Common Report Appendix 1: Further Statistics of the Quantitative Analysis Figure 1. Regression with a Fixed Effect Model
Figure 2. Hausman Test: Determines that the random effect model is more suitable for the analysis
82 Figure 3. Panel Data Scatterplot
Appendix 2: Political Assessment of Clean air and Environmental Policies Tool Table 1. Seven metrics on political feasibility
83 Table 2. Meaning of –1, 0, +1 scores
84 Individual Report – South Africa
Appendix 1: South Africa Policy Stocktaking
Sector Policy action Status/Characteristic Focus area Objectives Cross-sectoral
(Industry, transport, electricity & heat, agriculture &
forestry, buildings)
Carbon tax Phase 1 in effect Binding Phase 2 to start 1 Jan 2026
Explicit carbon pricing Part of environmental levy
Sustainably and cost-effectively reducing GHG emissions
Cross-sectoral National Greenhouse Gas Emission Reporting Regulations
In effect Binding
Regulations supporting lower emissions
To introduce a single national reporting system for the transparent reporting of GHG emissions, which will be used:
(a) to update and maintain a National Greenhouse Gas Inventory;
(b) for the Republic of South Africa to meet its reporting obligations under the United Framework Convention on Climate Change (UNFCCC);
(c) to inform the formulation and implementation of legislation and policy
Cross-sectoral Carbon budgets [part of carbon tax]
Phase 1 in effect (company-level) Voluntary, not enforced (will be mandatory when the Climate Change Bill is approved) Phase 2 to start 1 Jan 2026
Supporting lower emissions Planning tool
Sustainably and cost-effectively reducing GHG emissions
Cross-sectoral Carbon offset regulations [part of carbon tax]
In effect Voluntary
Tradable carbon credits
Sustainably and cost-effectively reducing GHG emissions Cross-sectoral
taxes on energy use and GHG / Transport
Fuel levy In effect Binding
Implicit carbon
pricing Sustainably and cost-effectively reducing GHG emissions
Cross-sectoral taxes on energy use and GHG
Electricity excise tax
In effect Binding
Part of environmental levy
To drive emission mitigation action in the private sector Cross-sectoral Sectoral
emission targets (SETs) Framework
Framework approved by Cabinet Not in effect yet (will be implemented when the Climate Change Bill is approved)
Drive down emissions in line with the Paris Agreement.
Energy Energy
Efficiency Savings Tax Incentive (12L tax incentive programme, 2013-2022)
In effect until 31 Dec
2022 Energy efficiency Improve uptake of lower carbon technologies / initiatives to reduce greenhouse gas emissions in the industrial and commercial sectors and to stimulate job creation in the green economy
Energy Private sector embedded solar generation
In effect, not bindingLow-carbon electicity generation
support the development and upscaling of solar photovoltaic (PV) and wind renewable energy embedded generation projects, developed by independent power producers operating in South Africa.
Energy Public sector
subsidy programme -- Eskom integrated demand management programme
Ongoing: 2005 -
present Energy efficiency Promote energy efficiency and load management together with related incentives / rebates.
Energy Natural gas
fuel switch programme
Ongoing Fuel switch To provide economical and eco-friendly energy
Energy / Building / Cross-sectoral Municipal
energy efficiency and demand-side mgt (Public sector grant funding programme)
Ongoing Energy efficiency Provide for the efficient use of energy resources and related incentives /rebates.
Energy / TransportElectric vehicles
Draft, not in effect yetModal shift in transport sector
Shift to electric vehicle use from internal combustion engine vehicles.
Energy Public sector
renewable energy procurement programme -- Renewable Energy Independent Power Producer Procurement (REIPPP) programme
In effect
An RFP system Renewable
efficiency The Integrated Resource Plan makes provision for the generation of 17.8 GW of renewable energy by 2030, to be commissioned under the Programme.
