National Development Plan highlights carbon tax development
It was announced on 7 September that the cabinet has approved the National Development Plan. The plan confirms the government's commitment to implement a carbon tax as part of its plan to transform the South African economy from its current high carbon base to a low-carbon economy.
The plan calls for the introduction of a carbon tax with "appropriate conditional exemptions". This is consistent with the contents of the Minister of Finance's budget speech in February, which listed a number of such exemptions. These range from discount on process emissions, through increased tax-free emissions based on performance against benchmarks, and the allowance of emission offsets.
The plan confirms that, should Eskom be taxed, the impacts of the tax will be passed through to electricity users directly. It, however, states that the tax would be implemented alongside "direct low-carbon policy actions" designed to lower the carbon footprint of the electricity system. It continues to state that the electricity sector could apply for exemption, but that this would be phased out over time.
Significantly impact on employment
The realisation by the government that the carbon tax could significantly impact on employment is discussed with the comment that this necessitates the implementation in a "flexible manner".
Another important point is that the tax will be calibrated against sector targets. This is especially true for high-emitting sectors like the cement mining and metals and coal-to-liquids sectors.
The creation of a properly regulated domestic market in carbon offsets will enable industry to identify least-cost approaches to emissions reductions and drive private sector investment in renewable energy and mitigation.
About Robbie Louw
Robbie Louw is director of Promethium Carbon.
