Seaweed Pods, Anyone? Marathons Get Creative to Stop Littering the Streets

Written by Sarah Mervosh, originally published on New York Times on 30 April 2019.

 

Months of training. Miles upon miles of pounding the pavement. A careful calibration of diet, sleep and the perfect running gear.

It all ends with one race day. And so much waste.

Marathons and other high-profile running events often leave behind vast trails of trash, with plastic water bottles scattered in the streets and mounds of clothing left behind at the starting line. It can be an ugly sight, and over the weekend, the London Marathon made headlines for trying to address the problem by handing out biodegradable, liquid-filled seaweed capsules at one of its mile markers.

But as more and more marathons take steps to reduce their environmental footprint, you may be surprised to learn that the waste you see on the streets after races is not necessarily the biggest problem.

Here’s a look at how marathons are trying to shrink their environmental impact, and what runners and spectators can do to help.

 

While the bottles and cups that athletes toss in the streets during marathons seem like a problem, most races do a good job of collecting and recycling that litter, according to the Council for Responsible Sport, which evaluates the environmental and social effects of sporting events around the world and offers certification for those that adhere to best practices.

“No one likes to see a street full of single-use plastic bottles, but as long as that’s getting cleaned up and recycled, what makes that any different from you doing that in your home?” said Shelley Villalobos, the group’s managing director.

Recycling is a strong option, she said, and reducing the amount used is even better. Some marathons have gotten creative to try to limit their single-use plastic and other trash.

This year’s London Marathon, for example, reduced the number of plastic bottles by more than 215,000 compared with last year, by cutting the number of drink stations on the course to 19 from 26.

It was one of several steps the marathon took this year as part of a goal to send zero waste to landfills by 2020, and the marathon was still evaluating whether the pods were effective, according to the event director, Hugh Brasher.

In Connecticut, the Hartford Marathon Foundation worked with an engineering company to create a 40-foot-long drinking fountain for the finish line of its race. The contraption, known as the Bubbler, allows multiple people to drink at the same time and is estimated to have saved about 85,000 plastic bottles and wax cups since 2007, according to the foundation.

Some races also collect tossed clothing for donation and offer composting for bananas, apples and other post-race recovery food.

And what about those metallic blankets that runners wear at the end of races? Those can also be recycled. Heatsheets, a popular brand of the blankets, has a program to donate the used blankets to a company that makes wood-alternative decks and railings.

 

While N.F.L. games and other popular sporting events create enormous amounts of waste, marathons that snake through neighborhoods and past people’s homes are an in-your-face reminder of human consumption. “It brings it out onto the streets, literally,” Ms. Villalobos said. But perhaps their biggest environmental harm is something you can’t readily see: carbon footprint.

For one thing, races give away thousands of T-shirts and medals, which take up materials and energy to make and ship. “If they are over-ordered, that’s wasteful demand,” Ms. Villalobos said. “Is that any better or worse than having single-use plastic bottles and then recycling them?”

The Chicago Marathon, which is the only one of the world’s six major marathons that has been certified by the Council for Responsible Sport, offers participant shirts that are made from recycled material. The ribbon on the finisher medal can also be recycled, said the race director, Carey Pinkowski.

And the marathon starts and finishes in the same park, which reduces the need for driving on the day of the race. “The majority of our participants can walk from their hotel room,” Mr. Pinkowski said.

But there is still another problem: All the people traveling to the marathon. The world’s biggest marathons, including Chicago, New York and London, have upward of 40,000 runners, and many of them and their loved ones fly or drive to get there.

Climate Neutral Group, which helps organizations limit and offset their emissions, found that 97 percent of emissions from the Cape Town Marathon came from participants’ air or road travel. The marathon invested in local projects to offset those emissions and has been designated as “climate neutral” since 2014, according to the group.

One of the most effective things you can do to make a marathon more eco-friendly is to offset your own travel, Ms. Villalobos said. Some events, including a 10-mile race in Washington, D.C. that is scheduled for around when the cherry blossoms bloom each spring, offer the chance to buy carbon offsets during race registration.

Some airlines, including United and Delta, also offer options to donate money or miles to offset the greenhouse gas emissions from your travel.

“If they are coming from out of town and they are not planning on planting a few trees while they are in town, I’d say that’s probably the best thing they could do,” Ms. Villalobos said.

