IS YOUR BUSINESS CARBON TAX READY?

Following over 8 years of planning and stakeholder engagement, South Africa is just about ready for the implementation of the Carbon Tax.

The first phase will run from the 1st of June 2019 till December 2022. The second phase will be for the period 2023 – 2030.

 
The tax will apply to all sectors including private, public and municipal entities whose thermal capacity is 10mwh and greater. This includes industrial users such as mining operations.  It excludes, however, agricultural, waste, forest and other land use sectors. Relevant entities will need to begin the process of monitoring and reporting carbon emissions, with taxes payable through SARS. Companies are required to begin reporting before the 31st of March 2019.
Although the initial tax has been set at R120 per ton of CO2 or CO2e (carbon equivalent), initial tax exemptions aimed at limiting negative economic impacts, mean that taxes could be as little as R6 - R48 per ton of CO2/CO2e.

The carbon tax is aimed at reducing the production and consumption of fossil fuels; the burning of which is responsible for human-induced climate change. Climate change will cause catastrophic impacts to the global climate system, weather events, agriculture, disease vectors, and human health. 

These impacts not only negatively influence socio-economic development but pose a threat to the survival of all species on earth. Additionally climate change is a justice issue due to the unequal distribution of impacts. The African continent is set to be disproportionally impacted by the effects of climate change compared to more developed nations.
It is with these serious global implications in mind that 175 parties (including South Africa) ratified the Paris Agreement during the United Nations COP21 (conference of parties) in 2016. The Paris agreement is a landmark policy instrument with the aim of promoting global action and cooperation to limit the rise of global temperatures to below 2°C of preindustrial levels. Signatories have committed to a further goal of a reduction to 1.5°C in order to reduce further risks and impacts.
In terms of South African environmental management, as legislated in the South African Constitution and NEMA (the National Environmental Management Act), the carbon tax complies with the “Polluter Pays Principle”. The principal states that the costs of remedying, preventing, controlling or minimizing pollution, environmental degradation and the consequent negative health effects must be paid for by those responsible for causing the damage. Essentially this aims at internalizing the external costs of production and consumption borne on society.
The carbon tax will be beneficial to South Africa as it will generate much needed revenue to the South African government, promote carbon offsetting programs and provide an incentive for R&D (Research and Development) into cleaner production such as renewable energy.
Although enterprises such as Eskom have been forbidden from passing on the tax to the consumer, there may be other cost implications for consumer goods in the future.
Whether or not the carbon tax will be sufficient in reducing South Africa’s contribution to the global carbon footprint remains to be seen. It will, however, no doubt contribute towards the sustainable development of South Africa, thereby enabling us to meet the following sustainable development goals:

Does your organization 'THINK BIG?' We would love to partner with you on your journey. 

For further information on Luhalza's agricultural sustainability research services click here: http://www.luhlaza-iss.co.za/researchandsustainabilityinstitute
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SOURCES:
https://unfccc.int/process/the-paris-agreement/status-of-ratification https://www.un.org/sustainabledevelopment/climate-change-2/ https://unfccc.int/news/175-states-sign-paris-agreement https://unfccc.int/process/the-paris-agreement/what-is-the-paris-agreement-0 https://cer.org.za/virtual-library/legislation/national/environmental-framework/national-environmental-management-act-1998 https://www.fin24.com/Companies/Industrial/5-things-you-need-to-know-about-the-carbon-tax-bill-20181124 https://www.dailymaverick.co.za/article/2018-12-12-carbon-tax-bill-south-africas-climate-change-battlefield/ http://www.thecarbonreport.co.za/carbon-tax/ https://citizen.co.za/news/south-africa/environment/2071005/carbon-tax-is-coming-and-corporates-arent-prepared/ https://www.esi-africa.com/south-africa-parliament-passes-carbon-tax-into-law/