Industrial Process and Product Use (IPPU)
Nitrous oxide reduction projects
Ongoing private sector projects, 2006 - present Binding
Process emissions Reduced nitrous oxide emissions during the production of nitric acid.
Industrial Process and Product Use (IPPU)
Carbon
budgets Not in effect yet Energy and process
emissions See above
Agriculture, Forestry and Other Land Use (AFOLU)
Afforestation Ongoing Not binding - DFFE responsible
forest land sink To encourage and support sustainable land use practices, raising awareness and promoting resource conservation ethics.
Agriculture, Forestry and Other Land Use (AFOLU)
Conservation agriculture Ongoing
Non-binding restoration programme
cropland sink To promote sustainability within the agriculture sector and a reduction of the carbon footprint in agriculture.
Agriculture, Forestry and Other Land Use (AFOLU)
Forest rehabilitation Ongoing
Non-binding restoration programme
forest land sink To restore and rehabilitate forests and woodlands so as to improve sustainability, ecosystem services and biodiversity.
Agriculture, Forestry and Other Land Use (AFOLU)
Thicket restoration
Ongoing Non-binding restoration programme
forest land sink
Agriculture, Forestry and Other Land Use (AFOLU)
Grassland rehabilitation
Ongoing Non-binding restoration programme
grassland sink
Waste Regulations
and standards - National Waste management strategy
Guidance/planning document, not binding as of yet
Waste management Encourage and support sustainable land use practices, raising awareness and promoting resource conservation ethics.
85 Appendix 2: Linear Fixed-Effect Model
𝑙𝑛𝐶𝑂2!" = 𝑎! + 𝑎$𝑙𝑛𝐹𝐷𝐼!" + 𝑎%𝑙𝑛𝑇𝐸𝐶!"+ 𝑎&𝑙𝑛𝐼𝑁𝐷!"+ 𝑎'𝑙𝑛𝑇𝑅𝐴!" + 𝑎(𝑙𝑛𝑃𝑂𝑃!"
+ 𝑎)𝑙𝑛𝑈𝑅𝐵!" + 𝑎+𝑙𝑛𝐺𝐷𝑃!"+ 𝑎,𝑙𝑛𝐹𝐷𝐼!"𝑙𝑛𝐺𝐷𝑃!" + 𝑇 + 𝜀!"
Appendix 3: Shapiro-Wilk test
Appendix 4: Variation Inflation Factor (VIF) test
a) VIF with the full regression
86 b) VIF without logFDI_GDP
c) VIF without logPOP
d) VIF without logtrade
87 Appendix 5: Outliers
a) logFDI
88 b) logtech
89 c) logindustrial_structure
90 Appendix 6: Feasibility scores explanation
Policy option 1: Phase out Coal Subsidies and subsidize renewables (RES-1)
Metric Explanation
Popular opposition (1)
A reduction in subsidies would only be a reduction in government spending and would not have a direct cost on the public. However, since the country's main electricity generating company, Eskom, relies primarily on these subsidies (IISD 2022), money should be reinvested toward an energy transition and toward low-carbon technologies and facilities such as renewable power plants. In Dechezlepretre et al.
(2022) it is shown that in South Africa there is support from 75 percent of the population for these kinds of subsidies.
Market benefits/costs
(0)
Several articles and reports have pointed out that coal power plants are more expensive to operate than renewables. Asselt and Irschlinger (2020) propose several recommendations to the WTO to replace coal subsidies with renewables subsidies, analyzing the impacts on trade.
Crawshaw and Silva (2022) show how in America 61% of coal plants are more expensive to operate than renewables plants, in India this percentage reaches 70%, while in Germany 100%. Despite this, the energy sector relies 80 percent (USAID 2021) on coal in South Africa due to its low cost. This last point compensates for the benefit given by the first point, and for this reason, the score assigned is 0.
Market concentration (1)
South Africa's energy market is one of the most concentrated markets in the world, in fact, Eskom produces 95% of the country's electricity (Ting and Byrne 2020).
