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Johannesburg THE Treasury is considering a proposal to introduce a carbon tax at source, probably of about R100 per ton, according to industry sources.
Coal companies would be taxed on the coal they deliver to Eskom, which emits the largest amount of greenhouse gases, although Eskom itself would not pay the tax.
But a carbon tax of R100-R200 a ton could cause a 1% decline in gross domestic product in the first six years, if it was not implemented in a balanced way, tax and advisory group Deloitte warned last week.
A discussion document was expected this month, said Treasury spokesman Jabulani Sikakhane.
SA has undertaken to reduce its greenhouse gas emissions 34% by 2020 and 42% by 2025.
KPMG sustainability director Zoe Lees predicted the proposal, one of several under consideration, would meet with heavy resistance.
Palmer Development Group environmental economist Mike Goldblatt said while he had “not yet seen Treasury’s proposal, it would be easier to implement, more manageable and more comprehensive”.
“Eskom would face higher prices for coal, forcing it to look for more carbon-efficient ways to generate electricity or it would pass the cost on to the consumer. It would also result in less incentive for Eskom to invest in technology such as carbon capture and storage, although this could be addressed. Ultimately, demand for fossil fuel would drop.”
But Duane Newman, head of Deloitte’s sustainability and climate change unit, said SA “should first develop a renewable energy sector and should include incentives for companies to reduce emissions, before introducing such a tax”.
He said that a tax of R100 a ton could generate about R45bn in tax revenue as the country generates about 450-million tons of greenhouse gases a year.
But around R650bn in tax revenue was collected last year, so the proposed carbon tax represents a substantial additional burden, he said, and would be inflationary.
He said business should be able to change behaviour rather than pay the tax.
“Ideally, income generated from carbon taxes should be invested in low carbon economic sectors, including renewable energy,” he said, but added that National Treasury’s current policy is not to ringfence revenue.
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