Climate Neutral Group can assist in making your event carbon neutral. Contact us on info@climateneutralgroup.co.za

Post It Note on Pin Board with light bulb drawn on it

City of Cape Town calls for Submissions on an “Innovative Sustainable Energy Solution”

The City of Cape Town is calling on people to submit their innovative sustainable energy solutions to help improve service delivery. The deadline for submissions is 14 June 2019.

About

According the City of Cape Town (CoCT) “sustainability is essential” in achieving their vision for “a more resilient future for the citizens of Cape Town”, thus playing a key role in their planning and decision-making.

CoCT aims to evaluate the market for sustainable energy interventions that can be added to their existing programmes in order to improve energy security and secure a pathway to low carbon development.

CoCT is calling on citizens to share their ideas or other input that could improve the city’s existing and/or new infrastructure and data.

Areas of interest include, but are not limited to:

  1. 1. Alternate transportation
  2. 2. Alternate waste management
  3. 3. Demand-side management and load shifting
  4. 4. Energy efficiency
  5. 5. Micro-grids for backyarders and un-electrifiable areas
  6. 6. Renewable energy
  7. 7. Smart metering
  8. 8. Institutional or policy changes in support of the above

Download and read the full Request For Information (RFI) Notice for more information.

Evaluation criteria

Proposed solutions should be designed to allow for adapting, upgrading and integrating into the city’s current infrastructure and address one or more of the particular areas identified in the Request for Information (RFI), as follows:

Each idea will be evaluated with the following criteria in mind:

  • behavioural change
  • energy security
  • Implementability
  • job creation and income generation capacity
  • skills development
  • sustainability

Submit your ideas

To have your submissions considered, all you need to do is submit a proposal detailing the solution you recommend along with supporting documentation. Local and international submissions are welcome.

Step 1: Download and complete the proposal template
Step 2: Combine your proposal and any supporting documents into one PDF document:

  • Submissions should not exceed 10 pages (including supporting documentation).
  • The maximum size for submissions is 10 MB.

Step 3: Submit your proposal online.

For more information about the RFI or have any questions, send an email to:innovation@capetown.gov.za.

Article originally published on www.capetown.gov.za

wind-turbines-on-field

3 Steps to a Climate Neutral Business

In 2018, the world’s leading climate scientists warned us that to avert climate change catastrophe we must cut global carbon emissions by 45% by 2030 and become climate neutral by 2050. In order to do this, government and businesses must make unprecedented changes to implement climate adaptation and mitigation strategies.

Becoming a business on a journey to climate neutrality is no longer a matter of simply “doing the right thing”. It has become a necessary way of future-proofing against environmental risks and threats that will negatively affect business and all people around the world.

Many places around the world are starting to declare a climate emergency whilst many large companies around the world are now addressing these threats by investing in short and long term strategies to mitigate environmental and social risk factors.

How to become a climate neutral business

1: Measure

Like a doctor measuring a patient’s pulse, establishing a baseline carbon footprint provides a valuable indicator of possible areas of where your business needs to improve. By identifying the internal carbon cost and the emission “hotspots” across your business, a clear climate strategy can be defined in order to reduce emissions and ultimately save money too.

At Climate Neutral Group, we use the footprinting software solution CO2management which allows you to set up and be in control of a standardised monitoring system to continuously measure and adjust your targets and strategy.

2: Reduce

Setting science-based targets provides companies with a clearly defined pathway to future-proof growth by specifying how much and how quickly greenhouse gas emissions will need to be reduced while ensuring transformational action is aligned with current climate science.

What is a science-based target?
A science-based target is a greenhouse gas emissions reduction target that is in line with the level of decarbonisation required to keep global temperatures below 2 degrees Celsius compared to pre-industrial temperatures, as described in the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC AR5).

Once science-based targets have been set, potential emissions reductions can be identified and a low-carbon transition plan can be developed.

3: Offset

Not all carbon emissions can be eliminated. The remaining unavoidable greenhouse gas emissions can be offset by financing cost-effective low-carbon energy projects which reduce emissions elsewhere.

By offsetting the impact of your business and purchasing the equivalent amount of carbon credits from certified offset projects, you are taking full responsibility for emissions that can’t be eliminated.

Carbon offsetting should not be the only step in a low-carbon strategy and should only be for the emissions that cannot be eliminated.

