SA is primed for Carbon Tax

BEGINNING SOON: PHASED APPROACH TO ENFORCEMENT SEEKS TO CREATE MINDSET CHANGE

Designed to reach certain emissions target by certain date.

South Africa is more than ready to embrace the first phase of the Carbon Tax Act, and despite the challenges it is essential to honour the country’s commitment to sustainable industry practices.

This according to EDS Systems head of business development Eckart Zollner, who explained that due to the Covid-19 pandemic the first phase of the Act’s tax deadline was delayed by three months. He suggested that businesses use this time to invest in tracking, quantifying and visualising their carbon footprint, as international deadlines remain.

South Africa’s phased approach to enforcing the Carbon Tax Act, tax-free allowances and carbon offset credits seeks to create a mindset change and increase aware of better technology to remove carbon emissions.

Many countries, notably in Europe, have embraced the concept of paying for greenhouse gas emissions. However, Zollner explained that we are all part of the global trading system, and therefore if one country defaulted it set back international efforts to curb emissions. He added that some countries had even introduced additional input tax on products from companies that did not take the issue seriously.

Who will be affected?

Whether they know it or not, consumers have already begun to pay for fuel emissions on petrol and diesel. In terms of industries most affected by the Carbon Tax Act, Zollner said that businesses with significant greenhouse gas emissions or large-scale factories would have to adhere to the Act. Most notably, Zollner said the coal mining industry would be affected because its emissions included some of the gases listed in the Act that are known to cause heavy carbon emissions.

“It won’t affect every single business. It’s only those companies which in this phase of the Act have direct control and majority ownership in the production plant. It does not apply downstream,” he explained.

Zollner used the example of a business purchasing cement from a supplier. He said the cement factory would be liable for carbon tax, but cement users would not be. “If you just use something, but don’t make it, you will not be liable for the carbon tax emitted on that product.” Therefore, the “taxpayers” referred to in the Act refer to business more than individuals. He did, however, predict changes to electricity prices, as power plants are responsible for significant carbon emissions. Zollner said that carbon tax and the importance of addressing climate change has been significant for a while. “If we don’t create sustainable living on our planet, we won’t have a home left to live in, and business won’t have healthy workers.”

Phase one of the Act

Tollner said the first phase of the Act, which runs from 1 June 2019 to 31 December 2022, aims to soften the financial blow to business and electricity prices. Phase one also seeks to create a conscience about being sustainable, and is designed to reach a certain emissions target by a certain date.

But most importantly, Zollner said that phase one allows crucial time for the Act to be understood by industries and government. He said even the concept of obtaining credits for sustainable practices would take time to be understood.

He emphasised the need to look at social sustainability, and better the efficiency of processes, especially those that are fuel intensive. The Act also puts pressure on the world to look at renewable energy as the best alternative energy source.

“The Carbon Tax Act is essentially a declaration, and this is nothing new. It’s a learning process for everyone involved. But rather swallow a small pill now than a much bigger one later down the line. And I think South Africa will fare well. The Act has good intentions, and is necessary.” –

The Act has good intentions, and is necessary