South African carbon tax bill heads for parliament vote after committee approval

Originally published on Carbon Pulse on February 5, 2019

A South African parliamentary committee on Tuesday approved the country’s carbon tax bill, moving the long-awaited levy a step closer to becoming law.

The Finance Standing Committee adopted the legislation, which if approved by the National Assembly and National Council of Provinces, and then signed by the president, will see the 120 rand ($8.97) per tonne tax enter into force on June 1 of this year.

The panel also approved a number of amendments made to the bill in December, according to consultancy EcoMetrix Africa.

“With this last technical hurdle overcome … it is now up to the political will in parliament,” said EcoMetrix partner Henk Sa, adding that, after gauging sentiment at today’s committee meeting, he believes that lawmakers will give the bill final approval.

Under current legislation, all emitters will face an effective rate of R6-48/tonne based on the suite of exemptions available and the admissibility of offsets, with some companies able to reduce their tax burdens by as much as 95%.

It’s not clear when the full parliament will vote on the bill, but there are a number of plenary sessions scheduled during the four weeks starting Feb. 19.

The term of the current National Assembly officially ends on May 6, but experts expect it to wrap up well before that as the country holds its general elections later that month.

During Tuesday’s committee session, a representative from South Africa’s Treasury said it will hold a review of the tax after three years of implementation, evaluating the headline rate and exemption thresholds while assessing the levy’s effectiveness in reducing greenhouse gas emissions.

The review will also consider how to better align the tax with other environmental initiatives – including South Africa’s carbon budget programme – and whether to expand its reach to other sectors.

The budgets will feed into sectoral targets that will help South Africa meet its Paris Agreement pledge to peak its GHGs in 2020-2025, plateau for a 10-year period from 2025 to 2035, and then cut them from 2036 onwards.

FACTFILE:

  • South Africa’s national carbon tax was first floated in 2010, a year before the country hosted the annual UN climate talks. But progress has been slow, with the government only publishing the first draft in Nov. 2015.
  • The tax will affect virtually all areas of South Africa’s economy, covering most stationary and non-stationary sources and applying to fossil fuel combustion, fugitive emissions, and industrial processes.
  • Waste, agriculture, forestry, and other land-use sectors are exempt from paying it or performing MRV until 2022 due to the difficulty in accurately measuring emissions from those sources.
  • A basic tax-free allowance of 60% is offered to all emitters, with an additional 10% for having process or fugitive emissions.
  • Another variable allowance of up to 10% is available for trade-exposed sectors, with an additional 5% available for above-average performance relating to sectoral benchmarks.
  • Each emitter has an offset usage limit of 5% or 10%, depending on their sector. Credits from projects certified under the CDM, Gold Standard, and Verified Carbon Standard (Verra) will be allowed providing they meet certain criteria.
  • Beyond that, a further 5% can be applied by companies that have developed an annual carbon budget and report it to the government.

How Climate Neutral Group can help

We are a leading carbon offsetting specialists providing carbon management and offsetting services, as well as being an established carbon tax consultant in South Africa.

Contact us to find out how we can assist to ensure that you comply with regulations and become a climate leader.

 

Photo by rawpixel on Unsplash

Landscape of power plant in distance at sunset

Carbon tax is coming, and corporates aren’t prepared

Written by Gcina Ntsaluba, originally published on Money Web on January 24, 2019

The worldwide trend is to be cleaner and greener, and a new tax is around the corner … and with business unprepared, the taxpayer will indirectly cough up.

With less than six months left before the Carbon Tax Bill is implemented on June 1, the majority of corporates are not ready for it, an expert says.

Franz Rentel, the South African director of Climate Neutral Group, which works with organisations to help minimise their carbon tax liability, said companies should determine which activities are generating tax liable greenhouse gas emissions. They should also develop a carbon offset strategy that addresses crucial questions, such as how and when to purchase carbon tax offsets.

“Purchasing carbon tax offsets can reduce carbon tax payable by up to 20%. The majority of SA corporates are not ready for the carbon tax. There is less than six months to go,” he said.