At climate Neutral Group, we have a number of offsetting projects worth supporting.

How Climate Neutral Group can Help

We are a leading carbon 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 become a low carbon and climate neutral business.

Polluting Factory

Carbon tax gets a muted welcome

Written by Tshegofatso Mathe, originally published on Daily Maverick on 

A carbon tax from June  1 this year will add 9c a litre to the petrol price and 10c to diesel. This comes on top of the recent hike of 74c a litre to cover exchange rate and product changes — and there might be more of those to come.

There will also be a general fuel levy increase of 15c a litre on April  3, as announced by Finance Minister Tito Mboweni in his budget.

The carbon tax on fuel, which will go into the general revenue fund and not towards environmental expenditure, is an attempt by the government to honour its climate change commitments. South Africa agreed at COP15 in 2009 to cut its emissions by 34% by 2020 and 42% by 2025.

The Carbon Tax Bill, tabled in 2016, has been adopted by the National Assembly and is being processed by the National Council of the Provinces.

Notably, though, Eskom is intent on being exempted from the new carbon tax until 2022 because, in part, the utility already pays an electricity levy on its generation of nonrenewable electricity.

According to Harald Winkler, from the Energy Research Centre at the University of Cape Town,“the utility is paying 3.5c per kilowatt-hour in a levy on electricity generated from non-renewables, so that was considered an indirect carbon tax and the utility said it won’t pay a direct carbon tax at the moment”.

Eskom is the largest carbon dioxide emitter in the country. According to its 2018 annual report, it produces 205.5-million tonnes each year.

But the utility manages its air pollution controls poorly, which severely affects people’s health. According to a presentation to the department of environmental affairs in 2017 by United Kingdom-based air quality and health expert Dr Mike Holland, pollution from Eskom’s coal power stations is estimated to cause the premature deaths of more than 2 200 people a year and results in thousands of cases of bronchitis and asthma in adults and children.

A report by United States coal plant expert Ranajit Sahu, released in February, showed the utility had failed to meet its own air quality standards over a 21-month period until December 2017. Its coal power plants exceeded its already lenient licence conditions nearly 3 200 times.

In response to questions, Eskom said it supports the carbon Bill.  Deidre Herbst, Eskom’s senior manager for environmental management, said: “With the mechanisms that national treasury have put in place, the impact of the Bill in its current form is expected to have a negligible effect on Eskom until the end of 2022. After 2022, the removal of the renewables rebate can be expected to have quite a significant impact on electricity price increases in 2023 onwards.

“Eskom is undertaking financial modelling work to determine this full impact. The results of this work will continue to be shared with the national treasury.”

Meanwhile, Eskom has to find alternative and less harmful ways to generate electricity.

According to Louise Naudé, the manager of the low-carbon frameworks programme of the World Wide Fund South Africa, Eskom “is supposed to be producing a public good for everybody in the economy. It is going to be exempted for a few years, which will give it enough time to make its electricity less and less dependent on coal.”

The issue is not without controversy. Environmental critics say the Bill is too little too late, but those promoting it say it should be seen as the beginning of a transition.

There is also concern that allowances during the transition phase are too generous and others take a more cynical view and see the tax simply as a ploy to collect more tax without necessarily reducing greenhouse gases.

And then there are those who are pleading to be completely exempt from it.

All emitters will initially get an allowance of 60% and only be taxed on 40% of their emissions. But in some cases, depending on how emitters compare with one another, the allowance can be as much as 95%.

The initial tax will be set at R120 a tonne, which Bobby Peek, the director of nonprofit environmental justice service GroundWork, sees as being too low. He said the tax should be much higher for it to have an effect.

“The idea of a carbon tax is not enough. International research indicates that to move the market the tax needs to be between R560 and R1 120 per tonne in 2020, and that it must rise from there.”

In reality, Peek said, in reality, the effect of the allowances “allows so many loopholes that the actual rate will be between R6 and R48 a tonne”.

Naudé was also critical of the rate: “The allowances can add up to 95%. Companies were very strong in lobbying against this tax, so basically they won the day. There were others who understood the bigger picture and understand we need to reduce our carbon emissions. It’s not all businesses who were resisting this; it’s only those who were heavy emitters.”

