carbon tax
Eckart Zollner, Head of Business Development at EDS Systems, explains the complexity of the Carbon Tax Act.

A carbon tax can be said to be “present and imminent” in South Africa and it is slated to affect all industries according to the Southern African Energy Efficiency Confederation (SAEEC).

However, it is apparent that phase 1 of the carbon tax will penalise companies whose primary source of emission is energy generation. Therefore, the SAEEC states that the “obvious conclusion is that using less energy will be essential to reducing the greenhouse gas emissions and the consequent steep tax for heavy emitters”.

The SAEEC notes that the in addition to the carbon tax ‘stick’, there is the ‘carrot’ in the form of the section 12L tax incentive for energy efficiency. Section 12L benefits companies that implement energy efficiency interventions to decrease their energy intensity and employ Measurement and Verification (M&V) to quantify the energy savings for the purpose of a tax allowance.

The section 12L tax incentive is currently at 95 c/kWh for energy savings.

Carbon tax and section 12L, with M&V as a core service that provides risk assurance offer opportunities for companies, engineers and consultants in the heavy industrial sectors. Therefore, the SAEEC, an active chapter of the Association of Energy Engineers (AEE) took the initiative in hosting a workshop to explore these opportunities. The workshop was held on the 12th April 2019 at the Eskom Learning Academy in Midrand.

The carbon tax impact

The main points addressed were that the phased implementation of this tax will delay the expected significant impact until 2022. However, the assumption that the carbon tax cost will ultimately be moved onto the product price seems to remain universal, states the SAEEC. Read more: Op-Ed: Revised carbon tax Bill introduced to Parliament

The section 12L tax incentive for energy efficiency has also been extended for another term to coincide with the tax phase 1 ending in 2022. Of significance is that the first reporting period for companies on the carbon tax is from 1 June to end December 2019, “which is around the corner!”

Other topics covered during the workshop included insights into calculations, what is excluded and included, carbon budget requirements, as well as the phases and their respective requirements.

The workshop was attended by representatives from the various industries and consultants active in the energy and emissions field. The workshop was made possible by the sponsorship of Cova Advisory and Catalyst Solutions and supported by the South African National Energy Development Institute (SANEDI).

The secretariat can be reached on for access to the presentations, or to request a membership application form.