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
Likely introduction of
carbon tax
(1 January 2015)
Likely date for
mandatory reporting
(1 January 2014)
2012
2013
Historic
2014
Forecast
2015
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.
February 2013 Budget Speech
 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
 Updated policy paper by the end of March 2013 (delayed)
 Energy-efficiency tax incentive
 Revenues generated through the carbon tax will be recycled
to fund energy-efficiency savings tax incentive.
 Phasing out of the electricity levy
Impact of benchmark
Examples from 2012 Budget speech
 Company A performs on industry
benchmark of 0.9 ton CO2e/ton product
 Company B performs better at 0.85 ton
CO2e/ton product
 Company C performs worse at 1.1 ton
CO2e/ton product
Examples from 2012 Budget
speech
• Company A pays tax of 40
• Company B pays tax of 35.8 (10%
less)
• Company C pays tax of 50.4 (26%
more)
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 (2013)
 Allowances for:
 Trade exposure – Maximum 10% (2012)
 Process emissions – Maximum 10% (2012)
• Offsets between 5% and 10% (2013)
Maximum threshold 90% (2012)
• Effective tax rate between R12/ton (at 90%
threshold) and R48/ton (at 60% threshold)
Scope 1 Emissions: Tax on
Vehicles
 Tax on new vehicles of R90 per gCO2/km for
emissions above 120 gCO2/km
 Assume car will drive 100,000 km
 Tax on carbon works out on R 900 per ton for
emissions above 120 gCO2/km
Scope 2 Emissions
 Same rate and threshold as Scope 1
• Effective tax rate between R12/ton
(at 90% threshold) and
R48/ton (at 60% threshold)
 3.5 cents per kWhr electricity = R35/ton CO2
phased out (2013)
 Effective tax rate between –R23 and +R13
Scope 2 Emissions
Scenario 2:
Scenario 1:
Scope 2
Emissions
(100,000 tons)
Scope 1
Emissions
(100,000 tons)
Tax paid by Eskom
(Tax a pass-through for Eskom,
therefore no incentive to offset)
Tax paid by company
Scope 2
Emissions
(100,000 tons)
Scope 1
Emissions
(100,000 tons)
Tax paid by company
Tax paid by company:
Tax paid by company:
Scope 1:
Scope 1:
Scope 2:
Total tax:
Total offset:
40% of 100,000 tons
= 40,000 tons
Cost pass-through from Eskom
40% of 100,000 tons
= 40,000 tons
80,000 tons
10% of tax directly by company
= 4,000 tons
Scope 2:
Total tax:
Total offset:
40% of 100,000 tons
= 40,000 tons
40% of 100,000 tons
= 40,000 tons
80,000 tons
10% of tax directly by company
= 8,000 tons
Carbon priced into energy at
R48/ton
800
Carbon adds
0.6%
700
600
500
Cost of Carbon
400
Carbon adds
2%
Cost of energy
300
Carbon adds
23%
200
100
0
Electrcity
Coal
Diesel
Carbon priced into energy at
R120/ton
800
Carbon adds
1.6%
700
600
500
Cost of Carbon
400
Carbon adds
12%
Cost of energy
300
Carbon adds
58%
200
100
0
Electrcity
Coal
Diesel
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 !
Tool to calculate your carbon
footprint
• What is a carbon footprint?
• Why do your carbon footprint?
• How to do your footprint
Info
• Company details
• Fuel use, Electricity use & Fugitive emissions
• Report
Input
Footprint
• Analysis (Mandatory reporting, Emissions reduction plans & Carbon tax
implications)
Tool available for download from www.promethium.co.za
Thank you
for your
time
Robbie Louw
082 557 8646
0861 CARBON
www.promethium.co.za