Carbon carrot and stick

2012-02-28 19:35

Cape Town - Government is going to pursue a carrot and stick approach on carbon tax, Environment Minister Edna Molewa said on Tuesday.

The tax, announced by Finance Minister Pravin Gordhan in his Budget last week, should be a "deterrent" to polluters, she told reporters in Cape Town.

"We must finalise this matter in such a manner that it is actually dealt with very sensitively," said Molewa, noting that details of the carbon tax were still being finalised.

"We believe that it actually is supposed to be much more of a deterrent to those who are polluters, rather than [a] broad carbon tax for everybody else who is... behaving very well," she said.

Her department was making input in this regard.

Molewa said the country's industries would each be allocated a carbon budget. Each sector would have to "do its best and spend to reduce emissions".

She said it was too early to say what impact the tax might have on electricity prices,

"It will not be correct for us now to say... it will impact on electricity prices because it may well come out to be something completely different that is a stick more than a carrot.

"Or maybe even carrying something of a carrot and a stick. From where we sit, it's much more of a deterrent."

Molewa conceded, however, that the energy sector in South Africa would have to pay more carbon tax "than any other" because it produced the most carbon emissions.

She said there would be "dialogue and support" for companies that found themselves under pressure to reduce their carbon emissions.

According to Gordhan's 2012 Budget proposals, a "modest carbon tax will begin to price carbon dioxide emissions".

The minister proposed the tax - at R120 per ton of carbon dioxide (equivalent) above certain suggested thresholds - take effect during the 2013/14 tax year, with annual increases of 10% until 2019/20.

The proposal includes "a basic tax-free threshold of 60%", with additional concessions for "process emissions and trade-exposed sectors".

Any reductions achieved would be measured against a base-year or industry benchmark.

Read more on:    eskom  |  pravin gordhan  |  edna molewa  |  carbon tax

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