Carbon tax is a fee imposed for the burning of carbon-based fuels (coal, oil, gas) and is globally recognised as a core policy instrument for reducing and eventually eliminating the use of fossil fuels, the combustion of which is destabilising the climate.

If set high enough, the tax is a powerful incentive to switch to clean energy, because it is economically rewarding to move to non-carbon fuels and energy efficiency.

The SA carbon tax stipulates that carbon emissions from industrial processes, such as cement production and from various industrial activities including mining, will also attract carbon tax.

Rentel said ordinary citizens would not be directly affected by the carbon tax. Eskom was not allowed to pass the additional cost on to consumers and it would not affect fuel prices.

“The most likely way the man on the street will be affected is that certain commodities increase in price as the big emitters pass on the additional costs to consumers. For example, cements, steel, glass, paper. But as the carbon tax is quite low and the allowances very generous in the first phase, the additional costs will not be significant,” said Rentel.

Companies must report on their greenhouse gas emissions before March 31. The SA greenhouse gas emission reporting regulations came into effect on April 3 last year to assist the national department of environmental affairs to get information from businesses to update the national greenhouse gas inventory.

This is a requirement of the Paris Climate Agreement, which SA ratified in November 2016.

The first phase will run until December 2022 and the initial tax rate will be R120 per ton of carbon dioxide equivalent.

INFO

  • Companies can reduce their carbon tax liability by investing in carbon tax offsets from eligible South African offset projects.
  • Carbon offsets are essentially a form of trade in which an offset is purchased that funds projects that reduce greenhouse gas emissions elsewhere.

How Climate Neutral Group can help

We are a leading carbon offsetting specialists providing carbon management and offsetting services, as well as being an established carbon tax consultant in South Africa.
Contact us to find out how we can assist to ensure that you comply with regulations and become a climate leader.

Photo by Diana Parkhouse on Unsplash

The Carbon Tax is Coming – Majority of Corporates ‘Not Ready’

Written by Ingé Lamprecht, originally published on Money Web on January 24, 2019

After almost a decade of consultation, the carbon tax will come into effect on June 1, 2019.

The tax will work on the ‘polluter pays’ principle and will have the most significant impact on major energy users.

Despite concerns that the tax would lead to job losses and could cripple struggling industries, government believes South Africa should play its part in reducing greenhouse gas emissions, and that the tax will allow the country to meet targets set in the Paris Agreement around the mitigation of the effects of climate change. In line with this objective, the tax will be implemented in two phases – the first from June 1, 2019 to December 31, 2022, and the second from 2023 to 2030.

The headline carbon tax will be levied at R120 per ton of CO2e (carbon dioxide equivalents) emitted above the tax-free threshold. Depending on the number of tax-free allowances an emitter qualifies for, the rate could fall to between R6 and R48 per ton of CO2e emitted.

After announcing in his medium-term budget policy statement that the introduction of the carbon tax would (again) be postponed by six months to June 1, finance minister Tito Mboweni tabled the bill in parliament in November 2018. Industry expects it to be signed into law in February.

But while the tax is imminent, delays have caused complacency and most corporates aren’t ready for the introduction, industry insiders say.

Izak Swart, director for carbon tax at Deloitte, says that while the bill has been tabled in parliament and has remained relatively unchanged over time, some of the final regulations underpinning the legislation remain outstanding.

Final regulations outstanding

Draft regulations for carbon offsets were published for another round of consultation in November, but the final regulations must still be released. Regulations for trade-exposed sectors (manufacturers concerned about how higher manufacturing cost could affect their global competitiveness) and industry benchmarks (deductions can be made where a firm is more energy efficient and thereby more carbon efficient than the industry in which it operates) are also outstanding.

Thus, while polluters likely have a good idea of the maximum amount of tax they will have to pay, there is still some uncertainty around the offsets that might be applicable to reduce the tax liability, Swart says.

William Hughes, business sustainability consultant at Mazars, says until the regulations that underpin the carbon tax bill are released for stakeholder consultation, there can be little certainty.

“However, for those who have been following the process, it is clear how the carbon tax will work practically.”

Duane Newman, director at Cova Advisory, says the carbon tax has been a long time in the making and a lot of businesses remain sceptical about the introduction and how it might impact their businesses.

