‘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.

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

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

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.


  • 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