What is significant about this court finding is that the judge indicated that Shell is responsible for the carbon emissions released when it extracts and refines its products, in addition to those emissions released when its product is used. This is in stark contrast to the current narrative from Oil and Energy majors who indicate that how their product is used is not their concern. This shift in responsibility is roughly akin to the outcome of the litigation against smoking companies who long resisted any responsibility for the damage their products cause. The hard science of climate change is now being used by the courts to shift responsibility into the hand of the producers. It was also interesting to see the IEA being cited in the judgement. Their latest report, Net-Zero by 2050, points towards the huge gap between what needs to be done to limit global temperature rise and what the world is actually doing. In the report, the IEA call for a halt on all new fossil fuel projects anywhere in the world and a ban on internal combustion engines by 2035. This is a pretty drastic recommendation from an international body set up in 1974 to ensure the security of the global oil supply.
With these critical examples in mind of how global climate risk sentiment is transitioning into action, it has been interesting to see the varying views on how ambitious South Africa’s National Determined Contribution (NDC) should be. Broadly speaking, on the one side you have a narrative that SA should be cautious in making overly ambitious commitments to carbon reductions, especially if we are unclear on how we will get there. There is some practical sense in going slow, doing our technical homework to manage the short-term economic and societal impacts, and rather save our ambition for the 2025 NDC submission round.
The opposing narrative, however, is that SA should favour a higher level of ambition as the basis for attracting climate finance which is desperately needed to support our Just Transition. This is of particular relevance currently, as weaker ambition in the NDC may limit SA’s ability to attract international climate finance, an opportunity that may not be available for us post 2025 and which could help alleviate the country’s energy woes. The scale of financing SA needs has been roughly dimensioned at some $11bn which sits at the centre of the Just Transition Transaction, which has been mooted for SA. In a nutshell, the transaction is an opportunity for Eskom to access low-cost climate finance, conditional upon a clear political commitment to decarbonise SA electricity, energy market reform, and massive ramp-up of green industrialisation. From a global perspective, the carbon intensity of SA’s electricity means that the carbon yield from this transaction is very high – making it attractive for global climate finance especially given the attendant opportunity to address SA’s just transition and green jobs issues.
President Ramaposa’s announcement last week around the raising of self-generation limits may well be an early indicator on which way this narrative will unfold and address the question of whether SA will be left behind on the world’s green energy path. BM
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