“There are questions around thresholds and entities and legal entity stuff, which does complicate calculations.”

During the first phase, only entities with installed capacity equal to or more than 10 megawatts (MW) will report their emissions and pay the tax.

Newman says calculating the tax based on capacity on site (as opposed to what is emitted) can make quite a big difference. A polluter may be caught in the net because of its ability to exceed 10MW.

Aligning carbon tax and carbon budgets

Government is also trying to align the carbon tax with carbon budgets (overseen by the department of environmental affairs), which effectively places a cap on emissions by introducing a higher tax rate (R600 per ton of CO2e emitted) where polluters exceed the budgets (projections) they have submitted to government for a five-year period, but this hasn’t found its way into legislation yet.

Newman says some large firms have argued that they won’t be liable for the carbon tax as they won’t exceed their carbon budgets, but the alignment between the carbon tax and carbon budget means that this is not the case. Some also argue that it doesn’t make sense to plan for the introduction of the tax as it is constantly postponed.

Most corporates are not ready for the introduction, he says.

Hughes agrees, and adds: “The continual delay in the implementation of the carbon tax has led to complacency among corporates. It is very important that corporates use the six months to June to get up to speed.”

As with any new tax, there are likely to be practical challenges after the introduction on June 1 – for both government and business, Hughes says.

“To mitigate these challenges from a business point of view, it will be important for businesses to fully understand the tax and what to measure and, most importantly, to have the systems and reporting mechanisms in place to do so.”

How Climate Neutral Group can help

We are a leading carbon offsetting specialists providing carbon management and offsetting services, as well as being an established carbon tax consultant in South Africa.
Contact us to find out how we can assist to ensure that you comply with regulations and become a climate leader.

 

Image credit: Thomas Millot on Unsplash

Two Important Dates Not to Miss in 2019

2019 is a landmark year for South Africa with Carbon Tax Regulations coming into effect by the middle of this year. Make sure you are in the know and stay up to date with the upcoming deadlines. If any of the following dates apply to your company, be certain to diarise them and start preparing to ensure you are ready when they do arrive.

31 March: Deadline for Mandatory Green House Gas Reporting

What is Mandatory Green House Gas Reporting?
The National Department of Environmental Affairs gathers information from businesses that have the capacity to exceed a certain green house gas emissions threshold. This is in line with international commitments to update and maintain a National Greenhouse Gas Inventory. At the same time this database provides SARS with information regarding carbon tax liable entities. The reports which are due by 31 March 2019, must be submitted in a prescribed format that differs from conventional corporate calculation methodologies such as GHG Protocol Corporate Standard and ISO14064.

Does it Apply to my business?
Companies are required to report if their installed capacity exceeds the applicable threshold for a specified activity. For example, for energy generation, this is typically 10MW total installed capacity. So if your company has 5 X 2MW coal boilers or 10 X 1MW back up diesel generators, you are above the threshold and have to report.

If you are uncertain whether you are required to submit a Mandatory Green House Gas Report, or if you would like guidance throughout the reporting-process, please do not hesitate to contact us.

1 June: Implementation of Carbon Tax Regulations

What are the Carbon Tax Regulations?
A carbon tax is a fee imposed on greenhouse gas emissions, caused by activities including the combustion of fossil fuels, emissions associated with certain chemical processes and fugitive greenhouse gas emissions. A carbon tax is globally recognized as a core policy-instrument for reducing and eventually eliminating the use of fossil fuels. Finance Minister Tito Mboweni introduced the Carbon Tax Bill in the National Assembly in November 2018 after a culmination of eight years’ worth preparing and stakeholder consultation processes. The bill which is aimed at reducing fossil fuel emissions in South Africa will come into effect on 1 June 2019. Businesses who emit beyond a certain threshold will be forced to implement greenhouse gas mitigation strategies, to engage with carbon offset solutions or pay the tax-rate at R120 per tonne greenhouse gas emitted.

Does it Apply to my Business?
Only companies who are required to submit a Mandatory Green House Gas Report will be liable for carbon tax. Companies that are liable can be awarded relief when purchasing carbon tax offsets. By doing so, a company can pay up to  20% less in carbon tax.

