South African approach to carbon tax and implications to the cement sector

Abstract

The South African Cabinet published the draft Carbon tax Bill in November 2015 to introduce fiscal measures to reduce greenhouse gas (GHG) emissions below business as usual by 34 per cent by 2020 and 42 per cent by 2025, as well as adaptation measures to complement other national climate response measures as outlined in the 2011 National Climate Change Response Policy (NCCRP) and the National Development Plan as outlined in South Africa’s Intended Nationally Determined Contributions (INDCs) submitted to the United Nations Conference of Parties (COP) 21 of the United Nations Framework Convention on Climate Change (UNFCCC) in Paris. The Price of carbon has been set at R120/ton CO2 emissions. The purpose is for the polluter to Internalise the external costs of emitting carbon, and Contribute towards addressing the harm caused by such pollution. The carbon tax regime has included various allowances, which includes the following: Basic allowance Process allowances Performance allowance Offset allowance Trade exposure allowance Carbon budget allowance, and Fugitive emissions allowance Treasury has also indicated that the revenue collected will be utilized for revenue recycling and neutrality. The paper describes the implications to the cement sector in South Africa.