Climate Change

Heavy carbon emitters will pass costs of new tax on to consumers.

Mail and Guardian 1 March 2013.

The introduction of a carbon tax, announced in this week’s budget speech, will generate billions of additional revenue for the state – but it could add to the cost of electricity. It has already hit the share price for South Africa’s major greenhouse gas emitters.

Finance Minister Pravin Gordhan said the government proposed to introduce a carbon tax at the rate of R120 a tonne of CO2 (carbon dioxide) equivalent, effective from January 1 2015. CO2 equivalent is a measure used to calculate how much global warming a particular type or amount of greenhouse gas can cause.

To soften the impact, a tax-free exemption will be included…

(Comment: The calculations for the impact of the carbon tax on electricity prices are correct for average prices, but not for marginal prices. For instance, the big emitters will be paying the full R120/tonne CO2 on the 40% above their threshold, so they are likely to try to pass on the full R102/tonne effect on 40% of their output.)

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