Our carbon tax solutions include a Carbon TaxScan which helps you measure and understand how much carbon tax your business might have to pay, a Carbon TaxCoach which helps your company lower its carbon tax liability, and a wide selection of South African Carbon Offsets.

Take a look at our Carbon Tax Q&A to find out more.

Owners of emission reduction projects with a hidden carbon component should act now to be able to meet the expected demand for offsets under the carbon tax. Do you have a project that you think could generate carbon offsets? Or do you have an existing (CDM) project that you are not sure whether you could trade the offsets under the carbon tax? Find out more about our carbon credit purchases and project development services.

Stay on top of your businesses’ role in these upcoming dates. Contact us to find out how we can assist to ensure that you comply with regulations and become a climate leader.

 

CNG Comments on Updated Carbon Tax Offset Regulations 2018

Opportunity to comment on National Treasury’s Nov 2018 Updated Draft Regulations for Carbon Offsets closes tomorrow, 14 December.

CNG has also provided comment on these updated Regulations. While we are generally satisfied with the substantial improvement from the first draft in 2016, we do feel however that some clarification is required especially when reading the Draft Regulations with the Explanatory Note.

Read our comments here.

South Africa exempts indirect emissions from carbon tax as it finalises long-awaited bill

Written by Mike Szabo, original published Carbon Pulse on December 10, 2018  /  Last updated at 03:04 on December 11, 2018

South African lawmakers last week finalised the country’s long-awaited draft carbon tax bill, and in the process made a few last modifications including exempting indirect emissions from the levy.

According to consultancy EcoMetrix Africa, the bill was finalised on Dec. 5 after two days of debate within the South African parliament’s Standing Committee on Finance, and will now head for a vote by the plenary in February.

Lawmakers on the panel made some final changes to the bill, including omitting emissions from purchased electricity, known as Scope 2 emissions.

So-called Scope 1 emissions, namely those directly from the combustion of fossil fuels and process and fugitive emissions remain covered by the tax, which under the current proposal is due to start at 120 rand ($8.34) per tonne on June 1, 2019.

“With the exclusion of Scope 2 emissions … a long-desired step in the rationalisation of the system takes place,” said EcoMetrix partner Lodewijk Nell.

“Considering the numerous electricity price hikes since 2008, and no perspective on when this series of price hikes will come to an end (the next 4.1% price hike has been announced for Apr. 2019), industry is already fully incentivised to reduce electricity consumption without any carbon controlling mechanism in place.”

In addition, the government floated annualising corporate carbon budgets rather than setting them in five-year clips.

Carbon Pulse was unable to independently verify the proposed modifications.

South Africa is aiming to harmonise the tax with its proposed carbon budgets for the country’s top emitters.

The budgets will feed into sectoral targets that will help South Africa meet its Paris Agreement pledge to peak its GHGs in 2020-2025, plateau them for a 10-year period from 2025 to 2035, and then cut them from 2036 onwards.

EcoMetrix said the changes to the tax were made to further align it with the country’s carbon budget system, which has been outlined under a separate climate bill.

It added that concerns were raised by the business community that the regulations that underpin the carbon tax bill would not be ready by next June, though it said the South African Treasury has given assurances that a review process was underway to finalise the rules and put them up for public comment.

EcoMetrix said that to date, only the bill’s offset regulations have been published for stakeholder consultation.

The Treasury last month floated a plan that would levy a penalty rate of R600 ($41.72) per tonne for emitters who surpass their company-level carbon budgets.

