South Africa Delays Carbon Tax, Endorses Fracking

  • Date: 27/02/14
  • Mike Cohen, Bloomberg

South Africa is delaying the carbon tax and endorses fracking for shale gas

South African Finance Minister Pravin Gordhan has delayed the carbon tax by one more year to 2016. Last year, he said it would start by January 1 2015. This was “to allow further consultation”.

The point of the tax is to punish companies that do not lower their carbon emissions, but also to provide incentive to companies that change the way they do business. This will be done by with a tax that steadily increases, while companies can lower how much they pay by offsetting their emissions. “This will support the shift to a sustainable economy.”

But several of the queries raised by people giving feedback about the tax have been included – the tax on dirtier forms of energy will be lowered as the carbon tax is introduced, allowing the tax to be near neutral. While the tax would be not ring-fenced and be spent on purely environmental projects, some of the revenue would be aimed at funding the newly started energy-efficiency tax initiative. This gives tax breaks to campaigns and projects that lower energy use.

Half of the respondents to the proposed carbon tax supported it, while 94% supported the intention of the tax. South Africa voluntarily committed to lowering its carbon emissions by 42% by 2025 at the Copenhagen climate conference in 2009.

Treasury had worked with the department of environmental affairs and “agreed that a package of measures is needed to address climate change and to reduce emissions”. It would work alongside environmental regulations that the department was implementing, renewable energy projects, and other programmes that worked in the environmental sector.

Fracking

In the energy mix, he also gave treasury’s endorsement of fracking of shale gas in the medium term, “to provide an additional source of energy for our economy.”

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