https://www.miningweekly.com

Proposed carbon tax ‘least-cost manner’ to ensuring greenhouse-gas reduction – Treasury

15th December 2017

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

Font size: - +

The National Treasury released the Second Draft Carbon Tax Bill for public comment on Friday and averred that it “seeks to give effect to the polluter pays principle . . . and will assist, in a least-cost manner, in reducing greenhouse-gas (GHG) emissions and ensuring that South Africa meets its nationally determined contribution (NDC) commitments [under the 2015 Paris Agreement]”.

The Draft Carbon Tax Bill and annexures are available on the National Treasury’s website and interested parties have until March 9, 2018, to make written submissions.

Section 5 of the draft Bill states that the rate of the carbon tax on GHG emissions must be an amount of R120/t of carbon dioxide equivalent GHG emissions.

The tax will ensure that the real cost of GHG emissions to the environment and society are explicitly incorporated into the prices of carbon intensive production activities. It helps to ensure that firms and consumers take these costs into account in their production, consumption and investment decisions, the Treasury said in a statement on Friday.

The tax aims to encourage companies to change their behaviour and start taking steps to gradually change their fuel inputs, production techniques and processes through investments in energy-efficient, low-carbon technologies to reduce their emissions.

“The carbon tax will also ensure that emission reductions are delivered while sustained economic growth is realised,” the release averred.

The carbon tax is expected to have a significant impact on reducing South Africa’s GHG emissions, and would lead to an estimated decrease in emissions of 13% to 14.5% by 2025 and 26% to 33% by 2035 compared with business-as-usual, the Treasury stated.

The aim is to reduce GHG emissions in line with the National Climate Change Response Policy and the National Development Plan.

INCENTIVES
The implementation of the carbon tax will be accompanied by a package of tax incentives and revenue recycling measures to minimise the impact in the first phase of the policy (up to 2022) on the price of electricity and energy intensive sectors such as mining, iron and steel.

The date of implementation of the carbon tax will be determined through a separate and later process by the Finance Minister through an announcement during 2018, or at the Budget 2019, taking into account the state of the economy, the Treasury assured.

The impact of the tax in the first phase is designed to be revenue-neutral in terms of its aggregated impact, when assessed together with the complementary tax incentives and revenue recycling measures, it averred.

“To ensure a minimal impact on the price of electricity in the initial phase, a credit for (or reduction in) the electricity generation levy and the renewable electricity premium (built into the current price of electricity) will also be introduced,” the Treasury added.

Beyond the first phase, a review of the impact of the tax after at least three years’ implementation will be conducted.

“Future changes to rates and tax-free thresholds in the carbon tax will only follow after the review, and be subject to the same transparent and consultative processes for all tax legislation, after any appropriate Budget announcements by the Finance Minister,” the statement read.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION