‘Weak’ carbon tax to be significantly strengthened from 2023 – Treasury official

Article originally published on Mining News Weekly on 9 July.

A leading National Treasury official has warned industry to prepare for a significant strengthening of South Africa’s carbon tax during the second phase of implementation, which will begin in January 2023, describing the first phase, which came into force on June 1, as “weak”.

South Africa’s headline carbon tax rate has been set at R120/t of carbon dioxide-equivalent (CO2e) emissions. During the first phase, however, several tax-free allowances and offsets have been included, which will result in a materially lower effective tax rate of between R6/t and R48/t.

South Africa’s largest emitter, Eskom, is exempt form paying carbon taxes in the first phase. Had it been included its yearly tax liability would have been R11.5-billion and would have placed further upward pressure on tariffs.

Speaking at a seminar in Johannesburg on Tuesday, deputy director-general Ismail Momoniat dismissed the persistent argument that the tax had been introduced to raise revenue, insisting instead that it had been designed primarily to change behaviour.

“The carbon tax is pretty weak . . . but very important symbolically,” he argued, indicating that it was likely to raise less than R3-billion a year during the first phase.

“But we have also made no secret of the fact that this tax will increase in future.”

Many in business remain sceptical, however, with some mining and industrial executives warning that the carbon tax will result in the loss of production and employment.

Business Unity South Africa’s (Busa’s) Jarredine Morris reiterated organised business’ opposition to the tax during her presentation to the seminar, hosted by Webber Wentzel and the Mail & Guardian.

Morris said that, although Busa recognised the potential benefit of sending an appropriate carbon-pricing signal, it remained concerned that the tax could deter both domestic and foreign investment.

Busa also questioned whether the tax would be an effective instrument for changing behaviour in the South African context, owing to the fact that many of the processes that underpinned mining and manufacturing activities could not be changed.

Morris was also concerned that several subordinate regulations had not yet been published, which made it difficult for companies to calculate their tax liabilities.

Busa would also continue to call on government to transition to a solution that integrated the carbon tax with the proposed carbon budget system whereby the tax was applied as a penalty in those instances where emissions exceeded the carbon budget.

However, Climate Neutral Group senior carbon adviser Silvana Claassen concurred with Momoniat’s view that the first phase had been crafted to “cushion” industry.

She said that, at R120/t, the rate was low when measured against global benchmarks that set the carbon price at between $40/t and $80/t.

“My advice to South African companies is to use the first phase to reduce your emissions so that you can reduce your tax liability come phase two,” Claassen said, arguing that the tax rate was likely to increase and the allowances decrease from 2023 onwards.

Momoniat rejected the notion that the introduction of tax ran counter to government’s ambitions to attract investment and reignite growth.

“If we are not going to deal with climate change and we are not going to make the necessary adjustments, then we are actually going to be left behind.”

He also reiterated the National Treasury’s rejection of calls for the revenue raised from the tax to be earmarked specifically for programmes that would support climate resilience, adaptation and mitigation.

“It is best for revenue to be centralised, otherwise you might find that we direct too little money towards the objective we want to meet.”

In response, Organisation Undoing Tax Abuse executive head Dr Heinrich Volmink called on the National Treasury to provide yearly reports on how much revenue was being raised from government’s various environmental levies and to juxtapose these against the allocations made for environmental programmes.

“You can still recycle the revenue into the central fiscus, but at least if we see these two figures side-by-side we will be able to see if there is some approximation  . . . I would argue that it is our fiscal right to be able to see the correlation between what’s been collected and what’s been spent in terms of carbon mitigation.”

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.

Discerning Offsetting: The Right Projects Can Take You from Carbon-Neutral to Climate+

Article by Sarah Leugers, originally published on Sustainable Brands on 21 June.

By making informed decisions on carbon credit selection, sustainability-minded companies can go beyond simply being carbon neutral — to inspire customers and employees alike with life-changing impacts.

What difference can carbon offsetting make for the planet, its people and your organization’s sustainability objectives? The answer is — a lot. But choice matters: Depending on which carbon credits you select, you may simply be compensating for your carbon footprint or — on the other end of the spectrum — helping drive development in vulnerable communities around the world.

