Tag Archive | carbon tax

Carbon tax offsets on the way

Tax offsets plan almost ready for Parliament

sent to clients 12 Aug     Only a little reminding is needed that 29 July 2016 was the deadline for comments to carbontax1Treasury on the forthcoming carbon tax offsets plan which Minister of Finance, Pravin Gordhan, has promised will come into effect 1 April 2017 with some saying it might even be as early as 1 Jan 2017.

It was in 2014 that National Treasury published the first carbon tax discussion paper for public comment. It was agreed the that such a tax would be phased in over a period of time, the first phase running up to 2020. The marginal rate was the envisaged at R120 per tonne of CO2 and during phase-one, a basic percentage based threshold of 60% will apply for tax offsets below which tax is not payable in order to assist with transition into the new scheme.

SARS as usual

Everything has been based on South Africa’s commitment to the Copenhagen agreement signed in 2009 to reduce greenhouse gas emissions by 34% by 2020 and 42% by 2025 – below the “business as usual” scenario.   The motivation provided for the tax remains as “so the cost of climate change an be reflected in the price of goods and services”.

sanedi carbon capIt was agreed that the tax would be administered by SARS.    Since that date, whilst the pro and cons of such a tax caused heated debate in some circles as to whether an introduction of a price mechanism could influence consumer and producer behaviour, the inclusion of Eskom in the tax net left many feeling somewhat helpless due to the utility’s enormity.

Eskom maybe dictates

OUTA complained that “Eskom’s various electricity tariff increases of almost three times the rate of consumer price inflation over the past eight years has become a tax of its own on society.”

They added that the electricity increase impact had resulted in fact to a reduction in electricity and energy as a result and this, which coupled with reduced production and consumption, had inadvertently caused a reduction of greenhouses gases having already taken place, OUTA said.   Of course, this remains totally unproven.

Neither Cabinet nor Treasury/SARS have replied to OUTA’s call to note “unintended consequences”.  No Treasury official it appears has felt that the Copenhagen Agreement can be dis-respected and have presumably felt that OUTA’s platform that a drop in national growth, due to global events and construction problems, has had little to do with the actual design of an overall process to cut carbon emissions over the next period of fifty years or so. The argument continues.

Quantifiable is the word

Now the first phase of the tax offsets are being set in concrete with Treasury having called for comment on theemissions final formula for the first phase of tax proposals, proposing, as before in the draft, that companies can reduce their liability for carbon tax by up to 5% or 10% of their total greenhouse gas emissions, depending on their sector, by investing in qualifying projects that result in quantifiable greenhouse-gas reductions.

Treasury says that the qualifying investments and offsets are likely to be in sectors such as agriculture, public transport, forestry or waste management and the accompanying documents note…“The proposal to use carbon offsets in conjunction with the carbon tax has been widely supported by stakeholders as a cost-effective measure to incentivise GHG emission reductions.”

How not to pay tax….offsets

“Carbon offsets involve specific projects or activities that reduce, avoid, or sequester emissions, and are developed and evaluated under specific methodologies and standards, which enable the issuance of carbon credits”, SARS concludes.

It is worth noting that tax legislation usually comes in the form of a “money” Bill which Parliament can debate butgreen scorpion not amend. Should the debate raise issues, then Parliament can address Treasury who will, according to their dictates, reconsider and change if they alone see fit.  

The general feeling seemed to be from hearings was that this event had to happen in line with other established economies, although OUTA has remained strong on its views that Eskom as a major player in the energy mix is distorting the situation.

The Treasury website has all the details of rules on which tax regulations will be based.
Previous articles on category subject
Treasury’s plan for carbon tax – ParlyReportSA
Carbon offsets paper still open – ParlyReportSA
Carbon Tax under attack from Eskom, Sasol, EIUG – ParlyReportSA
Treasury sticks to its guns on carbon tax – ParlyReportSA

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Treasury’s plan for carbon tax

Morden’s thinking on carbon tax….

cecil mordenBearing in mind Cabinet has not agreed to a carbon tax at this stage, Cecil Morden, National Treasury, explained to the portfolio committee on environmental affairs that the carbon tax as currently proposed could reduce South Africa’s GHG emissions by between 35% and 45% by 2035.

It had to be noted, he said, that SA was in the top 20 in absolute global emissions.

Looking back, Cecil Morden said carbon tax policy proposals began with the Environmental Fiscal Reform Policy Paper in 2006, a Carbon Tax Discussion Paper in 2010 followed by a Carbon Tax Policy Paper 2013, a Carbon Offsets Paper in 2014 and now the current legislative drafting process.

The anticipated carbon tax implementation date, Cecil Morden said, was still mid-2016.

Balancing the books as well

The problem now was with South Africa joining with others COP15 in 2009 with a commitment to curbemissionsgraphic GHG emissions by 34% by 2020 and by 42% by 2025, the question was now of how to reduce the need for higher levels of growth and the energy and carbon intensive nature of the SA economy against the world commitment to reduce GHG emissions.

Cecil Morden told parliamentarians that there was always a concern that climate change could slow or possibly even reserve progress on poverty eradication based on the fact that most developing countries were more dependent on agriculture and other climate-sensitive natural resources for income and quality of life.

In addition, developing countries usually lacked sufficient financial and technical capacities to manage climate change, particularly in Africa and South Asia. Both of these continents seeing more substantial increases in poverty relative to a baseline without climate change, yet the cost of which would still fall disproportionately on the poor.

Done by offsets

carbontax1The rationale behind carbon tax was a means, Cecil Morden said, by which government can intervene by attempting to level the playing field between carbon intensive, fossil fuel based firms and low carbon emitting sectors using renewable energy and energy efficient technologies using a carbon offsets scheme.

In referring to the several carbon tax modelling schemes that had been produced and results of studies, the model proposed could reduce GHG emissions by between 35% and 45% by 2035, the study to be made public by the end of July 2015.

The major concerns at the moment and noted by Treasury were the impact of higher electricity prices on low income households and on the international competitiveness of exports in the world market.

Killing the cat

“The choice”, Morden noted, “had been between command and control measures, in other words byemissions regulation or by market based instruments. In other words by regulations that used legislation or administrative measures that proscribed certain outcomes usually targeting outputs or quantitative factors such as minimum ambient air quality measurements.

The second option of policy instruments that attempt to internalise environmental externalities through the market by altering relative prices that consumers and firms face.”

“Although this second option”, Morden said, “ does not set a fixed quantitative limit to carbon emission over the short term, a carbon tax at the appropriate level and phased in over time to the correct level will provide a strong price signal to both producers and consumers to change their behaviour over the medium to long term.”

He concluded that an introduction of a carbon price will change relative prices of goods and services, making emission intensive goods more expensive relative to those that are less emission intensive”.