FACTFILE:

  • South Africa’s long-awaited carbon tax is scheduled to be implemented on June 1, 2019, with the carbon budgets imposed under a separate climate change bill starting out next year as voluntary before being made mandatory after 2020.
  • A national tax was first suggested in 2010, a year before the country hosted the annual UN climate talks. But progress has been slow, with the government only publishing the first draft in Nov. 2015.
  • Under the R120/tonne tax, emitters will face an effective rate of R6-48/tonne based on the suite of exemptions, or “allowances,” available and the admissibility of offsets, with some companies able to reduce their tax burdens by as much as 95%.
  • The tax will affect virtually all areas of South Africa’s economy, covering most stationary and non-stationary sources and applying to fossil fuel combustion, fugitive emissions, and industrial processes.
  • Waste, agriculture, forestry, and other land-use sectors are exempt from paying it or performing MRV until 2022 due to the difficulty in accurately measuring output from those sources.
  • A basic tax-free allowance of 60% is offered to all emitters, with an additional 10% for having process or fugitive emissions.
  • Another variable allowance of up to 10% is available for trade-exposed sectors, with an additional 5% available for above-average performance relating to sectoral benchmarks.
  • Each emitter has an offset usage limit of 5% or 10%, depending on their sector.
  • Beyond that, a further 5% can be applied by companies that have developed an annual carbon budget and report it to the government.
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South African govt proposes painful penalties for emitters that exceed carbon budgets

Original article was written by Mike Szabo  Carbon Pulse,
00:33 on November 30, 2018  /  Last updated at 01:07 on November 30, 2018

Companies that exceed their emissions limits set under South Africa’s upcoming climate laws will be forced to pay a penalty of at least five times the country’s carbon tax.

According to consultancy EcoMetrix Africa, the South African Treasury has floated a plan that would levy a penalty rate of 600 rand/tonne ($43.30) for emitters who surpass their company-level carbon budgets. The penalty is well above the R120 base rate of the country’s pending carbon tax.

South Africa is aiming to harmonise the tax with its proposed carbon budgets for the country’s top emitters, with both sets of proposed measures set to become law next year.

The country’s long-awaited carbon tax is scheduled to be implemented on June 1, 2019, with the carbon budgets imposed under a separate climate change bill starting out next year as voluntary before being made mandatory after 2020.

The budgets will feed into sectoral targets that will help South Africa meet its Paris Agreement pledge to peak its GHGs in 2020-2025, plateau them for a 10-year period from 2025 to 2035, and then cut them from 2036 onwards.

The carbon tax’s launch has been delayed by five months to allow the government to explore what level of penalty would help align the levy with the budgets.

Under the tax, emitters will face an effective rate of R6-48/tonne based on the suite of exemptions, or “allowances,” available and the admissibility of offsets, with some companies able to reduce their tax burdens by as much as 95%.

Carbon Pulse was unable to independently verify the Treasury proposal, but it’s understood that companies that exceed their budgets would face a R600/tonne penalty rate and, according to a separate annexure to the draft carbon tax bill introduced last week, no tax-free allowances would apply.

“This interface option will help to ensure a credible price signal to encourage behaviour change over the medium to long term, emission reduction certainty through a carbon budget, and provide the required regulatory policy certainty,” added the document published Nov. 21.

NO DOUBT

EcoMetrix Africa said officials speaking at a workshop held by the government’s Standing Committee on Finance confirmed that the draft carbon tax bill would be finalised on Dec. 5.

“From the onset it was made clear that there should be no doubt, this bill is going to happen,” the firm said.

“The political drive government demonstrated during this workshop to pass the bill is very strong. The time to act has come for any company that wants to manage and mitigate its exposure under the tax,” added EcoMetrix partner Henk Sa.

The company expects the carbon tax law to be amended to reflect the penalty rate only after the climate change bill has been approved by parliament.

The tax bill’s introduction came a week after the Treasury published new draft regulations to govern the use of offsets against the levy.

The changes are now open for public comment until Dec. 14.

Under the tax bill, companies have an offset usage limit of 5% or 10%, depending on the sector in which they operate.

Sa said he anticipates an over-the-counter (OTC) offset market to develop in the country in the first half of 2019, ahead of the start of the tax.

The proposed rules allow credits from projects certified under the CDM, Gold Standard, and Verified Carbon Standard – now known as Verra – to be used so long as they were generated in South Africa.

The carbon offset system seeks to encourage emission reductions in areas that are not directly covered by the tax, with investment in public transport, agriculture, forestry, and other land-use and waste sectors to be eligible.

