21 July 2010 – SA should introduce a carbon tax, and enforce other environmental taxes, according to this year’s Organisation for Economic Co-operation and Development (OECD) survey released yesterday. SA, despite its status as a developing country, has relatively high emissions, both in absolute terms and per capita.

The International Energy Agency ranked SA as the 18th largest emitter of CO2 from fuel consumption, ahead of countries such as Spain and the Netherlands. Despite high poverty levels, SA’s emissions per capita were at least 11 tons per person. Government had made a conditional commitment to reduce its greenhouse gas emissions by 34% by 2020, and 42% by 2025.

But despite this commitment, and a review of renewable energy policy, the OECD report said SA was a late starter when it came to energy efficiency and reducing emissions. SA made little use of green taxes generally and there had been no concrete action towards pricing carbon emissions.

According to the OECD, SA had room to tax fuel and this would be recommended rather than the new carbon tax on motor vehicles to be introduced in September. Fuel taxes would tax vehicle owners according to the distance driven rather than the efficiency of the vehicle. The local price of petrol, including tax, is among the lowest in the world, at about 0,80c/l in the fourth quarter of last year.

Among OECD countries, only the US, Mexico and Canada had lower petrol prices. Fiscal consolidation offered another rationale in favour of green taxes, the report said. In general, green taxes should not be considered revenue-raising measures but could be easier to implement when there was a budgetary need for more revenue, as was the case in SA.

Green taxes could also help SA steer away from energy-intensive growth, thus easing capacity constraints in the electricity sector. Action to mitigate climate change would also benefit air quality, as SA was heavily reliant on coal, which produced a number of pollutants when burnt.