Behavioural changes

Africa MoneyCecil Morden said that Treasury saw this as a powerful incentive for consumers and businesses to adjust their behaviour, resulting in a reduction of emissions.

MPs expressed concern that carbon offsets could be manipulated so they had to be related to actual reductions of emissions on paper, Morden replying that in terms of off-sets, there were going to be “quite rigorous requirements for how it should be monitored and Treasury would work closely with the DEA and DoE in this regard.”

Carbon thresholds the hope

In the discussions that followed Cecil Morden further noted that a carbon budget system was an evolving mechanism using information from companies to inform the budget. After a number of years, he said, the relative thresholds could be captured into absolute thresholds. The other possibility was to move towards an emission trading scheme and use the carbon budget just as an indicative monitoring tool, rather than as an instrument of penalty.

He then explained the use of border tax adjustments to try to level the playing field on imports. What ever happened, however, he promised, the entire matter would come before Parliament before South Africa participated in COP21.

Other articles in this category or as background
Carbon Tax under attack from Eskom, Sasol, EIUG – ParlyReportSA
Treasury sticks to its guns on carbon tax – ParlyReportSA
Minister Gigaba to line up Eskom for carbon tax – ParlyReportSA
Carbon tax not popularly received by Parliament – ParlyReportSA
Gordhan gives out strong message on carbon tax – ParlyReportSA
WWF warns that carbon tax must come to SA – ParlyReportSA

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Carbon offsets paper still open

emissionsCarbon tax offset plans down on paper….

A paper outlining proposals for a carbon offset programme for local businesses was released for comment a month ago, part of national treasury’s response to the challenge of reducing carbon emissions in South Africa.   Planned and instituted carbon emission reduction programmes will reduce carbon tax, the paper says.

Written comment on the paper is invited until 30 June 2014, which can be e-mailed to www.treasury.gov.za.    A little confusing at first is why what has been published should be dated 2010 but this is because the idea was first mooted in the 2010 Budget Review.

Black gold, maybe

The news of a carbon tax originally was not good for Eskom, their officials said in a submission to Parliament some time ago, Eskom being almost totally reliant on coal and to a small extent on nuclear input to the grid. What is known is that SA coal has the reputation of being particularly “dirty” insofar as carbon output is concerned making SA, relatively speaking, one of the largest emitters of greenhouse gases.

The tax itself is a form of penalty despite the knowledge of the country’s reliance on coal, the government seemingly wanting to stay in the lead as far as the question of a carbon economy is concerned.

Carbon offsets are described in the paper now published as “a measurable avoidance, reduction, or sequestration of carbon dioxide (CO2) or other GHG emissions.”

Carbon reduction

Accordingly, the “softer” aspects of such a tax are designed for those who have other avenues for reduction of carbon to be used for offsetting against the tax or who have mitigation plans in process or proven as planned.    They amount to 5% to 10% for electricity, pulp and paper and 5% fixed for other key industries with varying thresholds according to investment in reduction.

According to national treasury, the paper “outlines proposals for a carbon offset scheme that will enable businesses to lower their carbon tax liability and make investments that will reduce greenhouse gas (GHG) emissions”, the plan as proposed for comment being designed to be introduced from 2016.

In the draft Bill, certain eligibility criteria for carbon offset projects are laid down.   The proposal is that successful projects will be awarded a “tradable emissions reduction credit”.    Projects could be the subject of energy saving and efficiency; transport re-organisation; agricultural emphasis on biomass; and waste applications, for example.


In 2009, South Africa, at the UN conference on climate change, committed government to reducing carbon emissions from projected “business-as-usual scenarios” by 34 % in 2020 and 42% in 2025.  South Africa released a carbon tax policy paper last year.

The National Development Plan also calls on the nation to transform the local economy into an “environmentally sustainable low-carbon economy”.

Other articles in this category or as background

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DOE sells energy savings incentives

Energy savings incentives panacea for carbon tax….

NelisiweMagubaneDepartment of Energy (DoE) director-general, Nelisiwe Magubane, has said that the proposed new energy savings incentives will help reduce the effect of the forthcoming carbon tax due to be implemented next year.

The regulations on the “Allowance for Energy Savings” in terms of Section 12l of the Income Tax Act now announced will be linked to the tax process of the South African Revenue Service (SARS) and are aimed at encouraging businesses to continuously scale-up or intensify energy efficiency enhancements.

Magubane was announcing government’s promulgation of “pioneering regulations that will provide tax incentives for businesses that can prove verified energy savings as a result of purposefully implemented energy-reduction measures.”

Carrot and stick

The DG said, “It is important to note that, as government, we view the opportunity presented by the energy efficiency tax incentives as the proverbial ‘carrot’, as it is one of the key mechanisms [to be introduced] that will soften the impact of the ‘stick’, which is of course the proposed Carbon Tax Policy, due for implementation in 2015,” she said in her statement re-produced on the DoE website.

Treasury, in the meanwhile, noted that the incentive would calculate the energy saved expressed as a kilowatt-hour equivalent, which would then be used as a deduction against a business’ taxable income.

Forty five kilowatt-hour cents per hour would be sufficient to meet the savings requirements in terms of the regulations but this had to be verified by the South African National Energy Development Institute (Sanedi) with whom businesses searching for such savings must register.

The full regulations are to be published explaining implementation and for three months commencing January 2014, Treasury, Sanedi and SARS will “roll out a series of national workshops to assist businesses in acquainting themselves with the registration process and overall implementation”.

Energy savings strategy set at 12%

A government strategy is now ready for submission to Cabinet setting out a national target of energy intensity reduction of 12% by 2015.

Specific targets are a 10% reduction in energy consumption by the residential subsector; a 15% reduction by the mining and industrial sector; a 9% reduction by the power generation sector: a 15% reduction by the commercial and public buildings sector and a 10% reduction in energy consumption by the transport sector.

Previous articles on this subject

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Parliament: last chance to clean up

Last session of parliament….

Houses_of_Parliament_(Cape_Town)The final gathering of a Parliament is always an auspicious time. This is the thirteenth parliament of South Africa as a republic but currently the fourth under the ANC, this particular parliament having been started in 2009.   How time passes indeed.

Four times five is twenty and nobody can change the fact that this is the number of years we have had in South Africa to get things into first gear and pull away as leaders in Africa.

The poor still out there

But whilst security was always the issue in governments before 1994, service delivery to the poor has been the issue ever since, followed more recently by the need to fill the gap caused by inaction on infrastructure build.   When will the poor actually not be poor seems to be the question and in the case of South Africa the answer always seems to be within our grasp.

As do the energy, rail, transport and harbour, the communications, health and education issues seem to be equally just within our grasp.   Closing that gap is, of course, not helped by the lack of skills and training at the coalface and where it matters.

