Offsets to cushion South African carbon tax
28 May 2014
Posted by: Author: Brendon Bosworth
Author: Brendon Bosworth (All Africa)
To curb greenhouse gas emissions, South Africa wants to put a tax on carbon emissions from big polluters.
The aim of making polluters pay for the carbon they pump into the atmosphere is to help South Africa, the world's 12th highest emitter of greenhouse gas carbon dioxide, transition to a low-carbon economy.
"We have one of the most carbon intensive economies in the world," Anton Cartwright, a researcher on the green economy at the University of Cape Town's African Centre for Cities, told IPS.
Coal-burning power plants provide close to ninety percent of South Africa's electricity, making the economy highly carbon intensive.
"We don't get a great bang for buck on our coal," said Cartwright. "We use a low-grade coal with a very high CO2 content."
The tax was slated to take effect in 2015 but in February this year National Treasury announced it would be pushed back to January 2016, citing the need for "further consultation."
Offsets to cushion blow to industry
Initially, the carbon tax would see big polluters, including companies in the mining, fossil fuel and steel sectors, paying 11.50 dollars per tonne of carbon dioxide equivalent on between 20 and 40 percent of their total carbon emissions.
To cushion the effect on industry, the National Treasury has proposed allowing polluters to lower their tax liability by investing in carbon offsets.
"The combination of a tax and offsets is very sensible," said Cartwright. "You're priming the market and then providing flexibility."
A carbon offset is a measure that reduces, avoids or sequesters emissions. Polluters buy credits, each equivalent to one tonne of carbon, from verified projects -- including, for example, reforestation programmes and initiatives that increase energy efficiency in the housing sector -- at prices cheaper than the tax.
South Africa's large-scale carbon offset market is currently stagnant.
This article first appeared on allafrica.com.