Carbon taxes in the news Reply

One of the more interesting aspects of this year’s Budget Speech was the carbon tax that Minister Gordhan proposed. In 2010 a vehicle emissions tax was implemented and this year the minister proposed a tax of R120 per ton of carbon to be levied from 2015. There are still many issues that require clarification and the government has promised a discussion document, but it has been interesting to read the initial reactions.

The big users of coal: Eskom and Sasol will be hardest hit by the carbon tax and when they give this cost through to consumers, the tax could increase fuel prices by an estimated 36c/l and electricity prices by between 12% and 20% (in addition to the 8% increase that NERSA has recently allowed Eskom to levy).

The first question is of course: do you know what this will do to growth and job creation? Some experts argue that the impact will not be that big. The average tax on greenhouse gasses at R120 per ton for 40% of emissions comes down to R48 per ton. Businesses may be more worried about:

  • the clarity of monitoring, reporting and verification.
  • how firms will be able to use their carbon credits against their carbon liabilities, and
  • how government will spend the levies.
Very little has however been written about the Pigouvian nature of the carbon tax – that it is aimed at reflecting the pollution cost to society that our air conditioning and driving to the mall is causing. Burning fuel pollutes and I think that we should pay for the negative externality.
Fossil fuels and emissions

Fossil fuels and emissions

Recently I went to an interesting energy seminar. Uninformed as I was, I thought that at least, global warming will be slowed by the depletion of fossil fuels. If there is nothing left to burn, we won’t completely change the climate. Turns out I was wrong. There is more than enough fossil fuels left to completely change the climate. Considering that, a carbon tax might not be such a bad thing.

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