Transitioning SA's Petrochemical Value Chain

There is not yet a South African legal framework which guides decarbonisation in a coherent fashion. Greenhouse gas emissions are currently covered by the National Environment Management: Air Quality Act 39 of 2004 under which they have been declared priority pollutants for which limits can be set. However, this piece of legislation was developed primarily with a focus on local air pollutants and is ill equipped for governing an issue as economically intertwined as that of greenhouse gas pollution.

The country has long been waiting for the passing of the Climate Change Act to remedy this situation.  Currently in Bill form for a number of years, this was finally put to Parliament in February 2022. The Bill provides a framework for guiding both mitigation and adaptation, with provision for roles and responsibilities at multiple levels of government. Specifically relevant to the petrochemicals sector, there is provision for the imposition of carbon budgets and sectoral emissions targets to limit emissions from companies and sectors respectively – albeit without information on how these targets will be calculated. A carbon tax is already in place under separate legislation, the Carbon Tax Act of 2019.  Whilst tax levels are relatively low at present, there is the potential for these to grow as allowances to certain industries are removed.

The focus of these two pieces of legislation is, however, on big rather than on SMEs, smaller manufacturing, or the services sector, for example, which will also be impacted by decarbonisation of the value chains of interest in this study (Labour Engagement). Furthermore, there is no compelling focus within existing policy and legislation on society and the green socio-economy, including where jobs will come from in the transition (Labour Engagement). Stakeholders have suggested that the state needs to play a more active role in developing a coherent policy framework for effectively managing the just transition, and creating a buffer against social hardship that could result as jobs in certain sectors, including petrochemicals, are lost (Labour engagement).

Due to the complexity of the regulatory space, within the scope of this study no further effort was made to map out the full extent of the policies, regulations and laws required to support a just transition for Secunda, Sasolburg and their linked activities, beyond the selection of points identified above. Further relevant legal instruments to be considered might include liquid fuels and energy supply, management of balance of payments and government revenues, automobile manufacturing sector support and integrated environmental policy, to name a few. Furthermore, as indicated, an understanding is required of how these would interact with international commitments including under the Paris Agreement.