For companies that are new to carbon offsetting, the range of carbon credits available for purchase can seem challenging to navigate. To ensure that the credits you purchase are from highest-quality projects, here are some practical questions to consider:

  • Is the project’s technology compatible with a decarbonized world — for example, not simply switching from one fossil fuel to another?
  • Did the project follow safeguards to mitigate any unintended negative consequences?
  • Have the developers engaged local stakeholders, and reflected their concerns and objectives in the project design?
  • Are the project’s claims around sustainable development or the Sustainable Development Goals (SDGs) measured, monitored and independently verified?
  • What is the economic value created by the specific project?

When projects follow these sorts of best practices, their impact can go beyond cutting carbon to delivering meaningful benefits for communities and ecosystems. This is we at what Gold Standard call Climate+ projects: those that make a positive impact for the climate, plus the broader SDGs.

But just how much impact? To respond to an increasing need to quantify the impact of investments made in sustainability efforts, Gold Standard commissioned an independent research study several years back to calculate the economic value of Gold Standard carbon credits issued from a variety of project types. A more recent study by Vivid Economics revisits these calculations with the latest data available and better geographic specificity, in a new report — Valuating the benefits of improved cooking solutions: Impact data in high resolution — released this month. The study concludes that for every carbon credit from a clean cookstove project, for example, $267 in shared value is created. For biogas, the average value created is $464 per credit. The report breaks down the details of contributions for healthecosystem conservationpoverty reduction and of course, climate protection.

These figures help organizations better understand the full impact of their carbon credit purchases. More than this, by delving into the benefit profiles of different project types, companies can choose projects that are not only high-impact, but align with their own sustainability objectives — from gender equality and clean water access to biodiversity conservation — as well as help meet net-positive goals.

By making an informed decision on carbon credit selection to support more ambitious projects, sustainability-minded companies can go beyond simply being carbon neutral. They can inspire customers and employees alike with life-changing impact — backed with quantified, verified data.

Gold Standard Offsetting Projects at Climate Neutral Group

At Climate Neutral Group, carbon offsetting services through a wide range of carbon offset projects with profound socio-economic impacts. The following projects are verified by Gold Standard:

 

IETA welcomes SA Carbon Tax

Last month IETA welcomed the formal launch of South Africa’s carbon tax and offset law, the first such measure in Africa.

See below the press release, released:

The tax of R120 (US$8) per tonne of CO2 equivalent will be assessed on greenhouse gas emissions from industrial plants in the country. This obligation can be met partially by surrendering certified carbon credits from approved standards.

“We welcome the climate leadership shown by the government of South Africa, for what is a first of its kind on the continent,” said Dirk Forrister, CEO of IETA. “The flexibility will help to ensure rapid reductions in emissions in a cost-effective manner.”

South Africa’s tax forms part of its Nationally Determined Contribution to achieving the goals of the Paris Agreement, which under which nations have agreed to reach net zero emissions in the second half of the century.

South Africa’s tax will allow emitters to use carbon credits to meet between 5-10% of their obligations under the tax.

In the first phase of the tax, only South African-based credits developed under the UN’s Clean Development Mechanism, Verra’s Verified Carbon Standard or the Gold Standard will be eligible for compliance. A future national carbon standard will also be considered. Carbon credits from projects registered and / or implemented before the introduction of the carbon tax regime will be accepted subject to certain conditions.

The official Act is available here in the government gazette of South Africa.

IETA organised a webinar on this topic in April, with participation from the National Treasury of South Africa. You can access the recording and presentations here on the IETA website.

 

About IETA

For the past 20 years, IETA has been the leading voice of business on market-based ambitious solutions to climate change. Our objective is to build international policy and market frameworks to reduce greenhouse gases at lowest cost, delivering real and verifiable emission reductions with environmental integrity. To produce meaningful prices that drive change, we support market-based policies with effective emissions targets, clear rules and flexible compliance choices. See www.ieta.org for more information.

Carbon Tax Bill Signed Into Law By Ramaphosa

This article was written by Climate Neutral Group on May 24 2019.