Organized interests (-1)
Eskom is a state-owned company, and as explained in the previous point it produces 95 percent of the country's electricity and relies on these coal subsidies. There isn’t an organized group but since Eskom dominates the sector, is counted as an organized group that wouldn’t be in favor of this policy.
Government concentration (1)
South Africa implements its climate change mitigation policies at a national, rather than subnational level. The government sets sectoral and cross-sectoral regulatory and economic policies to reduce
emissions across the economy, while provincial and local governments are responsible for integrating climate change action into their
strategies and plans under the guidance of the Department of Forestry, Fisheries and the Environment (Averchenkova 2019).
Institutional capacity (1)
In the new "Economic Reconstruction and Recovery Plan" such
subsidies have already been included and implemented, so institutional capacity is high, but dedicated spending to support low-carbon
91 technologies has been only 4 percent (CAT 2021) Therefore we
consider capacity high but willingness low.
Government willingness (-1)
See above the “Institutional capacity” section
Policy option 2: Increase the Carbon Tax rate for the electricity sector (POW-1)
Metric Explanation
Popular opposition (-1)
Although a carbon tax does not directly target the public, the cost of a carbon tax is passed on to the public through increased costs (Grainger and Kolstad 2010; Moseman 2022). In addition, Vorster et al. (2011) show how it not only has an effect on the public but also a great impact in terms of distribution and equity.
Market benefits/costs
(-1)
Although a carbon tax can be passed on in whole or in part to the public, it is a direct cost to producers that has negative effects on the market (Cuervo and Ghandi, 1998).
Market concentration (1)
See the justification for RES-1.
Organized interests (-1)
See the justification for RES-1.
Government concentration (1)
See the justification for RES-1.
Institutional capacity (1)
With the implementation of a Carbon Tax in 2019 that covers 41% of CO2 emissions from energy use, the South African government showed that it has the capacity and willingness to apply this type of tax to the energy sector (KPMG 2019).
Government willingness (-1)
Despite the effort shown in implementing the carbon tax, it is
currently ineffective at reducing emissions due to its low levy relative to other carbon prices, and there isn’t the willingness to increase the rate (Szabo 2021).
Policy option 3: Increase Carbon Tax rate with revenues recycling in renewables subsidies (POW-2)
92
Metric Explanation
Popular opposition (1)
In Dechezlepretre et al. (2022) it is shown that in South Africa there is support from 78 percent of the population for this kind of policy proposal.
Market benefits/costs
(1)
Carl and Fedor (2016) found that 44% of carbon tax revenues around the world are used to subsidize energy efficiency and renewables, with Sweden (50%), Denmark (40%), and Norway (30%), as the countries with the highest rates and the highest environmental performance.
Market concentration (1)
See the justification for RES-1.
Organized interests (0)
As we explained in RES-1 Eskom represents the “organized interest”.
For the reasons explained in the “Market Benefit/Cost” section there would be some benefits for the market, and the subsidies will be used to help the company through the transition toward a “green” strategy.
These benefits are compensated by the fact that is difficult to compete with the very low prices for coal in South Africa, for this reason the score assigned is 0.
Government concentration (1)
See the justification for RES-1.
Institutional capacity (1)
See the justification for POW-1 for the part of the subsidies and RES-1 for the part of the carbon tax. Moreover, Cloete (2020) explains how a similar approach is already in use. The revenues of the carbon tax are mostly used in the first phase to reduce the prices of electricity but all the leftover revenues will be used to fund renewable projects (Cloete 2020).
Government willingness (-1)
See the justification for POW-1.
Policy option 4: Increase the budget of IPAs and reduce administrative costs (TRA-1)
Metric Explanation
Popular opposition (1)
The population would be in favor of this policy for different reasons.
Immurana (2020) found how FDI increases health outcomes, while Peric and Stanišić (2020) studied the labor outcomes, concluding that FDI increases employment rate, wages, and reduces income inequality.