Up skilling in skills

Aspects to watch in Parliament over the coming weeks involve monitoring the reports of each department’s on the skills training aspect.  Expense was not been spared in the budget. Everybody has been given money. But the “work-hard, focused, skillful, get it done properly” Chinese mentality seems to be missing.

Where the Chinese score is through leadership and therein lies the rub in South Africa, from the top, to the most low worker.

Leadership vacuum maybe

With an extraordinarily long list of legislation to get through in the next session of Parliament it will be interesting to see if the qualities of leadership emerge at all, or the country remains driven, even at cost to basic economic structures, by imperatives to get votes.

Unusual has been the move by the President to return the Protection of State Information Bill back to Parliament, ostensibly in the light of some grammatical errors. Whilst this does not vitally affect the business world, other than perhaps a number of businesses or industries in a strategic role finding itself involved or suspected as being involved in the leaking of some highly sensitive subject – say nuclear or defence, this affair will play out noisily in our newspapers but is not really a serious business issue.

Last minute rush

Meanwhile, the last session of any parliamentary government period will always see MPs distracted by forthcoming elections whilst attempting to handle a voluminous amount of legislation that sincerely affects business and they would like to see passed before the period ends.    Consequently, the expression “fast-tracking” will occur again and again over the coming two months.

Ministers will also make many a speech from a podium aimed at the electorate, rather than adding substance to a legislative issue.  Much will involve sorting the wheat from the chaff when it comes to government policy on critical issues.

Shabangu drops a bomb

Critical issues are obviously the Minerals and Petroleum Resources amendments, bearing in mind minister Shabangu’s recent statement on “free carry” and the ability of the state  to acquire up to 50% shareholding in gas exploration successes; the combining of the liquid fuels and mining BEE charters; land reform; fracking, carbon tax and e-tolling.

Also a certain number of ministers will be attempting to justify their stay in the cabinet and the requirement of pleasing the electorate will feature more heavily on their minds than that of the international investment public. Much will have to be ignored.

This is always a bad period for South African public relations; the political lobby; government relations and for departmental heads who may get rough treatment as they report to MPs on their achievements and as Parliament progresses towards the period of the medium term budget.

Heads down.

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Carbon Tax under attack from Eskom, Sasol, EIUG

Treasury determined on carbon tax…..

clampInsofar as the policy behind the need to implement a carbon tax, for whatever reason,  there appears to a vast disconnect between cabinet and the various affected government departments, treasury and energy users, said Mike Roussow, head of the Energy Intensive Users Group (EIUG).

This main point arose in a discussion group called together by chair, Sisa Njikelana, of the parliamentary portfolio committee of energy in an attempt to find some common group on the need for such a tax.    He had invited the various parties for a round-table discussion on the subject in order to put their views.

Major run in

Present at the meeting were such major players such as Eskom, Exxaro, BHP Billiton, the South African Petroleum Industry Association (SAPIA), the pulp and paper industry and Sasol.      Treasury was represented by treasury directors Ismael Mamoniat and Cecil Morden.

However, with only members of the portfolio committee on energy present but no representatives of department of energy (DoE), department of water and  environmental affairs (DWEA) or department of agriculture and fisheries (DAFF), nor any other portfolio committees such as trade and industry or environmental affairs, the discussions had little depth, said Rossouw.

Little by little says treasury

Treasury added to the discussion by stating that the point of departure was the White Paper on Climate Change and this was the basis for the tax proposals before them. The object was to change behaviour but unlike smoking legislation, such a tax would be introduced at a very low level so that energy users with emissions got used to the idea, thus giving a longer period to adjust, bearing in mind the costs of doing so.

“The worst scenario would be to wait and to introduce a sudden and crippling tax in years ahead” said Mamoniat.    The treasury officials referred to shale gas and sea gas possibilities, recognizing that these  may change the energy mix or the energy scenario, and treasury officials noted that whilst business did not like taxes and would object to their introduction on principle, a system had to be started and once going this would change behaviour.

Why be first, says business

Much of the debate centered around the fact that South Africa, with its slow rate of economic growth, business was not in a position to contribute to being a world leader, least of all being amongst the first to introduce such a tax globally.     “Perhaps we should not be leaders, but simply fast followers”, said one party to the debate who objected to the tax.

Eskom said it was saving most of its comments for the official responses to the carbon tax policy proposals recently gazetted but said that every unit it had was running at full capacity during the winter period and the cold weather currently being experienced, all effort being expended to accommodate the integrated resource plan (IRP), the anchor document for energy direction “to which the carbon tax proposals makes not one reference”, they complained.

Ducks not in a row, says Eskom

The Eskom team presenting, headed by Ms Caroline Henry, acting finance director, was pointed when said it was totally premature to introduce such a tax especiallywhen DWAE and DOE were still working on producing an integrated energy plan for the country.      The treasury proposals, she said, represented bad timing in every respect, bearing in mind that President Zuma had already announced that the country had no intention in changing its investment conditions or the economic scenario with any new conditions.     Such proposals were totally inappropriate therefore at this time, Eskom said.

Eskom added that the IRP already came up with a 34% savings factor on emissions but what was not needed at this stage, they concluded, were additional costs and further taxes added to a plan they had been working to for a long time.   Mamoniat appeared unmoved by this objection.

Sasol firm in objections

Sasol volunteered the remark that to introduce a carbon tax fully knowing that the country was totally reliant on coal gave the impression that they were out of touch with reality. They pointed to the fact that cost of the country’s exports were mainly energy intensive resulting in South Africa loosing competitiveness, if this course were adopted.

Sasol agreed that a carbon tax was one of many tools that could be used in causing industry to further mitigate the effect of carbon emissions but its introduction now was premature, they said. The costs to Sasol would be prohibitive in any case when applied to certain operations.

“We should not introduce a tool that can make no difference to a situation”, said the Sasol representative, who added, “Asking not to introduce a tax is not to say we are doing nothing.  Plenty is being done in mitigation of emissions. This country is one of the leaders carbon reduction programmes worldwide”, they added.

Liquid fuels industry over committed

SAPIA called for a practical approach and asked what really the industry could do that was not already being done. Already the petroleum industry was over-committed to modernisation and new fuel specifications.    The current world oil importation story placed the industry in a delicate position, as treasury must have surely realized, they said.

Quite clearly in the petroleum industry, said SAPIA, there is no satisfactory return on investment and the only sensible recourse in their mind was to provide conditions where the motorist was called upon to reduce consumption.

EIUG queries common approach

EIUG repeated their initial supposition that there appeared no joint departmental overall government approach to such a tax which appeared to be the brainchild of treasury, possibly in conjunctions with DWEA. They said that it appeared that neither appreciated how much was already done and what was being planned in terms of the climate response policy calls, both globally and locally.