After nearly a decade of negotiations, the Carbon Tax Act and the Customs and Excise Amendment Act were both officially gazetted on Thursday (23 May) and will come into effect from 1 June 2019. Where the Customs and Excise Amendment Act will be dealing with the administrative issues, the Carbon Tax Act sets out the technical and financial aspects, including emissions sources, the tax rate, tax-free allowances, and so forth.

The carbon tax is aligned to the polluter-pays principle, which means that carbon emissions caused by certain activities will be taxed at a rate defined in the Act. The carbon tax is one of a mix of measures to aid South Africa’s contribution to the global effort to stabilise the currently increasing amount of greenhouse gases in the atmosphere contributing to the climate crisis. The carbon tax is a price signal, which together with other measures including the tax incentives for efficient use of energy, aims to accelerate South Africa’s transition to a low carbon economy.

What does this mean for companies with a large carbon footprint?

South Africa’s economy is carbon intensive as a result of the historic abundance of coal. South Africa ranks number 14 on the list of the world’s biggest carbon emitters.

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.

Therefore, the carbon tax will be implemented in a phased approach to cushion the impact. In the first phase, all carbon tax liable entities will receive a basic tax-free allowance of 60%. This means that 60% of the total taxable emissions will not be taxed. There are more allowances in place, such as a trade allowance, performance allowance and carbon offset allowance, all of which can bring the amount of taxable emissions down further.

Because companies with a large footprint cannot instantly reduce their tax liability, as a result of lack of technology or implications of large upfront investments, the Carbon Tax Act also allows for companies to offset a defined percentage of their taxable emissions. This means that companies can choose to buy carbon emissions reductions that are generated elsewhere, within SA borders, and reduce that amount from their taxable emissions. Eligible carbon offset projects are renewable energy-projects, landfill gas recovery or other social impact projects such as the manufacturing of an energy-efficient cooking device (“Wonderbag”) which uplifts local communities.

Franz Rentel, the South African director of Climate Neutral Group, which works with organisations to help calculate and manage their carbon footprints, said companies should determine which of their 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.

See also: 3 Steps to A Climate Neutral Business (Read more>)

“The majority of SA corporates are not ready for the carbon tax but purchasing carbon tax offsets can reduce carbon tax payable by up to 20%. There is no longer any time to wait,” he said.

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

Carbon Tax by on Scribd

CDP Identifies Top Global Cities in New Climate Change List

Originally published on May 13, 2019 by Alyssa Danigelis on Environmental Leader.

CDP published scores for 596 cities worldwide that reported to the nonprofit’s environmental disclosure program last year. This marks the first time CDP has released a list of the cities awarded an A score.

The nonprofit explained that scores are based on how effectively cities managing, measuring, and tackling greenhouse gas emissions, and adapting to climate-related risks including water security.

Of the cities scored, 43 — which represent 7% — scored an A for climate leadership and action. They included Barcelona, London, Paris, Cape Town, Hong Kong, and San Francisco. Thirteen of the top scoring cities set goals of becoming climate or carbon neutral by 2050. The Hague, Boston, and Sydney are among them.

“Cities house more than half of the world’s population and are responsible for over 70% of the world’s energy-related carbon emissions, so they could make or break efforts to tackle climate change,” said Kyra Appleby, global director for cities, states, and regions at CDP.

The nonprofit says it named top ranking cities in a bid to drive up ambition in the face of growing urgency around climate change. CDP highlighted several city initiatives:

– London introduced an ultra-low emissions zone on April 8, 2019, where drivers that have more polluting cars pay more to drive.

– Calgary is building a new light rail system that’s expected cut 30,000 metric tons of CO2e from the city’s traffic emissions every year.

– The Hague built a kilometer-long dike underneath its new waterfront boulevard thats invisible to the average citizen but offers protection from coastal flooding.

– Taipei prioritizes tackling drought and has fixed 2,200 water leaks, saving 613,300 metric tons of water per year since 2015.

“We urge cities worldwide to step up their action, set targets in line with what the latest science says is needed to prevent dangerous climate change, and transparently share their progress,” Appleby said.

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