Carbon Tax: A success for the sustainability Sector
May 27, 2019
“The implementation of the Carbon Tax Bill in June can be seen as a significant achievement for the green building sector, and indeed every sector in South Africa working towards sustainability and carbon neutrality,” said Dorah Modise, CEO of the Green Building Council SA (GBCSA).
The contentious SA Carbon Tax Bill was passed in parliament on 19 February this year, following an almost decade-long debate and consultation process. It was first put on the table in 2010 with the Carbon Tax Discussion Paper, which was followed by the 2013 Carbon Tax Policy Paper, the 2014 Carbon Offsets Paper and then, in 2015, the original 2015 Carbon Tax Bill. Comments were submitted by business, non-government organisations, civil society, labour, state-owned entities and government line departments; with opposition met, not surprisingly from those representing the heavy emitters.
The Carbon Tax Act states that any person – a partnership, trust, community, municipal entity or public listed entity – who conducts an activity which results in the emission of greenhouse gases above the allowed threshold, will have to pay the initial phase carbon tax of R120 per ton. In its current state, the tax provides for exemptions and rebates which might mean that emitters may end up paying only R6 to R36 per ton emitted – criticised as being far too “watered down” to effect any real change in keeping global warming well below 2˚C. The tax will increase at a rate of inflation +2% and is in addition to corporate tax. When the second phase kicks in, at the beginning of 2023, the plan is to push the rate up to R600 a ton.
Greenhouse gas emissions are classed as either direct or indirect and organised into Scopes. The Carbon Tax Bill in its current form only makes provision for Scope 1 emissions, which are directly emitted by entities, like installed capacity of diesel generators. Scope 2 emissions, like purchased electricity, relate to the company’s activities but are emitted from sources owned or controlled by a third party and Scope 3 includes emissions that are neither owned nor controlled; such as waste disposal, leased assets and employee travel.
Addressing carbon neutrality from every angle
“The reality is that, due to its reliance on coal, South Africa ranks among the dirtiest energy producers in the world; we rank 16th on the global emission list and amongst the highest in the developing world. In order to honour our international commitments to The Paris Agreement on Climate Change (2015) as well as targets set by The National Development Plan, we need to address carbon neutrality from every angle,” said Modise.
The GBCSA has a 12-year history in advocating for all buildings to be designed, built and operated in an environmentally sustainable manner. “With buildings globally generating 1 in 3 tons of CO₂, green building practices can have a significant impact on combating climate change, and helping to create truly sustainable communities,” said Modise. And indeed, slowly but surely the landscape is being transformed, with green building becoming mainstream and several major property developers including star-rated greenGreen Star rated buildings in their new-build portfolios as a minimum standard.
And, with four of South Africa’s metros – Tshwane (SA’s “green” capital), Johannesburg, Cape Town and eThekweni – working towards only having zero-carbon buildings in development by 2050, according to the C40 Cities Climate Leadership Group and Sustainable Energy Africa (SEA); there is no doubt that the mindset is, and has to, move away from a reliance on fossil fuels, towards suitable energy source alternatives. With plenty of sunshine and an abundance of wind insuitable wind conditions in some regions of South Africa, it is little wonder that solar renewable energy alternatives are taking centre stage. According to a 2017 report of the International Renewable Energy Agency, solar power has fallen in price by three-quarters since 2010, while wind turbine prices have dropped by half.
Naysayers of the Carbon Tax Bill are those who state that it will diminish South Africa’s investment attractiveness and competitiveness, and that it has the potential to erode profitability through increasing costs; resulting in job cuts and exacerbated unemployment. Not surprisingly, this opposition group represents companies like Sasol, the such as those in the chemicals and energy sector multinational whocompanies which are accountable for significant volumes of greenhouse gases. which emits more greenhouse gases than the entire country of Portugal; and the Chamber of Mines. However, growth in the renewable energy sector will continue to stimulate economic development not only in a wide spectrum of capital and operational investments, but through the provision of cheaper electricity, which in time will off-set any fiscal contractions as the economy transitions away from fossil fuels.
In response to the argument of the legislation affecting the poor worst; Professor Harald Winkler laid out four programmes to reduce energy poverty that could potentially be funded by the carbon tax. This included electrification of off-grid houses; extension of free basic energy; scaling up of sustainable housing; and subsidisation of rooftop solar for poor households.
Ultimately, as Finance Minister Tito Mboweni declared during the tabling of the Carbon Tax Bill in parliament in November 2018, “climate change poses the greatest threat facing humankind”, and, in order for South Africa to play its role in the global effort, we can no longer cling to habitual behaviour, but rather need to assess how we can adapt to ensure resilience in a low-carbon economy.