“We cannot and should not be the world leaders in the introduction of carbon tax”, they said. “Aside from this, there are many things wrong with the way the tax is constructed.”

Eskom queries basis of tax

Eskom concluded that it was disingenuous of treasury department to suggest that nobody was doing anything answer to reduce emissions.  In any case, the tax was not being introduced at a low rate, they said and Eskom produced figures showing the tax as suggested when applied to current production output numbers which they said would be quite crippling. They added that the effects of the tax on the Medupi and Kusile power station projects when in production totally contradicted treasury calculations on the same subject.

The discourse was closed by the chair on the note that carbon tax as a proposal could not proceed in a vacuum and he acknowledged the point that it seemed reasonable not to consider this before the production of the final integrated energy plan had been tabled and agreed upon, let alone agreement on the final energy mix involving nuclear, gas and clean energy renewables.

Treasury appears dedicated to tax

Parliament is now empowered to deal with a Money Bill as a result of the 2011 amendments to the Constitution should the carbon tax policy paper result in a draft Bill for public comment but it could be considered unusual in these early stages of parliamentary development on the issue to exercise such muscle and the matter no doubt depends on what message comes down from cabinet to party whips. The Bill would come from the Minister of Finance.

Refer previous articles in this category


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SA Parliament in review

Parliament: the last session….

NA with carsLooking back on the session in Parliament just completed, probably the most important Bill to be introduced  in business terms was the Special Economic Zones (SEZ) Bill – its introduction leaping the country  from the somewhat current constrained IDZ strategic plan to a much broader SEZ vision involving the whole country.

The ideas incorporated in the Bill introduce a much broader economic theory of development of the underdeveloped areas in SA by giving to business and industry incentives, rather than just develop strategically important economic nodes because of facilities provided. The new Bill from DTI is, according to most, sensible in that incorporates genuine development possibilities but in the hearings from many institutions, industry and business there seemed much differentiation on what exactly is the best way to go forward on certain issues.

In the past, the minister Rob Davies and his colleagues have never been adverse to sensible debate in Parliament (witness the withdrawal of the Licensing of Businesses Bill for serious re-drafting) and the debate continued on the SEZ Bill for some time, many changes occurring, but the Bill seems destined in its final agreed form for assent.   Interesting was insistence by Dr Rob Davies that the three NEDLAC SEZ board members be approved by him.

Drama unfolds around E-tolling Bill

The Transport Laws and Related Matters Amendment “e-Toll” Bill was finally adopted despite the considerable from the opposition on the lack of transparency at local government and provincial level on e-tolling and the implications of cost to the taxpayer and to the private transport system.

Eventually on this subject, it seems to have become obvious that somebody has to pay for new roads, one way or another, and despite the earlier furore, many academic transport institutions have now indicated their support for e-tolling as it is proposed, since this really is the only way forward.   In the end, the most pressure for the passage of the Bill came from the fact that the financial commitments for the whole exercise had to be met and the realization that the loans in place were a reality. It turned out that lack of transparency in instituting where they went was a major problem, other than cost. That was solved.

Justice catch-ups

Important in the legal world was the Judicial Matters Amendment Bill, a sort of compendium of updates that made amendments to the Magistrate’s Court Act; the Criminal Procedure Act; the Child Justice Act; the Sexual Offences and Minimum Sentencing legislation; the Attorneys Act; the Small Claims Court Act; the Judicial Service Commission Act; Promotion of Access to Information Act; the Children’s Act; and the Reform of Customary Law of Succession and Regulation of Related Matters Act. All of this is part of the judicial reform process in place in South Africa.

From a judicial aspect the Legal Practices Bill, subjected to months of debate primarily resulting from the controversial proposal to provide for the minister of justice to select appointments to the a proposed Legal Practice Council which will have power over a newly separated division between advocates and attorneys. Stalwart Dene Smuts of the Opposition faces ANC chair Luwellyn Landers in this long drawn out affair, as has become the battle with the Protection of Personal Information Bill dealt with by the same PC committee and which has seen protracted viewpoints referred now for legal opinion.

Financial clean-ups

From the aspect of being a “catch-up bill, the Financial Laws Amendment Bill on various tax and financial regulatory issues was also dealt with but important in the financial world was the tabling, before the standing committee on finance, of the Banks Amendment Bill tightening up on regulatory issues in line with global issues in mind. Hearings and submission from the public are now called for.

On finance and just before the bell rang on closure, the Insurance Laws Amendment Bill was also tabled similarly tightening-up on this financial avenue. Further financial changes in the form of new regulatory measures arrived earlier with the tabling of the Rates and Monetary Laws Amendment Bill.

DTI has a busy time

DTI introduced during the session the Intellectual Property Laws Amendment Bill on Indigenous Knowledge and also the responses to public hearings on the B-BBEE Bill were aired, a Bill specifically introduced to eliminate fronting but which caused a storm by introducing criminalisation to the issue accompanied by serious penalties.

Minister Davies had the views of business spelt out in direct questioning from the media but the overall result was that it was quite clearly a cabinet decision that BEE in all its various legal applications was here to stay and there would be not be any form of sunset clause even considered in the near future, apartheid damage being considered by cabinet as too great and lasting in its effects.

During the last parliamentary session, DTI also introduced its next five year plan on IPAP and gave its thoughts on administered prices in the manufacturing  sector.

Also emanating from DTI and Parliament itself, was a National Credit Amendment Bill, a private member’s Bill from Dr Mario Ambrosini – now in ill health – which proposes some sensible amendments to the National Credit Act regarding unintended consequences, lesser pressure on consumer debtors to repay insofar as accumulated interest is concerned, this Bill and its parent the National Credit Act, having considerably changed the way South Africans do business, as has consumer legislation.

NEMA issues continue to dominate

From an environmental viewpoint the situation in Parliament, as always, remains dominated by the National Environmental Management Act (NEMA) under which a raft of Bills remain under discussion, including the Air Quality Bill amendments, the Integrated Coastal Management amendments; and a number of generalised issues under the NEMA Second Amendment Bill. The new winter session should see conclusion of most of these issues under the control of fractious PC chairman Adv. de Lange.

The cost of Air Quality infrastructure costs has left a number in the industrial sectors particularly worried, from statements made in Parliament to various parliamentary committees, coupled as it is with the introduction of carbon tax proposals by Treasury to the standing committee on finance.

Treasury no doubt considers this committee as their sort of alma mater in Parliament, pointedly ignoring similar and simultaneous proposals that should have been made, we would have thought, to the energy and environmental committees. It appears this is to be rectified.

Nobody likes a tax proposal, says Treasury

The carbon tax proposals seem to have been conducted in the manner of shoving a cracker into a room full of people, shutting the door, and watching reaction. Many Parliamentarians, even those of the ANC, could not accept that that Treasury had suddenly gone “over the top” environmentally and treasury officials were not in fact looking for more revenue to bolster a bad balance sheet. The feeling was that “golden boy” Pravin Gordhan would probably get his way in the end, despite more watering-down on future dates of implementation.