The tax may be low, but companies are still pushing back. In Parliament on Tuesday, the Airlines Association of Southern Africa argued that the tax will undermine the competitiveness of local flights.

But according to Climate Neutral Group’s country director for South Africa, Franz Rentel, although this will be the case now, eventually international operators will be subject to carbon taxes too.

Chemical company Sasol said it was ready to comply with the carbon tax, but it had some reservations about how this has been structured.

Johan Thyse, Sasol’s vice president of regulatory services, said: “To ensure that South Africa’s transition is orderly and just, developed policy needs to be clear and cohesive.

“We remain of the view that policy in the form of standalone carbon tax in its current design is not in the best interests of South Africa as it further diminishes the country’s investment attractiveness and competitiveness.

“It appears to be drafted in a manner that prioritises revenue collection over mitigation.”

Business Unity South Africa (Busa) also complained to parliamentarians about the structure of the Bill.

“The tax should factor current economic circumstances. Busa is not opposed to the carbon tax [but] there are certain principles in its current form that warrant further revisiting,” said Jarredine Morris, the organisation’s energy and environment manager.

Trade union federation Cosatu deemed the tax “lazy”, adding that it is “concerned at government’s late approach to resolving climate change and its many other crises”.

“We are equally appalled by the business profit-above-all-else approach. However, we do concede that government has lowered the levels of the tax in response to industry and workers’ concerns.”

 

 

 

Are you ready for the Carbon Tax Bill?

Written by Beatrix Knopjes, originally published on Isometrix on February 27, 2019

On 21 February 2019, South African Finance Minister Tito Mboweni announced that the Carbon Tax Bill will come into effect on 1 June 2019. This announcement is the culmination of nearly a decade of preparation and consultation with industry stakeholders.

The Climate Neutral Group in partnership with IsoMetrix have developed a turnkey solution to help organizations manage their carbon footprint and associated tax liabilities.

What is the Carbon Tax Bill?

The Carbon Tax Bill imposes R120 on each ton of CO2e (carbon dioxide equivalent) directly emitted by a company’s operations. The implementation of this tax follows a phased approach. The first phase commences on 1 June 2019 and will last until 31 December 2022. The biggest difference between the first and following phases is that during the first phase companies enjoy a basic tax-allowance of 60 or 70%. This feature is envisaged to fall away come the next phase of the Carbon Tax. The rationale behind tax-free allowances is to allow businesses time for transition by implementing measures that will reduce their emissions in preparation of a time where basic allowances no longer apply and each ton of emissions will be taxed.

Implementing a Carbon Tax in one of the world’s top carbon producing countries will benefit all South Africans in the long run and is in line with the country’s commitment to the Paris Agreement.

“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.” Mboweni said in his speech.

Where does this leave South African businesses?

Silvana Claassen, Senior Carbon Advisor at Climate Neutral Group South Africa explains that “South Africa is a carbon intensive country. This is largely due to a legacy of large coal reserves and low electricity costs that allowed industry to flourish. South African industry has been resistant to the implementation of the Carbon Tax Bill. However, global attitudes to curbing greenhouse gas emissions are turning in the direction of zero emissions technologies. As such, it is very much for the long-term benefit of organizations to reduce their carbon footprint.”

Silvana explains, it is typically companies with vested international interest that have done their homework, and often are on top of their carbon footprints enabling them to identify opportunities to reduce emissions resulting in  a direct positive impact on their bottom lines.  “Calculating a carbon footprint is not an easy task,” Silvana says, “especially when you take into account that your supply chain may pass on the cost of their carbon emissions to you. With carbon tax on the horizon, your carbon footprint comes at a cost, by reducing your emissions, you save costs. It is that simple.”

An opportunity to future proof your company

Robin Bolton, Head of Sustainability at IsoMetrix emphasizes that companies should use the time before the Bill comes into effect to put their house in order. “Organizations that take advantage of this time will get their administration sorted out,” he says, “and then implement a tool to manage and track carbon emissions.” The South African government has afforded a grace period to ease companies into their obligations that come with the Carbon Tax Bill, including the requirement to report on emissions. “This grace period is temporary,” says Robin, “by 1 January 2023, the requirements will be far stricter and the consequences far more serious.

Silvana adds that companies must see the next few years as an opportunity to future proof themselves while the tax free allowances are in place, as after this period not only do the allowances fall away but the rate per ton of CO2e will go up.