FACTFILE:

  • A national carbon tax was first suggested by South Africa in 2010, a year before it hosted the annual UN climate talks. But progress has been slow, with the government only publishing the first draft in Nov. 2015.
  • The tax will affect virtually all areas of South Africa’s economy, covering most stationary and non-stationary sources and applying to fossil fuel combustion, fugitive emissions, and industrial processes.
  • Waste, agriculture, forestry, and other land-use sectors are exempt from paying it or performing MRV until 2022 due to the difficulty in accurately measuring output from those sources.
  • A basic tax-free allowance of 60% is offered to all emitters, with an additional 10% for having process or fugitive emissions.
  • Another variable allowance of up to 10% is available for trade-exposed sectors, with an additional 5% available for above-average performance relating to sectoral benchmarks.
  • Beyond that, a further 5% can be applied by companies who have developed an annual carbon budget and report it to the government.

At Climate Neutral Group we can assist you to gain more insights in your carbon tax liability. We offer a full range of services from advisory to carbon offsets.  Contact our carbon tax specialist Franz Rentel for information franz.rentel@climateneutralgroup.com.

Tito Mboweni introduces Carbon Tax Bill

Finance Minister Tito Mboweni introduced the Carbon Tax Bill in the National Assembly on Tuesday, marking the culmination of an eight-year process of preparation and consultation with stakeholders.

The tax is due to take effect from June 1 2019, and while parliament’s finance committee expects to process the bill before the end of the year, it does not envisage voting on it before parliament rises in early December for the recess.

A number of tax-free allowances will apply during the first phase of the carbon tax and will be capped at 95%. An initial headline tax rate of R120 per tonne of carbon dioxide equivalent, and various tax-free allowances, will result in an effective tax rate that will vary between R6 and R48 per tonne.

Mboweni said in his speech introducing the bill that it would benefit all South Africans and was SA’s contribution to the world.

“Climate change poses the greatest threat to humanity and SA intends to play its role in the world as part of the global efforts to reduce greenhouse gas emissions. This enables SA to be considered among the positive nations of the world.”

He noted that the process of preparing the bill dated back to 2010 when the carbon tax discussion paper was published. This was followed in 2013 by the carbon tax policy paper; the 2014 carbon offsets paper; the 2015 carbon tax bill; and the 2016 draft regulation on carbon offsets.

 

The long-awaited updated carbon offset regulations have been published

The Minister of Finance recently announced the implementation of the carbon tax effective from 1 June 2019. The Draft Carbon Tax Bill makes provision for a carbon offset allowance which provides flexibility to firms to reduce their carbon tax liability by either 5 or 10 per cent of their total greenhouse gas emissions by investing in projects that reduce emissions elsewhere in South Africa.

Following the publication of the Carbon Offsets Paper in 2014 and the Final Carbon Tax Bill in December 2017, the National Treasury today published the new updated (second) Draft Regulation on the Carbon Offset. The Draft Regulation on the Carbon Offset sets out the eligibility criteria for offset projects, and details on the administration and procedure for claiming the allowance.

Click here for the Draft Bill and the the Explanatory Note to the Draft Regulation on the Carbon Offset.

Public comments can be made until the 14th of December 2018.

 

Let’s get more job-intensive, less carbon-intensive

Published on Fin24 on Oct 02 2018 20:15, written by Louise Naude.

Growth in South Africa’s GDP has stalled, yet significant opportunities to drive a deep and sustainable economic turnaround could be missed if we don’t pay attention.

Initiatives spearheaded by the Presidency, including the Jobs Summit this week, the Investment Summit later in the year, and the recently announced stimulus package are an opportunity to re-orientate the economy to deliver reduced inequality, create jobs and livelihoods, and advance industrialisation, while dealing with the geophysical and socio-economic implications of climate change.

The era of policy making with a blind spot around climate change must be brought to a close. We don’t have the money or time to waste on perversely locking the economy further into a carbon-intensive and climate-vulnerable path.

The Jobs Summit takes place on the eve of the release of the Intergovernmental Panel on Climate Change’s Special Report on Global Warming of 1.5 °Celsius on 8 October. Economic modelling in a publicly leaked draft of the full IPCC Special Report shows that the dangers for economic growth, particularly in developing countries, are significantly greater at average global warming of 2°C than at 1.5 °C.

