South African President Cyril Ramaphosa has signed the Carbon Tax Act into law, which will come into effect from 1 June 2019.
The Southern African Energy Efficiency Confederation (SAEEC) said in April that 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 added that 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 95c/kWh for energy savings. Read more: SAEEC explores carbon tax and the 12L incentive