Picture: THINKSTOCK
Picture: THINKSTOCK

A CARBON tax would be introduced from 2015, Finance Minister Pravin Gordhan told Parliament in his budget speech on Wednesday.

This would make South Africa the second Brics nation and the first African one to introduce a tax aimed at reducing the emission of gases related to climate change.

The Brics are a formal grouping of major developing nations, including Brazil, Russia, China and India.

In 2010 India introduced a nationwide tax of $1.07/ton (at the time) of coal produced in, or imported into, the country. Carbon has become the catchword for all so-called greenhouse gases, linked to climate change.

The long-awaited updated carbon tax policy paper would be published by the end of March, Mr Gordhan said. South Africans already pay about R10bn a year in unofficial carbon taxes such as levies on vehicle emissions, electricity and fuel.

The tax would be introduced at the rate of R120/ ton of carbon-dioxide equivalent, effective January 1 2015. The rate would increase at 10% a year during the first phase of implementation, from 2015-2020.

The budget review noted that the tax’s impact would be softened by a tax-free exemption threshold of 60%. There would be additional allowances for emissions intensive and trade-exposed industries.

The principal of sustainable investment consultancy SinCo, Graham Sinclair, said these exemptions were "a worry" because similar exemptions granted when the European Union introduced its Emissions Trading Scheme in 2000 had skewed the market. "It is still suffering," he said.

However, director of consultancy sustainableIT, Tim James, said the exemptions were "probably necessary", because without them South Africa’s international competitiveness could be affected in some jurisdictions. They might also curb Eskom’s energy rate hikes.

Mr Sinclair said "another devil in the detail" was how the tax would relate to a company’s overall earnings and whether mechanisms to curb its effects being passed on to customers would be put in place. If not, it would likely not change emissions behaviour.

Mr James said it was "key that every cent that is collected needs to be accounted for, and reinvested in renewables".

An additional R300m has been allocated to the Green Fund, on top of an R800m allocation, which is used to encourage companies to develop creative low-carbon projects.