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Why South Africa needs carbon tax

Heeding industry’s outcry against the Carbon Tax Act 15 of 2019, the National Cleaner Production Centre South Africa (NCPC-SA) elevated this topic at the Industrial Efficiency Conference 2019. The Centre engaged industry experts and government representatives to shed light on why government introduced the carbon tax, and how industry can reduce tax liabilities.

 

In response to a question of why the government signed into law the Carbon Tax Act, Sharlin Hemraj, National Treasury Director for the Environment and Fuel Taxes, posed a rhetorical question asking, “If not carbon tax, then what to address climate change?” She emphasised that the carbon tax is governments way of nudging industry to shift towards a sustainable growth path.

 

South Africa is ranked as the 14th country in the world for greenhouse emissions. Data released in August 2019 by NASA satellites illustrates that the area around Kriel in Mpumalanga is now the world's second biggest sulphur dioxide (SO2) emissions hotspot in the world. These statistics reiterate the need for South Africa’s industry to make the shift.

 

The Act, which came into effect on 1 June 2019, imposes a carbon tax on emitters of greenhouse gases, of which industry is one of the biggest contributor. “Industry carries the second largest burden for reducing carbon emissions,” confirmed Sharlin.

 

Alf Hartzenburg, NCPC-SA’s National Project Manager for the Industrial Energy Efficiency (IEE) Project, explained that, “When the rest of the world started moving away from carbon we continued to pursue it.” He noted that the NCPC-SA struggles to convince industry to consider carbon emission projects as important. “Short-term profits are what informs decisions,” he disclosed.

 

Joslin Lydall, Carbon Tax Energy and Resource Efficiency Accredited SANAS M&V Technical Signatory, reminded the delegates that, “The carbon tax has a number of incentives.” She highlighted these as a way in which industry can reduce carbon tax liabilities. Amongst these is the carbon off-set allowance, which allows for industry to claim carbon credits.

 

The introduction of the carbon tax, and subsequent incentives, is helping to re-frame industry attitude. “The very thought of paying a penalty has reached the boardroom,” says Sharlin. She advised that now is the time to gain buy-in for previously disregarded sustainability projects to help off-set industry’s carbon emissions.