Labour legislation came to an unsatisfactory end with the close of the last session with the contentious amendments to the LRA failing on lack of quorum in the House, a very tatty way for nearly a year of hard work to end. The Labour Relations Amendment Bill is therefore returned to portfolio committee level, whilst its tandem legislation partner, the Basic Conditions of Employment Amendment Bill, is ready for presidential assent.

Energy on the edge

Energy had an extraordinarily busy session, most of it dominated by Eskom and its problems and the somewhat hesitant introduction of independent power producers, clean energy and nuclear issues which have slowly made their way somewhat painfully into the energy mix.

Much talking on all these subjects took place in the session, with the ISMO Bill converted into a section 76 piece of legislation and therefore going to the provinces for approval. An overview report on energy generally is now awaited before the ISMO Bill proceeds any further. In essence, the body of the Bill is now complete.

The big one in mining and petroleum

Entering this period at the last moment was the knowledge that a long awaited draft Mineral and Petroleum Resources Development Amendment Bill, containing a number of contentious proposals such as state rights and ownership in any discovered and exploited resource and particularly referring to gas. This has been published for public comment by the minister of energy affairs. The debates and initial briefing have started already.

Although debate throughout the last session hasfocused on mainly what Eskom, in its debate with NERSA over final agreed tariffs for the next five years – a debate very much involving parliamentarians – at the last minute gas exploration and its potential assumed a higher profile. With things going downhill at Medupi in the last few months, parliamentarians sensed that Eskom may not have all the answers needed for the national grid to meet its needs in even the medium term. Despite assurances to parliamentarians to the contrary, costs at Medupi continue to escalate leading to murmurs in the background that possibly Eskom may re-approach NERSA.

Presentations to parliamentarians on possibilities surrounding shale gas development indicated that any contributions from the Karoo were not likely to come into play until well after the period of the current scenario planning of five years, possibly ten, had been played out. The general feeling was expressed, however, that shale gas development would pass beyond its current exploratory phase into exploitation when measured as an economic necessity in balance against the disadvantages expressed strenuously by objectors.

Nuclear has arrived

On energy also, an amending Bill beefing up the National Nuclear Regulators office was introduced, all seemingly in a vacuum at the time since no view could be obtained from government energy policymakers on the issue of finalising the energy mix for the future. Time seemed to be slipping away. As one of her last moves before swopping ministerial portfolios with minister Ben Martins of transport, minister Dipuo Peters finally announced that nuclear energy was in the pipeline, although, like gas energy, both remain in the early development and planning stage. Parliamentarians becoming aware that the private sector is where the action will take place in this zone, as has been the case for years with the fuel refining industry.

Land reform to become big issue

Other critical issues making their entry into Parliament include the issue of land reform on the major issues of “willing buyer – willing seller´, the definitions of what exactly is meant by “in the national interest”  and the possibility of a state valuator to determine the price of the exchange.  Such proposals are coming from the ministry of public works in the form of a draft Expropriation Bill, back again in a new form for public comment. The “unlock mechanism” seems to be a state appointed valuator who will contemplate the “official market value” in some sort of effort to take the horse play out of the issue.

Meanwhile, the last session of Parliament also saw major legislation in the area of land and property with the conclusion of two Bills, the Sectional Titles Bill and the Deeds and Registries Bill which, by their names, indicate which areas they overhauled.

Finally, and almost improbably, the Spatial Land Planning Use Bill entered the fray, a Bill tackling the almost impossible odds of trying to sort out the convoluted systems of municipal and local land planning which have so the beset human settlements drive in recovering from the failed mess left by apartheid.

After nearly two years of haggling, something representing a final document for the Spatial Bill has been cobbled to together, accepted by most of the provinces, ignored by the Eastern Cape and rejected by the Western Cape since, the Bill as a section 76 proposal involving all tiers of government had had to go through debate in the provinces. Majority vote won the day but whether any of this can be got to work in the nether regions of South Africa is now the challenge.

Changes at the top

On the subject of human settlements, Tokyo Sexwale went before Parliament for his budget vote, budget votes being the main subject of the last session, and presented in a somewhat half-hearted way his housing loan scheme for lower-middle income class incomes.  In fact, the entire set of presentations from the department of human settlements seem to have fed back from Parliament to cabinet with a general “thumbs down” on performance in terms evaluation from minister Collins Chabane, resulting in that and Minister Sexwale no longer holds the portfolio.

Newspaper comment on the political aspects regard Tokyo Sexwale’s challenge at Polokwane for presidency being the reason for his departure to us would seem somewhat irrelevant.  If Sexwale and his department over the three years of his tenure had been able come up with some answers on the human settlements problem and scored success with voters, he would have been in an unmovable position. Quite clearly, minister Collins Chabane’s report on evaluation on human settlements was the equivalent of a very bad end-of-term report.

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Treasury sticks to its guns on carbon tax

2015, only if implementable….

nattreasury logoNational Treasury is still planning to introduce a carbon tax on January 1, 2015, but chief director for economic and tax analysis, Cecil Morden, told business that government will only move ahead when it is satisfied implementation possibilities.

In Parliament, when asked by members of the finance standing committee if this was “yet another revenue tool”, he said the primary objective of implementing carbon taxes was to change future behaviour before it was too late.

Doing our own thing

“The clock is ticking”, said Morden.   He asked parliamentarians not to diminish South Africa’s role as a potential leader on the issue with carbon tax. “The USA is paralysed and if we do nothing because China and the USA does nothing, we would have lost the opportunity to start at a lower level, do things slowly and sensibly, with marginal steps towards inevitable change.”

Confronted at a National Business Initiative meeting in Johannesburg calling for more information on the tax and answering further queries as to such a tax was necessary at this stage of South Africa’s development, Morden said that more clarity would be provided in the draft legislation.

At the moment a policy document on the tax has been published by Treasury for public comment.

Phasing in

The tax is proposed at a rate of R120/t of carbon dioxide equivalent, increasing at 10% a year during the first phase, from 2015 to 2019 and the legislation, of which a draft has yet to be published as a result of the current public comment period. This would give the detail, Morden said. It would describe the tax-free thresholds for each sector and possible offset structures.

Morden acknowledged that there might still be gaps, but encouraged stakeholders to highlight these in their written responses and to make proposals on how these could be filled.

We’re not tax collectors

Again he denied, as he did to opposition members in Parliament, that the carbon tax was nothing more than a revenue-generation exercise and disagreed flatly with the argument that such tax proposals were not a priority in the context of the country’s other socio-economic, skills and infrastructure problems.

