Carbon tax warning from heavyweight lobby group

The Industry Task Team on Climate Change (ITTCC) would also like government to make transparent the implicit price that has already been attributed to carbon emissions through the adoption of South Africa's Integrate Resource Plan (IRP2010) on electricity, which was promulgated early last year.

The IRP2010 indicates that South Africa will introduce 17 800 MW of new renewables capacity between 2010 and 2030, representing 42% of all the capacity expected to be added over the 20-year period. National Treasury spokesperson Bulelwa Boqwana told Engineering News Online that the revised paper of the carbon tax discussion document will not be released before the February 22 Budget, but that there will be communication on the issue thereafter. In the initial paper, released in December 2011, the National Treasury supported a direct tax on carbon emissions, which it said will "impose the lowest distortion" on the economy. A tax of R75/t of carbon dioxide-equivalents (CO2e), increasing to around R200/t CO2e over time, "would be both feasible and appropriate to achieve the desired behavioural changes and emissions reduction targets".

But the ITTCC's Mike Rossouw, who is also chairperson of the Energy Intensive Users Group, argues that there has been inadequate fact-based research on the ability of the South African economy to make the carbon tax leap. He argues further that there has been no recognition by government that South Africa has already introduced an unspoken carbon price through the IRP2010. Research conducted on behalf of the ITTCC shows that the cost of the transition to the proposed new generation mix could be substantial. Although he acknowledged that the prices levels selected can be contested, Rossouw stressed they are based on the latest available international benchmarks. "Runaway" power prices are already having a negative impact on the competitiveness of South Africa as a mining and minerals beneficiation investment destination and, should a carbon tax be added, that competitiveness could be undermined further, he concluded.

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