UPDATE 1-S.Africa to put emission caps on top polluters

Tue Oct 18, 2011 11:13am EDT

* S.Africa takes aim at top polluters

* New climate policy to give leverage at global talks (Adds minister's comments in par 11-13)

By Wendell Roelf

CAPE TOWN, Oct 18 (Reuters) - South Africa plans to place limits for carbon emissions on top polluters who may face penalties if they do not conform to the new regulations, a climate policy paper showed on Tuesday.

Africa's biggest economy wants to cut CO2 emissions by 34 percent over the next decade but has little flexibility to make fast changes with major employers among the top polluters and its cash-strapped power sector almost fully reliant on coal.

The government said the planned emissions cap, marking a more assertive state approach, will provide some flexibility and carbon offset initiatives, but transgressors could be fined.

"It's like a speeding fine -- if you go over the speed limit, you get caught, you get busted and fined," Peter Lukey, acting deputy director general at the Department of Environmental Affairs told Reuters.

He said the limits, to be set up within the next two years, would focus on key sectors such as electricity, fuels, and the mining and transport industries. Targeted companies and sectors will need to submit plans on how they plan to tackle emissions.

"The policy as it is, is do-able and viable, although a key concern is implementation. There are no fixed targets at this stage but the objectives are ambitious," Johan Muller, industry analyst at Frost and Sullivan consultancy, told Reuters.

The national climate policy, approved by cabinet last week, also aims at balancing South Africa's climate agenda with its ambition to reduce a chronic 25 percent unemployment rate.

A mooted carbon tax plan proposed earlier this year was already criticised for hurting South Africa's job creation plans, putting the government in a bind ahead of hosting a global climate summit later this year.

"Government will assess the vulnerability of the different economic sectors to climate change and develop sector job resilience plans," the policy paper said.

More than 1 million jobs have been shed since South Africa's recession in 2009.

Minister for Environmental and Water Affairs, Edna Molewa said she believed the policy, to be reviewed every five years for additional regulatory or legislative amendments, would strengthen South Africa's negotiating position at the COP 17 global climate summit to be held later this year.

"The policy as concluded now is really going to give quite a whole lot of leverage... As one of the high emitters of the world, we are taking action," Molewa told reporters.

Officials and analysts have muted expectations of the summit to agree on game-changing results capable of producing a new and binding pact to slash greenhouse gases.

Power utility Eskom and petrochemicals group Sasol , which collectively pump out more than half of the country's annual carbon dioxide emissions of around 500 million tonnes, are the nation's main polluters.

Finance Minister Pravin Gordhan is also expected to mention climate change when he presents his medium-term budget on Oct. 25, with additional incentives to encourage and reward efforts to curb emissions on the table.

South Africa plans to cut emissions by 34 percent and 42 percent below its 'business as usual' emission growth trajectory by 2020 and 2025 respectively.

Already, the state has introduced an electricity generation levy, a motor vehicle emissions tax and a levy on incandescent light bulbs to prompt consumers towards a greener future.

A water-scarce country, most of South Africa's emissions derive from energy supply, with about 85 percent of the country's electricity generated by coal-fired power stations. (Editing by Agnieszka Flak)