C A R B O N TA X
SA’s novel approach to carbon pricing
T
he Carbon Tax Act (No. 15 of 2019) permits the reduction of a carbon tax liability by the application of carbon of fsets to the taxable amount of greenhouse gas (GHG) emissions, and the Carbon Offsets Regulations (2019) provide for the online administrative functionality enabling the listing, transfer and retirement of offsets by an immediately recognisable set of commodity market par ticipants – buyers, sellers, aggregators, brokers and regulators. The carbon tax is an essential element of government’s Post-2020 Mitigation System and, by its imposition, South Africa becomes the first African jurisdiction (and one of only ver y few developing countries) to introduce a domestic price on carbon emissions.
Why a carbon tax? Carbon taxation and pricing must be understood
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NOVEMBER 2020
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October 2020 marked the commencement of a viable South African carbon market, established as a component of the domestic carbon tax legal regime. By Andrew Gilder, in the context of the national climate change response, which Olivia Rumble and is based on the scientifically Mansoor Parker* demonstrated acceleration of changes to the global climate system that are being driven by anthropogenic GHG emissions. South Africa is a par ticipant in the multilateral climate change legal regime and has indicated its clear intention to contribute to the global climate response through the urgent implementation of national measures. The impor tance of domestic action is not only a function of international diplomacy, global realpolitik and macroeconomics but is also driven by the need to cur tail the countr y’s elevated emissions profile and geophysical vulnerability to climate change. South Africa has the highest GHG emissions on the African continent, is among the top 20 global per capita emitters, and exhibits
a carbon intensity on par with highly industrialised countries such as Japan, the USA and China (carbon intensity is a measure of GHG emissions per unit of GDP). The National Climate Change Response Policy describes a ‘Peak, Plateau and Decline’ GHG emissions trajector y range, intended to peak emissions between 2020 and 2025, to plateau them for approximately a decade, and to achieve an absolute emissions decline from 2035. The global trend towards future carbonconstraint means that economies that avoid taking mitigating action will become increasingly uncompetitive, and throughout the lengthy
