Legislation on air pollution is being phased in and a law on waste pollution awaits the president's signature.

A consultative conference in the first quarter will kick off the drafting of South Africa's climate change policy. Later, the country's mandatory electricity conservation programme is due to be implemented.

Amendments are on the cards for environmental impact assessments - mooted as streamlining measures designed to make it simpler for business to get environmental clearances.

Laurraine Lotter, the executive director of the Chemical and Allied Industries Association who also represents Business Unity SA in climate change talks, speaks of "a very busy year for us".

South Africa's international obligations arising from a global warming deal, due to be concluded in Copenhagen at the end of the year, could pave the way for the toughest environmental compliance requirements businesses have faced, once policies are developed.

Taxing question

Cecil Morden, the chief director of economic tax analysis in the national treasury, acknowledges there will be pressure to implement fiscal measures to reduce carbon emissions as a post-Kyoto accord is thrashed out.

A tax of 2c per kilowatt-hour (kWh) on electricity generated from non-renewable forms - due to be implemented in July - is the first step to broadening the debate locally, he says.

The treasury was mandated by the cabinet last year to investigate a carbon tax and emissions trading scheme, following publication of the government's long-term mitigation study and a long-term commitment to create a zero-carbon economy.

Morden says this work is "some time down the road". He believes the government needs to determine if South Africa is ready for emissions trading - for example, whether the financial sector is ready for the technicalities of a trading system and if there will be enough local participants to sustain it.

"I don't think, from where I'm sitting, I can say much on emissions trading. That is not our primary role," Morden says. "We must rather see how it can dovetail with a broader carbon tax."

The treasury is open to exploring three broad options for carbon taxes, he says:

# Input taxes could be placed on producers or buyers of the source of emissions, such as coal or diesel. Care would need to be taken not to double tax;

# Output taxes, such as the 2c/kWh tax on non-renewable forms of electricity, could be placed on various sectors; and

# There could be taxes on actual emissions - both carbon and other pollutants - by business. This option would involve a high degree of monitoring.

Business and other interests are gearing up for this debate ahead of the first consultative conference on climate change, to be hosted by the department of environmental affairs and tourism next month.

Says Lotter: "We absolutely recognise that there has to be some kind of economic instrument for carbon because of climate changes." But business is concerned that the 2c/kWh surcharge is a piecemeal approach.

The surcharge needs more careful consideration says Lotter. "Normally when you introduce a levy, you want to change behaviour. But we don't have that option. What other electricity can we use?"

Although energy efficiency programmes are a key component of measures to mitigate carbon emissions around the world, in South Africa they feature prominently as a result of Eskom's supply constraints. The energy conservation scheme is due to be introduced towards the end of next month and its implementation will be phased in.

It will require users to consume 10 percent less than in the base period of September 2006 to October 2007, says Nelisiwe Magubane, the deputy director-general of electricity and nuclear in the department of minerals and energy.

The department plans the first round of consumption cuts for about 150 big industrial users that use about 40 percent of power generated. "But it doesn't necessarily mean the rest of commercial consumers are off the hook," says Magubane.

The big users have metering systems in place to make the scheme possible. The state will have to ensure smart metering is rolled out to smaller customers too.

Lotter says business will be upset if the regulations initially apply only to big users.

"These sectors have borne the brunt [of the electricity crisis] because of the ease of application [as they are directly connected to Eskom]."

She cautions that none of South Africa's heavy industrial sectors can comply with a 10 percent cut in electricity use without losing production.

"They are obviously taking a major amount of electricity, but they are the backbone of the economy. Of course, the commodity price situation has contributed to many [firms] shutting down processes."

Lotter expects a collaborative approach to the regulations governing the energy conservation scheme and expects the issue to be debated at Nedlac, the negotiating chamber for business, labour and the state.

Emission permission

Companies are also grappling this year with standards to regulate air pollution levels, as set out in a national framework following the enactment of the Air Quality Act.

Although the legislation was enacted more than four years ago and has already helped identify two hotspots - the Vaal triangle and Highveld priority areas - the old Atmospheric Pollution and Prevention Act will be repealed only in September.

Municipalities will then assume responsibility for monitoring ambient air quality and source emissions. This will usher in a transition period when emission producers will have to apply for new permits.

Joanne Yawitch, the deputy director-general of environmental quality and protection in the department of environmental affairs and tourism, says intensive preparation is being done.

The department has worked with municipalities to train staff and build capacity; discussed the legislation with businesses, sector by sector; and published a draft framework for ambient emissions that has been handed to the SA Bureau of Standards.

"We will have ambient standards that set out the desired state and then license particular facilities in respect of whatever substances are emitted," Yawitch says.

She believes industry has been responsive on the whole. "We're going to have to see, once the legislation is in place, but by and large there have been reasonable processes."

As a result, Yawitch says, there will not be any "major surprises" and she does not believe the costs of compliance will be "that huge".

Lotter, however, believes compliance will be challenging. "The original proposal was for existing plants to meet standards within eight years from the date of publication," she says. "For some in the metallurgical and chemical industry, this will definitely be a challenge. Remember, some of these plants are 50 years old."

Business also has concerns that the regulations are not consistent and do not always reflect the discussions that have taken place, she says. Yet a number of firms have already been reducing emissions. The department will take action against those that do not, Yawitch says.

Lotter acknowledges that business knows it must comply.

A similar consultative process in developing regulations will follow the enactment of the new Waste Management Bill, which Yawitch says will have important implications for business, as it implements a waste hierarchy.

Lotter expects the legislation to increase the cost of doing business. She expects the consultation process to distinguish clearly what is hazardous waste, because in some cases "there is a thin line between what is and what is not - and the cost differential is significant".

Some businesses look forward to the new regulations. Egmont Otterman, the secondary materials manager at Pretoria Portland Cement, says the implementation of tyre rules will ease the collection of waste tyres to power cement kilns.

"We will get a waste energy source and the government will get a landfill site solution," he says. With careful management, cement producers can use waste tyres for 40 percent of a kiln's power requirements, Otterman says.