Minister Gordhan announced in this week’s budget speech that South Africa will start paying a carbon tax on 1 January 2015.
Robbie Louw, a director of carbon advisory firm Promethium Carbon, comments on the announcement:
“With one exception, the announcement holds no surprises. All the elements mentioned are in line with the details supplied in the 2012 budget. The announcement is also in line with the National Development Plan 2030 that has formed the centre piece in many government communications since December last year.
“The elements in line with last year’s announcement are the price of R120 per ton of CO2, the 60% tax free threshold and the special relief measures for a number of industries. The price of R120 will escalate by 10% per year until 2020.
“The one piece of new information is the announcement that the levy on non-renewable electricity will be phased out when the carbon tax is introduced. The levy of 3,5 cents per kWhr currently equates to R35 per ton of CO2.
“This compares well with the R48 per ton which is the average price of emissions at R120 per ton for 40% of the emissions. The net effect of the carbon tax will therefore be significantly less than what has been anticipated and should not present an undue burden on the economy.
“The balancing act achieved by the phasing out of the electricity levy when the carbon tax is introduced is aligned with the objectives of the National Development Plan requirements to balance the implementation of the carbon tax with the need to preserve and create jobs.”