SA postpones carbon tax

By Antonio Ruffini

South Africa, whose electricity and liquid fuels industries are highly dependent on coal, with limited alternative options for the majority of consumers, has pushed out the proposed implementation of a carbon tax, originally intended to come into effect in 2015, to 2016. The country which is short of generation capacity is building two new large coal fired power stations totalling some 9.6 GW, Kusile and Medupi. The first unit of the six unit Medupi power station is according to national power utility, Eskom, expected to produce first power towards the end of 2014.

The country is also planning for another coal fired power station (currently referred to as Coal 3) as Eskom’s existing coal power station fleet will begin to retire in the 2020s. This is not all bad news for those worried about the country’s carbon footprint as the newer more energy efficient plants will supersede the older less efficient stations.

The delay in the implementation of a carbon tax in South Africa has been welcomed both by opponents and proponents of such a tax, the latter who feel more planning is required to channel the funds from such into appropriate programmes to improve the country’s carbon profile. The plan to introduce a carbon tax in South Africa is contentious as related questions have been raised as to what degree the country should sacrifice economic growth to pursue a climate change agenda. The government’s increasing support of fracking and the use of gas as a means to move down the carbon curve could be a more sensible approach.

In addition, the postponement of the carbon tax has been welcomed as there has been suspicion that the implementation of a carbon tax is simply an additional revenue collection mechanism, disguised in a form that will limit opposition. The government however, denies this and claims that the sole purpose of the tax is as a measure to help South Africa reduce its carbon footprint.

At his recent budget presentation South Africa’s finance minister Pravin Gordhan said the reason for the delay in a carbon tax was to ensure have a coherent, well-aligned set of measures. He said that the country’s national treasury was involved in designing the tax, but the departments of water affairs and forestry and environmental affairs are also busy with a number of initiatives and government has to ensure the total package is coherent and synchronised.


Comments are closed.