South African brewing fully imposes CO2 emission tax

At the end of last year, the Ministry of Finance of South Africa announced the draft discussion paper on “Reduce Greenhouse Gas Emissions-Carbon Tax Scheme” to solicit public opinions on the full introduction of carbon dioxide emission tax (hereinafter referred to as carbon tax) in South Africa. A few days ago, at the meeting of the Transport Technology Forum held at the University of Johannesburg, some delegates presented their own opinions.

Why should we introduce carbon tax?

At present, South Africa's total greenhouse gas emissions are about 500 million tons of carbon dioxide equivalent per year. It is the world's top 20 greenhouse gas emitters; its per capita emission is about 10 tons per year, which is higher than the world average. The population of South Africa accounts for about 5% of the total population of Africa, and its greenhouse gas emissions account for half of all Africa. What is even more serious is that South Africa’s economy is heavily dependent on energy. About 80% of greenhouse gas emissions come from energy supply and consumption, while coal power generation accounts for more than 90% of South Africa’s electricity supply. As a developing country, South Africa can be said to have a long way to go in eradicating poverty, improving people’s livelihood, and developing the economy. In the coming period, South Africa’s absolute emissions will surely continue to increase. According to South African scientists, if South Africa imposes no restrictions on greenhouse gas emissions, by 2050 its total greenhouse gas emissions will reach 1.64 billion tons per year, which is clearly unsustainable for South Africa.

On the other hand, from the international perspective, the United Nations climate change negotiations have stagnated and South Africa is also experiencing increasing pressure. Before the Copenhagen climate conference in 2009, the South African government announced a specific action goal, that is, by 2020, South Africa’s greenhouse gas emissions dropped by 34% compared to the usual, and by 42% by 2025. To achieve this goal, we must adopt strong comprehensive measures such as science and technology, economy, and policies. The introduction of the CO2 emission tax is one of the economic measures.

How to use carbon tax revenue?

Shalin Hemlaki, director of the Ministry of the Environment and Fuels Taxation Department of the South African Ministry of Finance, said that following the proposal made by the Ministry of Finance, the levy of 75 rand (at 2005 prices) per ton of carbon dioxide gradually increased to 200 rand over time. / Ton, this is feasible and most likely to achieve the goal of changing production and consumption behavior and reducing greenhouse gas emissions.

Based on South Africa's current CO2 emissions, assuming a tax of 100 rand/ton of carbon dioxide, South Africa will have approximately 50 billion rand of carbon tax revenue each year. South African circles have different opinions on how to use this income.

Hemlaki pointed out that many people believe that carbon tax revenue should be used exclusively to support environment-related projects and activities. This is a wrong concept. Under normal circumstances, the Ministry of Finance will try to avoid the use of specific tax revenues. Instead, it will be used as part of the country’s fiscal revenue for priority areas of national economy and people’s livelihood, such as strengthening education, reducing poverty, etc., and reducing greenhouse gas emissions. The project is certainly within the scope of support. Although the Ministry of Finance does not support strict limits on the use of carbon taxes, it is also studying the value of environmental projects. Different departments directly provide financial support, such as allocating some funds in annual budgets to support emission reduction projects.

Hemraki pointed out that South Africa’s comprehensive carbon taxation requires a long period of preparation. First of all, we must verify the levels of greenhouse gas emissions in different industries; we must also pass legislation to make reporting greenhouse gas emissions mandatory corporate legal obligations; at the same time, we must also conduct environmental law enforcement capacity building and so on.

The introduction of a carbon tax will boost railway rejuvenation Abri Deswart, manager of logistics operations at the South African Empire, said that once the carbon tax is implemented, it will have a huge impact on the transportation industry in South Africa. In order to save costs, some cargo transportation will be turned from roads to railways. South Africa’s railway infrastructure needs to adapt to this shift, which may lead to “railway renewal”.

According to the proposal of the Ministry of Finance, if the tax is levied at 75 rand/ton carbon dioxide, the logistics cost of road transport is about 2 billion rand, and the cost of railway transportation is 400 million rand; if it is 270 rand (equivalent to 200 in 2005) (Rand) / ton taxation, the logistics cost of road transport is about 5 billion rand, rail transport costs are 10 billion rand.

Deswart said that if there is 25% of cargo (about 4.2 million tons) converted from road to railway by way of intermodal transportation at the cost of 100 rand/ton carbon dioxide, the transportation industry will save 25 million rand. If it is 270 rand/ton carbon dioxide, it will save 67 million rand. Therefore, the transportation of goods needs to be more oriented toward railways, and railway transportation and road transportation need to integrate more effectively. At the same time, to reduce the impact of the carbon tax, more efficient vehicles are needed, using cleaner fuels.

The South African Department of Energy has published a new draft of a clean fuel standard. According to the draft, starting in 2013, South Africa will begin to supply fuel that meets the “Euro 5” standard; by 2017, all refineries in South Africa must complete technological upgrading to produce fuel that meets Euro 5 standards.