The potential implications of introducing a carbon tax in South Africa

• Jurisdiction: South Africa
• Date: 16 August 2019
• Published date: 16 August 2019
• Pages: 88-116
• Author: De Jager, R.

88

THE POTENTIAL IMPLICATIONS OF

INTRODUCING A CARBON TAX IN

SOUTH AFRICA

ROBYN DE JAGER†

Lecturer & Programme Leader – LLB, Department of Law, Monash South

Africa

ABSTRACT

This report analyses the potential implications of the proposed

carbon tax for South Africa from an environmental and an economic

perspective. A review of all the relevant literature on the topic was

undertaken and a synthesis of the information available created,

with the aim of objectively reviewing the implications of the carbon

tax for the country. It looks at implications carbon tax would have

on the country’s emissions, economic growth and employment;

arguments by various stakeholders; and the interactions between the

carbon tax and other proposed climate change mitigation measures

proposed by the government. It also concludes that carbon tax holds

negligible potential, from an emissions reduction perspective, and

that the tax could have an unsustainable negative economic impact.

The REIPPPP alone holds immense potential as an instrument for

emissions reduction. Further, this article avers that a carbon tax is

unnecessary and would be ineffective, and should therefore not be

implemented.

I INTRODUCTION

The South African government recognises that anthropogenic

greenhouse gases (hereinafter ‘GHGs’) are partly causing changes

in the earth’s climate,1 and has therefore committed to reducing its

GHG emissions by 34 per cent by 2020 and 42 per cent by 2025.2

The possibility of utilising economic incentives, such as a carbon

† BA, LLB (Rhodes), LLM (Wits).

1 Draft Carbon Tax Bill (2017) at 2, available at http://www�treasury�gov�za/public%20

comments/CarbonTaxBll2017/Draft%20Carbon%20Tax%20Bill%20December%20

2017�pdf.

2 CDC Climat Research (CDC), Environmental Defense Fund (EDF) & The

International Emissions Trading Association (IETA) ‘South Africa: An Emissions

Trading Case Study’ (2015) 2.

(2018) 4(2) JCCL&P 88

© Juta and Company (Pty) Ltd

89

THE POTENTIAL IMPLICATIONS OF INTRODUCING A CARBON TAX IN

SOUTH AFRICA

tax, to reduce emissions was first discussed in the Environmental

Fiscal Reform Policy Paper which was released in 2006.3 In 2011, the

intention to utilise these incentives was included in the National

Climate Change Response White Paper (hereinafter ‘the NCCRWP’),

which details the climate change mitigation measures which the

government intends to put in place.4 Along with the carbon tax, the

government intends to implement a carbon budgeting system5 and a

carbon offset scheme.6

The second Draft Carbon Tax Bill for the Republic of South Africa

(hereinafter ‘the Carbon Tax Bill’) was released for public comment

on 14 December 2017.7 This follows an earlier Bill which was released

for public comment on 2 November 2015.8 The stated objective of

the Carbon Tax Bill is ‘to provide for the imposition of a tax on the

carbon dioxide (CO2) equivalent of GHG emissions; and to provide

for matters connected therewith’.9 The carbon tax was announced in

2010 but due to opposition to the tax, implementation thereof was

postponed until January 2016.10 The carbon tax was then supposed

to have been implemented from 1 January 2017; however, that

implementation was postponed again, pending further consultations

with stakeholders.11 Following the conclusion of engagement with

the public, a revised bill was expected to be tabled in parliament by

mid-2018,12 and the Minister of Finance, in the 2018 budget speech,

announced that the government intended to implement the carbon

tax from 1 January 2019.13 The latest update at the time of writing

3 Ibid.

4 The White Paper on the National Climate Change Response (GN 757 in GG 34695

of 19 October 2011) at 5 (hereinafter ‘NCCRWP’), available at https://www�

environment�gov�za/sites/default/files/legislations/national_climatechange_response_

whitepaper�pdf.

5 Ibid.

6 Explanatory Note for the Draft Regulations on the Carbon Offset (2016),

available at http://www�treasury�gov�za/public%20comments/CarbonTaxBill2016/

Explanatory%20Note%20Carbon%20Offset%20Regulation�pdf.

7 National Treasury ‘Release of Carbon Tax Bill for introduction in parliament and

public comment’ 14 December 2017 at 1, available at https://www�crediblecarbon�

com/wp-content/uploads/2018/02/2017121401-MEDIA-STATEMENT-CARBON-TAX-

BILLGHcomments�pdf.

8 Explanatory Memorandum for the Carbon Tax Bill (2017) at 1, available at

http://www�treasury�gov�za/public%20comments/CarbonTaxBll2017/Annexure%20

1%20Explanatory%20Memorandum%20Draft%20Carbon%20Tax%20Bill%20

December%202017�pdf.

9 Carbon Tax Bill op cit note 1 at 2.

10 B Rennkamp Trading Off Climate Change Mitigation and Poverty Reduction in South

Africa: Drivers and Barriers to Institutional Change (Conference paper delivered at

the Berlin Conference of Transformational Climate Governance, 2016) 31.

11 Dennis Williams ‘Carbon Tax Update’ Associated Energy Services 27 October 2016,

available at http://www�aes-africa�com/carbon-tax-update/.

12 National Treasury Media Statement op cit note 7 at 1.

13 Minister of Finance ‘Republic of South Africa 2018 Budget Speech’ at 13, available

© Juta and Company (Pty) Ltd