IsoMetrix Carbon Tax Module

The IsoMetrix Carbon Management module is designed to help companies calculate and manage their carbon footprint. The system enables the calculation of a company’s carbon footprint. Because of its agility, this module meets the requirements of a variety of published guidelines and protocols and allows for the use of specific factors and formulae. The added value that the IsoMetrix systems bring is that objectives and targets can be set with actions captured and tracked to ensure compliance and to meet these objectives. The partnership between IsoMetrix and Climate Neutral Group is synergistic in nature: Climate Neutral Group provides expert advice on identifying a company’s activities so that the Carbon Management module can be tailored to include reporting of associated emissions. Where IsoMetrix provides the technology tool to track and report a company’s emissions, Climate Neutral Group can propose strategies to reduce a company’s footprint and ultimately pay less tax.

For more information, contact us on info@climateneutralgroup.co.za

How SA companies can use carbon offsets to pay less carbon tax

Written by Franz Rental, originally published on LinkedIn on February 20, 2019

Yesterday, 19 February, the National Assembly passed the long-awaited carbon tax bill, clearing a key hurdle in keeping the measure on track to enter into force 1 June 2019. The bill will now be submitted to the Council of Provinces before it is sent to President Ramaphosa to be signed into law.

Under the Bill, offsets can be used to help companies pay less carbon tax. And these savings can be considerable. Many companies, including the large emitters most impacted by the tax, are not aware that by using carbon offsets they can pay up to 20% less in carbon tax, while at the same time boost their Corporate Social Investment mandate.

MARGINAL VS EFFECTIVE TAX RATE

The Bill will apply a marginal tax of R120 rand/tonne of CO2e on virtually all areas of South Africa’s economy, covering greenhouse gases sources from fossil fuel combustion, fugitive emissions, and industrial processes.

The levy will rise annually by 2% plus inflation until the end of the first phase in 2022, and then align with inflation after that.

However, emitters will initially face an effective tax rate of R6 – R48/tonne based on the suite of tax allowances available and the admissibility of offsets, with some companies able to reduce their tax burdens by as much as 95%.

Seeing that the effective tax rate is only R6 – R48 per tonne many people are under the false impression that offsets need to be priced under this rate in order to pay less carbon tax and therefore using offsets will hardly make a difference in reducing a company’s carbon tax.

But this is not the case, as I will explain below.

CARBON TAX OFFSETS

Carbon offsets, or carbon credits, from projects certified under the CDM, Gold Standard, and Verified Carbon Standard (Verra) will be allowed providing they meet certain criteria.

Some project types have been branded ineligible including HFC-23, N2O adipic acid, nuclear, CCS, and installations that have renewable energy generation capacity in excess of 50 MW.

The regulations also stipulate that projects can only be eligible if they don’t benefit from other government incentive programmes such as the Energy Efficiency Savings Tax Incentive (12L) or the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP).

Carbon offsets generated by activities that are covered under the carbon tax are also not eligible. For example, if a company implements a project that reduces the coal use in their boilers the project activity cannot be registered as a carbon offset project for use under the carbon tax as this project will result in a company paying less carbon tax (i.e. to avoid double counting).

SAVINGS FROM USING CARBON TAX OFFSETS

As mentioned above, the marginal tax rate is R120 / tonne, which means that for those emissions you are taxed on, you pay R120 / t. The effective tax rate is calculated if you divide the R120/t by the % allowances.

So for example, if your company has 1000tCO2 of process emissions you do not have to pay tax on the first 70% (tax free allowance) and therefore you only pay tax on 300t (this is your “taxable emissions”). This means you have to pay R36,000 in carbon tax (300t X 120/t).

The effective tax rate is then calculated as follows:

(R120 / 100) X 30 = R36/t.

This means you are paying R36 / t on the full 1000t (and R120 / t on the 300t). From 2022 the basic tax free allowance of 70% falls away, then you are paying R120 / t on the full 1000t.

In terms of offsets, using the above example, a company would be allowed to use 5% of the total 1000t in offsets (process emissions allows 5% offset use). This would be 50t. If this company buys offsets for, say R60, then they would save R60 / t (R120/t tax rate less R60/t offset price). Their carbon tax saving would be calculated as 50t X R60/t = R3000.

