Mixed reaction to new SA carbon tax proposals
● SA has published a new package of Carbon Tax Act regulations for public comment, coinciding with warnings from the World Meteorological Organisation that the plant has entered a new period of exceptional heat, melting ice and record sea levels due to industrial-era carbon emissions.
The South African draft regulations, dealing with carbon offset schemes, trade exposure allowances and greenhouse gas intensity benchmarks, follow the introduction of SA’s first carbon taxes in June.
In the first tax phase, which ends in 2022, companies will in theory be charged R120/tonne of carbon dioxide emissions, but offsets and other allowances will cut the effective tax rate by up to 95%, to between R6/t and R46/t.
The tax has been criticised by climate scientists and environmental groups as too low, but several business leaders say they fear it will threaten economic growth and jobs.
The new package of regulations deals largely with new mechanisms that allow companies to reduce their carbon tax liability. They include new carbon offset schemes that aim to reduce or capture carbon in new projects that reduce emission levels. These include tree-planting, energy-saving or renewables such as wind or solar power.
New offset standards will be developed with the World Bank, but several critics have questioned the real carbon savings achieved.
Business Unity SA (Busa) says it engaged with the Treasury during the development of the new allowances, but is still reviewing the draft regulations and will only be able to comment in due course.
Busa’s environment and energy policy manager, Jarredine Morris, said: “The reality of climate change and its implications is clear and unequivocal and Busa is committed to addressing climate change and building climate resilience. We further believe that the success of meeting our commitments and responsibilities to address climate change lies in the development of a robust, holistic, integrated and aligned mitigation system.”
Johannesburg carbon consultancy firm Promethium Carbon welcomed the new regulations, saying they provided a kick-start to several companies to launch new smallerscale offset projects.
Promethium director HJ Swanepoel said several companies have been holding back from such projects, reluctant to incur costs until there is regulatory certainty.
Carbon offset
The Minerals Council, which has previously characterised SA’s carbon tax as “a good cause pursued through the wrong method at the wrong time”, said: “On the basis of a very initial study of the regulations, we can say that while they address the Phase 1 period, they don’t appear to provide sufficient clarity on Phase 2 to enable companies fully to assess the impact for the period from 2022.”
The Centre for Environmental Rights and the Life After Coal Campaign reiterated their objection to carbon offset schemes, which “enable large gas emitters to further escape liability from an already toothless carbon tax system”.
Centre attorney Nicole Loser said: “The carbon offset regulations are unlikely to give rise to a meaningful reduction of emissions, and so are not aligned with the state’s constitutional duties to implement proper emission reduction measures to protect the people of South Africa from the impacts of climate change.”
Last week, in the annual UN Emissions Gap Report, experts said that global emissions continued to soar — hitting a new high of 55.3 gigatonnes of CO2 equivalent in 2018.
The South African government’s Climate Change Response white paper states that even under conservative scenarios it is “predicted that by mid-century the South African coast will warm by around 1 to 2°C and the interior by around 2 to 3°C … By 2100, warming is projected to reach around 3 to 4°C along the coast, and 6 to 7°C in the interior”.
“With such temperature increases, life as we know it will change completely.”