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Carbon tax may hurt South African competitiveness

3 Dec 2012

South Africa's entire economic system is geared towards coal dependency with an abundance of relatively inexpensive natural resources, ESI-Africa reports. This makes South African industry extremely coal-reliant, with an estimated 90% of CO2 emissions resulting from coal production. Various options - such as South Africa's proposed carbon tax - are now being investigated in order to accelerate moving away from coal dependency.

An implementation of carbon tax will have significant financial consequences for selected industries in South Africa who are either unprepared to implement the carbon tax, or unable to mitigate its effects. Frost and Sullivan's team leader for energy and power, Johan Muller, says that the competitiveness of South African businesses affected by the proposed carbon tax, "needs to be urgently evaluated by ... the relevant business (and) also by government." The economic results of imposing a carbon tax would vary greatly, depending on the industry, he says.

According to ESI-Africa, informed industry adaptation will be imperative to surviving the proposed carbon tax. Strategies for the medium- to long-term should include in-depth discussions and evaluations of liabilities such as the carbon tax.

Read the full article on www.esi-africa.com.