Morden countered his Johannesburg questioners in the same manner as he did in Parliament on to why the tax was necessary; saying, “We do not have to have a carbon tax to raise revenue as suggested and the gradual introduction of a carbon tax should been seen as a contribution to the international agreements on climate response that South Africa has already agreed to and the consequent necessity to reduce South Africa’s greenhouse-gas emissions.

Tax to be fed back somehow

The National Treasury would not, however, entertain “hard” earmarking or ring fencing of the revenue accumulated but would consider other recycling mechanisms, including “soft” earmarks in future Budget undertakings; reducing other taxes and levies; and the introduction of new incentive schemes.

More background articles on subject

Posted in Cabinet,Presidential, Energy, Enviro,Water, Finance, economic, Health, Mining, beneficiation, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Minister Gigaba to line up Eskom for carbon tax

SOE’s in for carbon tax on climate response….

Public enterprises minister Malusi Gigaba, without mentioning carbon tax specifically, has launched a climate change policy framework for state-owned enterprises (SOEs) that seeks to align their climate response with the United Nations Global Compact (UNGC) on carbon emissions.   South Africa is a signatory to the UNGC and to the ten  UNGC principles which include human rights, labour, climate response and anti-corruption.

Principle seven states that business should support a precautionary approach to environmental challenges; principle eight says the signatory will undertake initiatives to promote greater environmental responsibility; and principle nine encourages the development and diffusion of environmentally friendly technologies. Minister Gigaba enumerated these.

The UN’s ten principles we are to follow

The minister said, “The UNGC calls companies everywhere to voluntarily align their operations and strategies with the ten universally accepted principles in areas  which include greenhouse gas emissions”.

The minister’s statement is featured  on SA government’s news site, and quotes the minister as stating , amongst other things, that it was “strategic” for South African business corporations to align their operations with  UNGC and their principles.

In aligning the newly launched policy framework for  state owned enterprises along similar lines, he says government will develop a detailed strategic plan in relation to climate change that includes “green economy considerations in operational decisions”.

The minister referred to four key design principles informing the policy framework, including the need for SOEs to focus on the overlap between commercial, economic, developmental and environmental objectives whilst carefully managing areas where these objectives conflict.

SOEs include…….

It emerged during the debate that certain state-owned enterprises (SOEs) have already endorsed the global compact, which, according to SAnews were, Denel, Transnet, Eskom, SAA, Broadband Infraco, Safcol and SA Express.

This agreement with UNGC appears to be one of the “global agreements which finance minister Pravin Gordhan referred to in his parliamentary budget vote speech when he gave his reasons for proposing a carbon tax, one of these and the main reason being to “change behaviour towards emissions”.     This  is also the keynote point of the recent treasury updated Carbon Tax Policy Paper out for public comment and which follows the much earlier discussion paper of 2010, “Reducing Greenhouse Gas Emissions: The Carbon Tax Option”.

“Recycling” of carbon tax rather

Minister Pravin Gordhan told parliamentarians recently that the “full earmarking” (or ring fencing) of specific tax revenue streams are not in line with sound fiscal management practices.     However, the efficient recycling of revenue, his deputy Cecil Morden said, was if mechanisms for structural adjustment revising greenhouse gas mitigation (GHG) is to be possible.   Morden said, ” A carbon tax will be introduced as part of a package of interventions to ensure that the primary objective of GHG mitigation is achieved”.

Public enterprises minister Malusi Gigaba’s recent speech therefore presumably means that he has every intention of following the minister of finance’s speech in making Eskom pay carbon tax, or as Cecil Morden said, “mechanisms for structural adjustment revising greenhouse gas mitigation”.


Posted in Electricity, Energy, Enviro,Water, Finance, economic, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

Carbon tax not popularly received by Parliament

Public comment still open…

emissionsgraphicNational Treasury has released more on carbon tax with the publication of a policy paper making at the same time a final call for public comment on the whole issue of carbon tax before the expected draft bill becomes reality.

Furthermore, the policy paper has again been re-presented to the standing committee on finance in its updated form. It was not popularly received by opposition members and some ANC Alliance critics. Details on these meetings will follow on this website after client reports have been digested.

Not necessarily a done deal

The updated carbon tax policy paper, “Reducing greenhouse gas emissions and facilitating the transition to a green economy” is now in circulation and includes input from the previous round of public comment.

Still calling for an initial tax rate of R120 per ton of CO2 emissions in the first phase of five years starting 1 January 2015 and staying until 31 December 2019, this will be followed with yet another phase but 60% of actual emissions will not be taxed initially.

According to departmental calculations, this will mean the effective tax rate will range between R12 and R48 per ton of CO2e during the initial phase, it was said.

Treasury insists tax is to change behaviour

During the first phase the agricultural and waste sectors will be exempt and a tax free threshold of up to 70% will also apply in the electricity sector. Treasury stated in their recent presentation to Parliament that the intention behind the tax is to change behaviour, meet international obligations and not so much to raise additional revenue.

Opposition members said that industry would not agree with this potential investors.

Written comment is invited until 2 August 2013.

The following articles are archived on this subject:

Posted in Cabinet,Presidential, Energy, Enviro,Water, Facebook and Twitter, Finance, economic, Fuel,oil,renewables, Land,Agriculture, LinkedIn, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments

Sovereign rating time after budget and SONA

SONA and Budget 2013/4 beat the pundits…   

zuma2With budget behind us, the script for the state of nation address (SONA) becomes a little clearer.

At the time SONA wasn’t what was expected and represented to many a total let down insofar as direction, information and inspiration was concerned.   President Zuma’s speech was really quite remarkable for the subjects it didn’t touch upon or skirted around.   Perhaps that’s what happens when a majority party is half way through its current tenure of office.

In all fairness, however, there is so much that is about to happen in South Africa on infrastructure development and so much “in the pipeline”, that there was little the current government could do other than recycle the list of eighteen major projects that the twenty seven government departments and sixteen utilities having been talking about for months, sometimes years, all of which seem in a pretty embryonic stage. The hope is that when it all comes together, it won’t be too late.

NERSA played a trump card

On energy, little was said – in fact practically nothing at all that was not patently obvious such as the fact that Medupi and Kusile are being built. In fact nothing was said on electricity at all, the reason for which was to become evident in the NERSA decision the following week when Eskom’s multi year price determination call of 16% was toned down to 8%.

Dangerous budget

pravon gordhanAlso the following week and following SONA came Pravin Gordhan’s budget with its surprising nil increase on income tax, severe budget cuts, the introduction of carbon tax and an increased fuel levy. Once again the National Development Plan was heavily emphasised and perhaps at last government is going to get on with it with a new presidential infrastructure co-ordination commission to support the initiative.

The Budget was in some ways masterful but still frightens the credit rating agencies, with Gordhan trying to balance the books after an increased deficit over the previous year, something the new government used to pride itself on not needing under finance minister Trevor Manuel – but times change and the global recession arrived.

