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Environmental levy implementation delayed


22 October 2008 – A 2c/kWh environmental levy on traditionally generated electricity has been postponed to July.

“The proposed electricity levy, delayed until next year, will be broadened to cover other large carbon producing enterprises,” a National Treasury representative said.  It is believed the implementation will coincide with the start of the next municipal financial year.

“The electricity levy should be seen as the first step towards the introduction of a more comprehensive emissions based carbon tax,” the 2008 medium term budget policy statement from National Treasury said.

All renewable forms of energy generation such as wind, solar and water, will be exempt from the levy, which will be collected at source by the generators.

The initial announcement of the levy was met with dismay and resistance, as South Africa’s electricity prices are already increasing by some 28%.  While the announcement of the delay in implementing the levy has been met with disappointment by organizations such as Earthlife Africa, Business Unity South Africa (BUSA) has welcomed the decision.

The carbon trading market is maturing and treasury commented: “South Africa is exploring the use of similar market based mechanisms to encourage companies to produce more efficiently.”

South Africa is the 20 largest CO2 emitter in the world and has one of the highest rates of greenhouse gas emissions per unit of gross domestic product.

South Africa ranks among the 20 largest CO2 emitting countries, and has one of the highest rates of greenhouse gas emissions per unit of gross domestic product.

Government also announced plans to scale up energy efficiency programmes and has allocated an additional R180 million (US22.5 million) for demand side management initiatives.

“The principal focus is replacing incandescent light bulbs with compact fluorescent light bulbs as part of the strategy to mitigate against the current electricity emergency situation,” the National Treasury said.

An allocation of US$2.5 million has also be made for retrofitting of government buildings to improve energy efficiency.