Deputy Minister Narend Singh: Bridging Compliance: CBAM, ESG and the South African Metals and Engineering Sector

Speaking notes by Deputy Minister Narend Singh Bridging Compliance: CBAM, ESG and the South African Metals and Engineering Sector Emperors Palace, Kempton Park, Johannesburg

Thank you, Programme Director - Nuraan Alli
Her Excellency Ms Elsebeth Søndergaard Krone, Ambassador of the Kingdom of Denmark;
Chief Executive Officer of SEIFSA, Mr Lucio Trentini;
Specialist ESG and EU Legislation Dr Vibeke Huge Rehfeld;
Representatives of the South African Reserve Bank and other government departments;
Representatives of the Danish and South African Industries;
Members of the Media;
Ladies and Gentlemen

Good morning to you.

It is indeed a pleasure to address you at this event this morning.

South Africa remains committed to stabilising the greenhouse gas (GHG) concentration in the atmosphere and contribution to the global temperature goal of keeping temperature well below 2 °C and pursuing efforts to 1.5 °C below preindustrial levels in line with the principle of common but differentiated responsibility and respective capabilities (CBDR-RC).

In our long-term Low Emissions Development Strategy (LEDS), communicated voluntarily under Article 4.19, South Africa committed "to ultimately moving towards a goal of net zero carbon emissions by 2050, which will require various interventions to reduce greenhouse gas emissions.

Importantly, South Africa recognises the need for climate action to be centred on a Just Transition, meaning a transition to net-zero carbon emissions society that accommodates the needs of workers and communities, which may be negatively affected through the loss of jobs or activities as a result of a move to a lower carbon economy.

The Climate Change Act, which was signed into law by President Ramaphosa in July 2024, sets out South Africa's national climate change response, including mitigation and adaptation actions, which also constitutes South Africa's fair contribution to the global climate change response.

The Climate Change Act enables the alignment of policies that influence South Africa's climate change response, to ensure that South Africa's transition to a low carbon and climate resilient economy and society is not constrained by policy contradictions. The Climate Change Act also sets out measures to enhance South Africa's ability and capacity over time to reduce greenhouse gas emissions, and build climate resilience, while reducing the risk of job losses, and promoting new job opportunities in the emerging green economy.

The Nationally Determined Contributions (NDC) for South Africa have been informed by peak, plateau and decline in terms of carbon emissions reduction. The recent Bid Window of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), the work of the Just Energy Transition (JET), green hydrogen generation, are key steps in a positive direction.

Regarding pertinent issues of the Carbon Border Adjustment Mechanism (CBAM), and due credence to the United National Framework Convention on Climate Change (UNFCCC) Principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC), must inform what can or cannot be achieved by Emerging Markets and Developing Countries (EMDCs).

We remain concerned that outside of multilateral processes such as the UNFCCC, discussion and agreement the CBAM policy design of using market principles to cut GHG emissions will create a direct impact on developing countries', such as South Africa, exacerbating inequality, poverty and unemployment. This we should take all measures to guard against.

On the issues of Environmental, Social and Governance (ESG) sustainability reporting requirements by Business, point to responsible business conduct. The JSE Listed Companies are familiar with King III and King IV Reporting. Last week, Deputy Minister Swarts, in her engagement with Private Sector also emphasized the need for Private Sector to embrace and advance ESG Reporting, in transitioning their businesses from Business as usual (BAU) to low carbon, if Business is to remain relevant, especially on exports.

The Department of Forestry, Fisheries and the Environment has been actively engaged in the decarbonization of the Steel Sector. As you are well aware, the Steel Sector, is one of the hard to abate sectors, and is highly energy intensive.

The Department of Forestry, Fisheries and the Environment, in collaboration with the Department of Trade, Industry and Competition and in partnership with the Organization for Economic Cooperation and Development (OECD), has been working closely with Industry Association, the South African Iron and Steel Institute (SAISI), and industry partner, ArcelorMittal, together with other players, to determine what may be the low hanging fruit for a low carbon transition.

The entire value chain has to be reflected upon - both upstream and downstream players. This is work in progress, and indeed comes with its own set of challenges, in the form of necessary research and development, capacity development, and the much-needed capital investment.

Green Hydrogen, as input energy, is one such option for the production of green steel. Sectoring scrap metal market as input material for the Steel Sector to lower the carbon footprint, would be another option. Refurbishment of existing technology and investment into new and energy efficient technologies are other options.

Downstream industries are also faced with competition on imports. Therefore, compliance and enforcement are important, and so is the provision of the necessary legislative measures.

In conclusion, there are many hurdles which industry will be confronted with in their efforts to decarbonise, particularly in developing countries such as South Africa. Key for us is to take the necessary key steps to transition, without adversely affecting the competitiveness of such industries and leaving no one behind. This will require a collaborative effort and the provision of the necessary support.
I wish you well in your deliberations and I thank you.

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