Executive powers

Interesting for Parliament is the introduction of the draft Infrastructure Development Bill giving extraordinarily wide powers to an all-powerful commission to be known as the presidential infrastructure co-ordination commission, as stated above, with all nine premiers, the President and Deputy President steering the ship in an effort to cut red tape and speed things up.

This can only be good, if only for the fact that the captain of the ship can speak alone to the twenty seven departments and sixteen utilities described above.

Public Service too big

Which leads to the issue of a somewhat bloated public service which has had the benefit of above-inflation increases this year, so it was pleasing to see that a skills audit of public servants is about to be commenced amongst the 1.2m public servants, which in a country of only 51m, is totally disproportionate.

Public Service and administration minister Lindiwe Sisulu told Parliament that the increase of 1% per year in salaries has to be turned into a decrease of 1% next year.

Encouragingly also, planning minister Trevor Manuel (who has but ten staff) has clearly indicated that he is relying on the parliamentary oversight system to beef up his programme to wake up to the National Development Plan.  How well Parliament scrutinizes the national budget in the coming weeks in every parliamentary portfolio committee demanding both value for money and delivery on time, every time, is now the critical issue.

Posted in Cabinet,Presidential, Energy, Finance, economic, Fuel,oil,renewables0 Comments

Parliament briefed on new climate response policy

climatechange2DEA outlines its climate response plans…..

Ms Judy Beaumont, deputy director-general for climate change in the department of environmental affairs (DEA), has told parliamentarians that the objectives of the national climate response policy were to manage inevitable climate change impacts through interventions that built resilience and emergency response capacity and to make a fair contribution to the global effort to stabilize green house gas (GHG) concentrations.

The department has made a number of presentations to parliamentary portfolio committees in recent weeks updating members on a six-month basis following the public hearings in June of this year resulting from the introduction of the White Paper on National Climate Change.

What can be done, says DEA

Ms Beaumont set out DEA’s current position, resulting in a National Climate Change Response Policy.  She said that her department has developed and detailed what the department calls “deliverables”.

She gave details of the plans to implement the programmes being run currently and the process being used to effect the general response policy which she described as “mitigation, adaptation and monitoring”. She also described DEA’s relationships with other government departments regarding their climate mitigation programmes and with national treasury regarding finance.

All in the same direction

Beaumont said that what had come out of the hearings was the need for a common set of climate scenarios and likely impact scenarios and it was necessary to build in a system of monitoring the situation as it developed so that all knew exactly on an ongoing basis what the picture was and how climate change was affecting the country, both economically and from a disaster aspect.

The major mitigation programmes to reduce carbon emissions needed to have a common set of desired outcomes so all knew what the target was, she said, and all the “flagship” climate change programmes being run in various parts of the country had to be in harmony with common criteria established under the response document, she noted.

Carbon budgets to follow

She said once the desired emission reduction outcomes (DEROs) had been defined then  carbon budgets were to be drawn up for relevant economic sectors.

Various departmental officials detailed some of the current issues under focus, one being a draft of South Africa’s monitoring and evaluation system framework by October 2013, followed by the report on the same subject to the UN Framework Convention on Climate Change by December 2014.

Some of the adaptation programmes on climate change were the dept. of agriculture’s land care plans; sectoral agro and agro industry programmes; an atlas on climate change and much research.  From the department of water affairs there was water conservation and demand management and from the South African weather service came a flow of forecasting, early warning and research, coupled with work through the national disaster management sector.

All headed towards agreed responses actions

She added that an important contributor with programmes linked to others was the department of cooperative governance where there was “mainstreaming of disaster risk reduction planning in progress with response toolkits”.  DEA had established, Ms Beaumont said, “that there should be a common set of climate scenarios, impact scenarios in key sectors and a need to assess costs and agree adaptation responses per sector.”

Into the entire process. DEA said, account had to be taken of the energy efficiency strategy being prepared by the department of energy, its integrated energy plan and the renewable energy independent power producer programme.

Scenario planning in three stages

On scenario planning, parliamentarians were told that the intention was to “project and evaluate the socio-economic and environmental implications of potential impacts of anticipated climate change and climate variability and the adaptation responses options available” for identified sectors in South Africa over the next decade and until 2025; in the medium for the next two to three decades until 2050 and with long term scenario visualisation to the end of the century.

The shorter term scenarios were already in progress and due for completion and funding had come from the German development organisation, GIZ, to conduct phase one of the long-term scenarios, where initial work had been undertaken.

Links with the national committee on climate change and all such scenario planning was in place, the committee was told.

Carbon Tax still  an imponderable

In answer to questions, DEA said that on carbon tax and a “carbon budget interface” an analysis of the different policy approaches and interfaces between the carbon budget and carbon tax instruments was currently underway. In funding much of the climate change response work in South Africa, parliamentarians were told, national treasury were leading the debate on this, if indeed there was to be a carbon tax, and were to finalise any carbon tax policy for national debate to counter the rise in GHGs.

A tax rate of R75 per tonne of CO2, rising to approximately R200 per tonne over time had been suggested “to save South Africa from potential catastrophic changes in its climate”  but as one parliamentarian told DEA, with global recession hitting business and industry to the extent it has, now and into the same scenario future, it has become doubtful who is the most threatened party.

Posted in Energy, Enviro,Water, Finance, economic, Fuel,oil,renewables, Health, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry0 Comments

Discussion Paper Next Step On Carbon Tax

Finance Minister Pravin Gordhan is reported to have told lawmakers in Cape Town that a revised carbon tax policy paper is definitely due sometime in the course of 2012 and that government has agreed in principle to the need to price carbon emissions and on the phasing in of a tax based on such a pricing structure.

According to reports, BUSA has, in the meanwhile, called upon the cabinet for relevant ministers to engage further on a framework before implementing any such proposals on a carbon tax, especially given recent electricity price hikes and rising costs to the consumer.

Similarly, the Manufacturing Circle said it “would welcome the opportunity for engagement”, with the caveat that a carbon tax, if not applied suitably, would “hurt manufacturing and jobs”.

National Treasury has argued previously that such a tax was necessary to create incentives for the public and industry to change behaviour and to encourage cleaner-energy technology and energy-efficiency amongst the public.

Posted in Energy, Finance, economic, Fuel,oil,renewables, Health, Mining, beneficiation, Trade & Industry0 Comments

Gordhan gives out strong message on carbon tax

en:Primorye Power Plant in Luchegorsk, Primors...

Image via Wikipedia

Finance Minister Pravin Gordhan is reported to have told lawmakers in Cape Town that a revised carbon tax policy paper is definitely due sometime in the course of 2012 and that government has agreed in principle to the need to price carbon emissions and on the phasing in of a tax based on such a pricing structure.