So if this company does not make use of offsets they would pay R36,000 in carbon tax. If they use offsets they only pay R33,000 (R36k – 3k). This is a saving of 8%.

As such it can be clearly seen that even though the company paid R60 / t for the offset (much higher than the R36 / t effective tax rate) they still saved carbon tax.

To conclude, as long as a company purchases offsets for less then the price of the marginal tax rate they will still pay less carbon tax.

Generally, how much carbon tax a company can save by using offsets will depend on:

  • price of the offsets – the lower the price, the higher the savings (but offsets are not free!)
  • percentage offset allowance – combustion emissions allow for 10% offset allowance – hence higher the savings compared to using 5% offset allowance for process and fugitive emissions
  • emissions profile – a company with mostly combustion emissions will save more carbon tax when using offsets compared to a company that has mostly process and/or fugitive emissions (this is due to the fact that combustion emissions have a 60% tax free allowance compared to 70% tax free allowance for process and fugitive emissions).

Due to the considerable tax savings to be had, and the fact that there will be more at least 5 times more offset demand than supply, carbon tax liable companies are advised to develop a carbon offset strategy that addresses the following crucial questions:

  • To purchase offsets, and save tax, or not?
  • Linking offsets to broader company objectives?
  • Linking offsets to CSI / social development programmes?
  • Purchasing a function of price and / or project type?
  • Who will manage this process (internally or outsourced?)
  • When to act?

Climate Neutral Group can help your company lower its carbon tax liability through a robust carbon tax offsetting strategy. We also have a large portfolio of eligible South African carbon offsets thereby maximising your carbon tax savings.

South Africa’s parliament approves long-awaited carbon tax bill

Written by Mike Szabo, originally published on Carbon Pulse on February 19, 2019

South Africa’s parliament on Tuesday approved the country’s long-awaited carbon tax bill, clearing a key hurdle in keeping the measure on track to enter into force this spring.

The margin of approval by lawmakers was unclear, but observers said the legislation was supported by a clear majority, despite some pushback from the opposition Democratic Alliance (DA).

DA lawmakers cited conflicting arguments including high unemployment and the tax being ineffective due to the price being set too low. They also contended that the levy was an inappropriate approach, and that the government should consider implementing an emissions trading system instead.

The bill will now be submitted to the Council of Provinces before it is sent to South African President Cyril Ramaphosa to be signed into law.

“The time has really come for companies to start preparing for the carbon tax, which is now all but certain to become operational and effective in little over three months’ time on June 1,” said consultancy EcoMetrix Africa.

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 since then, with the government only publishing the first draft in Nov. 2015 and big emitters including state-owned utility Eskom lobbying to further delay or completely scrap the plan.

After a number of delays, the government had intended to implement the tax in Jan. 2019, but late last year it postponed it by a further five months.

If approved in its current form, the bill will apply a tax of 120 rand ($8.49) per tonne on virtually all areas of South Africa’s economy, covering most stationary and non-stationary greenhouse gas sources and applying to fossil fuel combustion, fugitive emissions, and industrial processes.

The levy will rise annually by 2% plus inflation until the end of the first phase in 2022, and then align with inflation after that.

However, emitters will initially 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%.

GHGs from purchased electricity, known as Scope 2 emissions, are also excluded.

OFFSET ONSET

Credits from projects certified under the CDM, Gold Standard, and Verified Carbon Standard (Verra) will be allowed providing they meet certain criteria.

Some project types have been branded ineligible including HFC-23, N2O adipic acid, nuclear, CCS, and installations that have renewable energy generation capacity in excess of 50 MW.

The regulations also stipulate that projects can only be eligible if they don’t benefit from other government incentive programmes such as the Energy Efficiency Savings Tax Incentive or the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP).

EcoMetrix said its modelling estimates there will be a “considerable” shortage of usable carbon credits in the short-to-medium term.

This, it added, could trigger a revival of South Africa’s project-based offset market, which along with the wider CDM programme under the Kyoto Protocol has not yet recovered from the crash in CER prices that came following the global economic downturn.

REVIEW

South Africa’s Treasury 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.

Emitters that exceed their company-level limits will be forced to pay steep penalties.

FACTFILE:

  • South Africa’s waste, agriculture, forestry, and other land-use sectors are exempt from paying the tax 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.
  • 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 Chris Liverani on Unsplash

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