8 November 2011

Carbon tax still to be key measure against climate change

Earlier this month Government released its long-awaited White Paper on Climate Change. In general, the White Paper clearly envisions a wide mixture of measures to be taken in mitigation against the effects of climate change, market-based measures being but one of the weapons in the Government's arsenal in the fight against climate change.

Among the market-based measures the White Paper identifies carbon taxes, economic incentives and emissions trading schemes together with carbon budgets (cap and trade schemes) as appropriate and effective measures in achieving the desired outcomes.

In contrast to the inclusive approach adopted in the White Paper, the discussion paper on carbon tax released by National Treasury in December 2010 clearly favoured a carbon tax as opposed to the use of cap and trade schemes.

As yet, National Treasury doesn't seem to have softened its stance in this regard. On 19 October 2011 both the National Planning Committee and National Treasury briefed the Portfolio Committee for Water and Environmental affairs on some of the issues relating to the White Paper. The presentation given by the National Treasury echoed its position on the introduction of a carbon tax as opposed to cap and trade schemes. The only question that remained was really whether the carbon tax should be implemented by way of proxy on the sale of fossil fuels, or whether the actual carbon emissions would be targeted.

National Treasury did however indicate that they had received more than 78 comments on the carbon tax paper and that a new version of the paper would be released in due course.

Heinrich Louw

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