If the greenhouse gas emissions produced by human activity continue on the current trajectory, warming is set to exceed 3°C, by far surpassing the abovementioned 1.5 °C by about 2040. Yet, if we act swiftly and together to make far-reaching changes to be globally carbon neutral by 2050, we can still keep warming below 1.5 °C.

The longer we take, the harder it will be, and the worse and more irreversible the implications.

South Africa will increasingly face trade impacts due to reduced demand for, and trade barriers against, our high-carbon and carbon-intensive exports, such as thermal coal, locally produced iron and steel, and combustion-engine vehicles. Already, the European Union requires a binding reference to the United Nations Paris Agreement in its trade deals.

Redirecting fossil fuel subsidies is an obvious way to start stimulating the emergence of a low-carbon economy and provide for social protection of affected workers. In the liquid fuels sector alone, South Africa’s fiscus hands fossil fuel producers between R6.4bn and R28bn per year, and forgoes between R35m and R4.7bn revenue through indirect subsidies.

This excludes the price support received by Sasol via the regulated fuel price. That’s the President’s stimulus package pretty much funded right there, without having to take monies from education, health, social grants and the like.

Cutting coal is central to a climate solution in the country and globally, and re-skilling and re-deploying workers in high carbon-emitting sectors is critical. We should guard against a new economic path being shaped by the perspectives of carbon-causing companies serving their special interests behind a smokescreen of overnight job losses.

An article published on Fin24 reports that South Africa’s Standard Bank and multinational Standard Chartered Bank have adopted policies to stop funding any new coal-fired power plants. Lower investment risk is starting to swing away from carbon-intensive to lower carbon, and a tipping point will leave the country and investors with stranded fossil fuel assets and business models, and accelerating job losses.

Both the science and economic trends are clear that climate action is urgent. All government programmes and expenditure, including the President’s stimulus package, should pull in a low-carbon direction, and private investors and lenders would be well advised to do so too.

Not to do so is perverse, shoring up economic and business models that undermine development.

The required profound decoupling of development from fossil fuels and other causes of emissions opens up the opportunity to address other deep-seated systemic features of South Africa’s economy. However, there is no guarantee that a transition to a low-carbon economy will do so unless explicitly managed by a developmental state, and driven by businesses and labour with foresight. WWF advocates a Just Transition Taskforce spearheaded by the Presidency, and housed within The National Economic Development and Labour Council (Nedlac).

The flip side of a necessary winding down of the role of fossil fuels in our economy will be the opportunities to be found in a low-carbon economy, which is where the greatest potential for economic development and exponential returns on investment off a low base lie. Decisive and swift action in this direction can create a competitive advantage for South African businesses ahead of the pack.

Here are a few ideas:

•  Focus on the growing market for metals and minerals necessary for manufacturing ‘clean’ technologies.

•  Beneficiate minerals used to make electric and hybrid vehicles, and localise the assembly and manufacturing of these vehicles.

•  Localise production of water treatment and water conservation technologies.

•  Re-use industrial and household waste as inputs for manufacturing. (Moves to formalise waste economies must involve informal waste workers.)

•  Adopt climate-smart agricultural crops and practices which conserve soil carbon and reduce water use, to expand food security and rural livelihoods.

Certainly, cutting coal is central to a climate solution in the country and globally, and fortifying workers in high carbon-emitting sectors, is critical. A Nedlac task team on the carbon tax is focusing on plans for the workforce and businesses in exposed sectors.

We should guard against a new economic path being shaped by the perspectives of carbon-causing companies serving their special interests behind a smokescreen of overnight job losses.

But a fixation on a fossil fallout means we are not facing forward to greenfield job creation and intensification, and risk keeping the economy stuck in the doldrums as the world passes us by.

The workforce must be skilled in anticipation of participation, job creation must be decent, women’s under-employment can be addressed, job-intensive business models need to be pursued. The Jobs Summit needs to build climate considerations into all job creation and investment initiatives. The Summit’s agenda is to align efforts of every sector and every stakeholder behind the imperative of job creation – let that be climate-smart job creation within a just transition.