BUSA has, in the meanwhile, called upon the cabinet for relevant ministers to engage further on a framework before implementing any such proposals on a carbon tax, especially given recent electricity price hikes and rising costs to the consumer. Similarly, the Manufacturing Circle said it “would welcome the opportunity for engagement”, with the caveat that a carbon tax, if not applied suitably, would “hurt manufacturing and jobs”.

National Treasury has argued previously that such a tax was necessary to create incentives for the public and industry to change behaviour and to encourage cleaner-energy technology and energy-efficiency amongst the public.

Posted in Electricity, Energy, Finance, economic, Fuel,oil,renewables, Health, Mining, beneficiation, Public utilities, Trade & Industry, Transport, Uncategorized0 Comments

SA Budget – 2012/3

Having announced that South African finances were “in good health”, a silence echoed around the National Assembly debating chamber as finance minister Pravin Gordhan announced in this year’s budget statement a general fuel levy on petrol and diesel, which will go up on April 4 by 20 cents and the fact that the RAF levy would go to 88 cents, i.e. up by 8 cents.

A levy on generated electricity from non-renewable sources will increase by 1 cent per kWh from July and this will replace current energy efficiency initiatives.

Again, as per last year, Minister Gordhan has proposed personal income tax relief, this year amounting to R9.5bn. A further tax credit for contributions to medical schemes is to be introduced, with reform to tax treatment of contributions being planned.

The introduction of short and medium term savings exemption programmes is to be introduced and the capital gains tax for individuals goes to 33.3% from March 1 and for companies to 66.6%.

A number of measures are to be introduced to improve the corporate tax environment but ways to finance the forthcoming National Health Insurance programme have to be found, minister Gorhan said, and this could include an increase in VAT, a payroll tax or a surcharge on general tax.

However a grant would suffice in the meanwhile until 2014 when a workable system would have to be found  to provide” an equitable system of health coverage for all South Africans”.

Commentators, we see, have already discounted a possible VAT increase as politically dangerous for the ANC, pointing to a general payroll increase during the early stages at 0.5%, other government-watchers noting that such a welfare programme is likely to be introduced on a province-by-province basis in line with the hospitalisation infrastructure programme.

The minister clearly indicated that a carbon tax was to be introduced.

A budget deficit of 4.6% of GDP, with government debt reaching R1.5 trillion by 2014/5, was announced by the minister.

Considerable additional investments are to be put into health and education with, for example, a further R850m for additional university infrastructure and R426m for tertiary hospitals, plus R450m for nursing colleges.  R9.5bn is to be provided for investment incentives and the development of SEZ programmes, with R6.2bn to be spent on job creation.  R4bn is specially going to PRASA for passenger coaches (refer our post), with R4.7bn for solar water geysers; R1.8bn on water infrastructure and R3.9bn on informal settlement upgrading.

Total spending on infrastructure and similar developmental issues was expected to reach R1.05 trillion this coming year, rising to R1.15 trillion next year.

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WWF warns that carbon tax must come to SA

World Wildlife Fund (WWF) warned South Africans that  “by not having a carbon tax to pay for carbon reduction programmes, the result was  too expensive for human well-being”. They were addressing the parliamentary committee on energy on outcomes of the COP17 conference on global warming, held recently in Durban.    WWF said that SA achieved the outcomes it needed at COP17 inasmuch that SA delegates had interceded sufficiently to prevent the breakdown of the Kyoto Protocol on African soil.   Nevertheless, there were still, in the opinion of WWF, massive “ambition gaps” in global warming objectives and that the “citizens of the world as a whole are still held hostage by the major developed countries”.

WWF representatives said South Africans should be very proud of the way this conference had been run; the high standard of input from the department of energy (DOE) and the contributions made by South African experts towards “a just transition to a sustainable environment.”

The most important achievement at COP 17 in their view was the setting up of a Green Climate Fund, although WWF admitted there is no funding income at this stage. Nevertheless, WWF said that whilst these funds may never reach the proportions expected, there was little doubt that money would start flowing in.

On the positive side it was to be noted, however, that not only had the “firewall” that had come about between developed and developing countries been broken down to some extent but that  carbon dioxide reductions targets expressed at earlier COP conferences were being realized as serious issues and not “pie in the sky” warnings.

At present, South Africa faced a carbon constrained future and hopefully it seemed had realized thus but the country was now at the point where it could be a market leader on the issue, or as WWF warned, it could be a “laggard reflecting technology interventions applied too late.”

“We are still treating every problem as if we only had a hammer and every challenge was a nail. The country had to start thinking outside the box, find new solutions and stop falling back on the coal as public enemy number one”, WWF said.

Whilst South Africa, WWF said, was not a country with large land-areas under forestation, the overall principle that 20 percent of global carbon emissions are caused by forms of deforestation –greater than emissions from every car, truck and plane on the planet combined – such facts still applied to South Africa.   Even if countries fulfil their current mitigation pledges, the world will still faced between a 2.6ᵒC and a 4°C scale of warming, which would leave the country in a perilous state.

Coal burning still remained the greatest exuder of carbon emissions and South Africa found itself therefore in a delicate position. Ways had to be found around these issues, whilst energy efficiency was still a totally underestimated answer for South Africa as a tool to fight global warming, WWF said.

They noted that SA, consequently, was “only behind China and India in carbon emissions” but it was to be noted that China had “already smelt the coffee” and was instituting changes. South Africa, they said, should join with China in the search for innovative programmes.

On carbon tax, WWF said that “SARS was an effective body and we should build on their abilities and clear with them a long-term scale-up trajectory of tax collection, starting on a low-scale manner in order not to upset development.”

On the country’s energy programme, WWF said that government has a direct and very powerful influence in the electricity sector and in the light of the benefit of this, in terms of the IEP, more could be achieved. There was economic  over-reliance on the mining sector for answers in energy planning generally but no single factor – whether it be energy security; job creation; CO2 emissions; water impacts or social impacts – should be “allowed to trump each other” in the search for answers.

WWF attacked fracking as a fuel industry practice. Air pollution from shale gas extraction was going to be a major problem if allowed, worse by far than coal they said. “Indeed, fracking is not even an option”.

WWF also noted that carbon intensities of methane gas were, according to US government survey results, excessive and fracking therefore did not fall into a low carbon future at all.  Underground water resources within a 17 mile distance from a well were contaminated and job creation opportunities were transient and temporary in nature.

Until the fuel companies can provide better data that could qualify and quantify a clearer future for this process, then the moratorium should not be lifted, WWF said. No specific fuel company was mentioned.

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This website is Archival

If you want your publications as they come from Parliament please contact ParlyReportSA directly. All information on this site is posted two weeks after client alert reports sent out.

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  1. Jeremy Cronin back on land expropriation issue
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