MITIGATION POTENTIAL AND EMISSION REDUCTION CONFIDENTIAL 1

OVERVIEW Mitigation Potential Analysis Additional Mitigation Work Desired Emission Reduction Outcomes (DEROs) Carbon Budgets 2 CONFIDENTIAL

South Africa’s GHG Mitigation Potential Analysis - Objectives 1.Project national greenhouse gas emissions into future 2.Identify and analyse mitigation opportunities and present marginal abatement cost curves (MACCs), showing costs and greatest technical potential for emissions reduction from different technologies 3.Assess the socio-economic and environmental impacts of the identified mitigation options; multi criteria analysis 4.Develop emission reduction pathways  set of reduction trajectories over time, which is technologically achievable  Pathway merely identifies what is technically possible without providing a detailed description of how that outcome would be achieved 3

Subsectors EnergyIndustryTransportWasteAFOLU Electricity Petroleum refining Other energy industries Coal mining Oil and natural gas Aluminium production Iron and steel Ferroalloy Chemicals Pulp and paper Cement Lime Commercial building Residential building Mining other than coal Aviation Road transport Rail Municipal wasteAFOLU

MITIGATION POTENTIAL

1. Commercial Buildings

MACC 2020 The identified mitigation potential for commercial buildings is estimated at 7.5 million tCO 2 e in 2020 Several negative marginal abatement cost mitigation options are available to reduce emissions from commercial buildings Construction of passive buildings with improved thermal design offers the largest single mitigation potential with the lowest marginal abatement cost

2. Road Transport

MACC 2020  The uptake of CNG vehicles which show a negative marginal abatement cost in all years is an attractive measure.  It should be noted that the large-scale uptake of CNG vehicles requires the necessary supporting infrastructure, along with the necessary supplies of gas.

NATIONAL

National MACC 2020 The MACC illustrates that 37.8% of the total mitigation estimate for 2020 (39.7 MtCO 2 e) can be achieved through implementing mitigation measures with a negative marginal abatement cost

Additional Mitigation work Mitigation technology plan: assess opportunities and barriers for the development and large-scale deployment of the key mitigation technologies - DST leading National Employment vulnerability assessment: assess impact on jobs, by sector – EDD leading Align Integrated Resource Plan process with emission reduction planning. This Mitigation Potential Analysis is based on IRP The IRP Update suggests lowered demand, delay in nuclear decision, inclusion of shale gas, Coal 3 – DoE Carbon Capture and Storage - CCS is the only technology currently available that can deliver large scale carbon dioxide emission reduction associated with coal-based electricity generation – DoE & SANEDI

Setting Desired Emission Reduction Outcomes Analysis of mix of instruments (including carbon tax) to achieve emission reductions, including assessment of gaps Allocation of Desired Emission Reduction Outcomes per sector and sub-sector, and where necessary, company level Carbon Budgets Submission of Mitigation Plans by companies

National Benchmark Range: Peak, Plateau, Decline, with middle trajectory DEROs will be designed so annual emissions fall within the PPD; Aiming for the midpoint of the PPD range

Develop and propose the allocation of long- (2050), medium- (2030) and short- ( ) term desired greenhouse gas emission reduction outcomes (DEROs) per sector Develop an appropriate mix of policy measures per sector (Mix of Measures) Allocation of carbon budgets to companies DERO Objectives

Alignment of systems DEROs and C-tax alignment Alignment will be designed around c-budgets, with ctax ideally applying to emissions above the threshold Alignment consistent with the PPD emissions are peaking – DEROs and C-budgets may increase Energy and Climate Change systems DEA and DoE finalising energy and climate change reporting systems

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