The Energy Research Centre (ERC) at UCT - noting the preamble to this bill - which refers to the carbon tax providing “appropriate price signals to help nudge the economy towards a more sustainable growth path”, says what is actually required is the transformation of our energy economy and not a nudge.
Commentators, however, have warned that any business which fails to understand the implementation of the Carbon Tax, to plan for it, and to be ready for it… does so at its peril.
The tax is expected to be implemented in January having been in the making for some years with several rounds of consultation and much discussion. South Africa is currently below our emissions targets in terms of undertakings on global warming, and the tax will put us ahead of other countries. However, if we do not implement the tax we could face having import taxes placed on our exports - because the importing country would not want their taxes to be compromised by imports from a country that did not have a tax.
The ERC also pointed out that a simpler tax design would be more effective and that looking to the future, Treasury should consider looking at other options. Options that allow greater flexibility for the economy, or variations such as consumer- rather than producer-based-tax, and border tax adjustments.
The ERC is also concerned that there is no operational link to the national mitigation goal and suggests that the carbon tax rate be adjusted on an annual basis, depending on where we find ourselves in relation to the peak, plateau and decline trajectory.
Fossil energy is seen as a burden on health systems and the cause of environmental degradation and the tax should encourage companies to change their habits and use already constrained resources more efficiently. Unfortunately it is also likely to force the costs of using fossil energy to be passed on to anything that is produced using fossil power.
Eskom is a major problem as it produces half of the country's emissions; It is responsible for 230-million tonnes, but gets a 70% discount. These taxes, they have warned, cannot be absorbed and would have to be passed on to the consumer.
Oil is the country's largest single import and reducing this dependency would help the balance of payments.
Renewable energy on the other hand is becoming increasingly attractive with spending on research and development in technology driving down the price of renewable energy, and a reliance on fossil fuels.
The ACDP calls on government and the next parliament to ensure that the impact of the tax does not overly burden consumers.
The ACDP is disappointed that Treasury will not earmark the carbon tax for renewable energy projects but notes that it is being used for incentives and tax reductions to lower the impact on poorer people, and industry. The ACDP calls on the next parliament to ensure accountability in this regard and proof that these funds do make a difference to the poor.
ISSUED BY: CHERYLLYN DUDLEY MP
20 November 2018