business to invest in the projects needed for a successful just transition in this country.
We need to use blended finance to unlock private sector flows.
International development finance institutions and governments of the Global North that made financial pledges under the Paris Agreement and COP26 are important sources of cheap and concessional capital.
To access this and other funding, we need a credible project pipeline.
We need to work with all spheres of government, with communities and with the business sector to create new manufacturing, mining, agriculture and service opportunities.
The science of climate change is complex. So too are the economic, technological, social, ecological and political implications.
Nonetheless, climate action is an imperative. We must act now.
This requires collaborative efforts between government, business, labour, civil society, communities and international partners.
If we work together, if we understand the risks and if we appreciate the urgency, we can make our country climate resilient.
And in doing so, we can build a sustainable future for generations to come.
I thank you.
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