Legalbrief 3 June, 2019.
SA’s carbon emissions are disproportionately high, write Tina Costas and James Ross, from Norton Rose Fulbright, SA, in an analysis in the Cape Times. ‘There are various causes, the primary one being the country’s reliance on coal in energy generation. To minimise emissions, SA has made several international and national commitments to reduce greenhouse gas (GHG) emissions,’ they note. ‘The carbon tax, through the 2018 Carbon Tax Bill, will introduce the “polluter-pays principle”. This principle incorporates the costs of damage caused by greenhouse gases into the price of high carbon-emitting goods and services. It should change consumer behaviour and encourage investors to shift towards low carbon options,’ they state. ‘The law was announced in the 2019 Budget Speech, and signed into law by President Cyril Ramaphosa last month. It will operate in two phases – the first from 1 June 2019, to 31 December 2022, and the second phase from 2023 to 2030,’ they explain. ‘Companies, individuals and public entities will be liable to pay the carbon tax if conducting an activity that results in the emission of GHGs above the prescribed emission thresholds. The greenhouse gases covered include carbon dioxide, methane, nitrous oxide, perfluorocarbons, hydrofluorocarbons and sulphur hexafluoride,’ state Costas and Ross. ‘The National Treasury has advised that energy-intensive sectors will be “cushioned” through measures that have been introduced to ensure the tax does not raise the price of electricity. This will supposedly be achieved through a tax credit for the renewable-energy premium built into the electricity tariffs, as well as a credit for the existing electricity generation levy,’ they state. ‘The performance and operational structure of the tax will be reviewed after three years,’ they state. ‘Businesses should assess the extent of their exposure to the tax and act accordingly. As an example, price increases on taxable activities such as transport could necessitate a supply chain review,’ they conclude.