Robbie Louw
Director
Promethium Carbon
South Africa
Content
 Background to Carbon Tax in SA
 Scope 1 Emissions
 Scope 2 Emissions
 Scope 3 Emissions
 Carbon footprint tool
SA Timeline to low carbon
economy
 Framework For
A
Considering Marketbased Instruments To
Support Environmental
Fiscal Reform In SA
(April 2006 )
Long Term
Mitigation
Scenarios
(October 2007)
2006
2007
Carbon Tax
Discussion
Paper
(December
2010)
National Climate
Change Response
White Paper
(October 2011)
Defining South
Africa’s Peak,
Plateau & Decline
GHG trajectory
(June 2011)
2008
2009
National
Development Plan
2030
(August 2012)
Carbon tax
announcement in
Budget Speech
(February 2012)
2010
2011
2012
Likely introduction of
carbon tax
(1 January 2015)
Caron Tax Policy
Paper (May 2013)
2013
Historic
2014
2015
Forecast
2012 Budget Speech
The proposed design features include:
 Basic tax rate of R120/ton CO2e
 Emissions threshold of 60% (adjustable), below which
the tax will not be payable.
 A higher tax-free threshold for businesses with process
emission, with consideration given to the limitations of
certain sectors.
 Additional relief for trade-exposed sectors.
 The use of offsets by companies to reduce their carbon
tax liability.
May 2013 Policy Paper




Taxed on direct emissions
1 Jan 2015 – 2020: basic tax-free threshold of 60%
5-10% for emission-intensive & trade-exposed industries
Carbon tax rate of R120 per ton CO2 increasing at 10 % per
year
 Energy-efficiency tax incentive
 A portion of the revenues generated through the carbon tax
will be shifted or recycled.
 Phasing out of the electricity levy??
Emissions and boundaries
Source: GHG Protocol, Corporate Value Chain (Scope 3) Accounting and Reporting Standard
Scope 1 Emissions
 Taxed at R120 per ton above 60% threshold
 Allowances for:
 Trade exposure – Maximum 10%
 Process emissions – Maximum 10%
• Offsets between 5% and 10%
Maximum threshold 90%
• Effective tax rate between R12/ton (at 90%
threshold) and R48/ton (at 60% threshold)
Carbon Tax Structure
Relief – 10% for process
emissions
40% @
R120/t
Effective
rate of
R48/t
60% @
zero
Direct Greenhouse Gas
Emissions
Direct Greenhouse Gas
Emissions
Relief – 10% for trade
exposed
20% @
R120/t
Effective
rate of
R24/t
60% @
zero
Carbon Tax Structure
Relief – 10% for process
emissions
40% @
R120/t
Direct Greenhouse Gas
Emissions
Direct Greenhouse Gas
Emissions
Relief – 10% for trade
exposed
15% @
R120/t
Threshold +5%
Effective
rate of
R48/t
60% @
zero
65% @
zero
Effective
rate of
R18/t
Scope 2 Emissions
 Taxed in Eskom’s hands
 Electricity Pricing Policy allows Eskom to pass
through all taxes to users
 Rate and threshold at R120/ton and 60%
 Eskom has no access to relief mechanisms
 Offset costs in Eskom’s hands not tax – cannot
be passed through automatically
Background to CO2 in electricity:
Nersa Reason for Decision
Multi Year Price Determination 2013/14 to 2017/18
 Nersa Policy Recommendations:
o Electricity should be Value Added Tax (VAT) exempt
o The environmental levy should be used to fund IPP
development instead of imposing an additional 3% on
the electricity price increase
o Taxes/ fiscus should fund the build programme rather
than the electricity tariff.
Carbon priced into electricity
Year
2014/15
MWh energy
demand
2015/16
2016/17
2017/18
272,964
278,589
284,450
4 240
13 243
16 386
RE IPP Cost
R/ton CO2*
17
52
63
75
Non-renewable levy
– 3.5c/kWh*
38
38
38
38
48
53
53
139
155
171
R million cost
approved for RE IPP
Carbon Tax* *
Total carbon cost
*
**
56
Calculated using emission factor from Carbon Tax Policy paper – 0.91 t CO2/MWh
R120 on 40% escalating at 10% per year
289,983
19 689
Carbon priced into energy at
R48/ton
Scope 3 Emissions
 Your suppliers are going to try to pass on the
effect of the carbon tax
 Your customers are going to refuse to let you
pass the costs on to them
Cost pressure
Cost pressure
Make sure you understand your Scope 3 emissions !
Carbon footprint analysis tool
www.carbontax.co.za
Carbon tool analysis
 Requirements for mandatory reporting
 Requirements for the submission of GHG
mitigation plans
 Carbon tax impacts:
 Scope 1 emissions
 Access to relief measures
 Impacts of offsets
 Scope 2 emissions
 Access to relief measures
 Impacts of offsets
www.carbontax.co.za
Thank you
for your
time
Robbie Louw
082 557 8646
0861 CARBON
www.promethium.co.za