Carbon tax Treasury

Carbon tax resistance a ‘red herring’ – Treasury

LegalBrief 30 July,  2019

General: Carbon tax resistance a ‘red herring’ – Treasury

A senior Treasury official dismissed as a ‘red herring’ the SA mining industry’s concern over a relatively new tax on carbon dioxide emissions, saying the levy was too low to add up to unbearable costs. According to aBusinessLIVE report, the tax, which was enshrined into law in May, faced opposition from big polluters such as miners, steelmakers and Eskom, which had warned it would eat into profits and push up electricity prices. Anglo American Platinum said the tax could cost it up to R300m, while the Minerals Council of SA warned it could lead to 6 000 job losses a year. ‘In the short term, the impact of the carbon tax on the price of electricity is minimal,’ said Treasury Deputy Director-General Ismail Momoniat on the sidelines of a coal industry conference last week. Momoniat said the challenges facing the mining sector could hardly be attributed to the carbon tax, which seeks to lower carbon dioxide emissions to ensure the country complies with global agreements such as the Paris accord to combat climate change. He said the tax currently only applied to ‘scope 1’, or direct emitters, which comprised about 100 companies. While cost hikes could become true in a few years, SA’s two-step process is likely to give firms time to come up with ways to curb their emissions, and thus pay lesser taxes. ‘You can see this is coming. The world is going to have to take pretty strong steps if it’s to deal with emissions, and carbon tax is just a mechanism,’ said Momoniat.

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The new carbon tax will help SA’s waste companies change the way they do business, a waste management executive said last week. SA has again been ranked as the seventeenth dirtiest energy producer in the world, ‘out-polluting’ the UK and France, commercial and industrial waste management company Wasteplan CEO Bertie Lourens said last week. According to anEngineering News report, in a media release issued following the 2019 SAPICS Conference, in Cape Town, during which he addressed delegates, he discussed how SA was fast approaching a situation where it is running out of landfill space – an inevitable ‘day full’. Lourens mentioned that the country’s carbon tax regulations should help change the way companies do business, as it is geared towards reducing carbon emissions by 34% by 2020 and by 42% by 2025. Lourens noted that there were things businesses could do now to anticipate the tax burden and reduce their waste to landfill so that less of the business is exposed to heavy carbon taxability,including investing in renewable energy, cool carbon projects and biogas digesters, and reducing waste to landfill. ‘Africa is uniquely poised to leapfrog fossil fuel, carbon heavy systems and adopt wind, solar and water energy on sustainable, large-scale levels. The tax will take all your activities into account, including the activities related to your waste disposal on site,’ Lourens said. ‘The waste-to-energy landscape in SA is still in a vulnerable state, but we believe this will all soon change as our economy is shifting to a low-carbon economy,’ Lourens concluded.

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