FIRST DRAFT CARBON TAX BILL 2015: RESPONSE DOCUMENT

The 'First Draft Carbon Tax Bill 2015: Response Document' is a December 2017 report by the Centre for Environmental Rights (representing the National Treasury's responses) that details public comments and government feedback on the design of South Africa's carbon tax. It addresses key policy issues including revenue recycling, tax-free allowances for trade-exposed sectors, the treatment of the electricity and aviation sectors, and the alignment of the tax with South Africa's Nationally Determined Contribution (NDC) under the Paris Agreement.

• The National Treasury proposes three categories for recycling carbon tax revenues: tax shifting (such as reducing the electricity generation levy), tax incentives (like the Energy efficiency savings tax allowance), and 'soft' earmarking for budget allocations such as improved public transport and enhanced free basic energy/electricity programmes.
• To avoid double taxation and maintain electricity price neutrality during the first phase (up to 2022), the government proposes a combination of a lower electricity generation levy and a credit for the renewable energy premium.
• Non-stationary greenhouse gas emissions from liquid fuels in the transport sector will be integrated into the existing fuel tax regime as an add-on. Based on a 60 per cent tax-free threshold, the estimated tax is a maximum of 11 c/litre for petrol and 13 c/litre for diesel.
• While South Africa supports a global approach for international aviation via the Carbon offsetting and Reduction Scheme for International Aviation (CORSIA), emissions from domestic flights will remain subject to the domestic carbon tax regime based on fuel carbon content.
• The trade exposure allowance has been transitioned from a company-based to a sector-based model. It uses a 'Trade Intensity' formula—the ratio of the sum of the value of imports and exports to production—to grant graduated relief up to a maximum of 10 per cent for high trade intensity sectors (those with intensity ≥ 30 per cent).
• The carbon offset allowance is capped at 10 per cent for combustion emissions and 5 per cent for process emissions to ensure firms prioritize mitigation within their own operations. For the first phase (up to 2022), the geographic scope is limited to South African projects.
• The carbon tax is designed to help South Africa meet its Paris Agreement commitments, specifically its Nationally Determined Contribution (NDC) to have emissions peak between 2020 and 2025, plateau from 2025 to 2035, and decline from 2036 onwards.
• Economic modelling indicates the carbon tax will lead to an estimated decrease in emissions of 13 to 14.5 per cent by 2025 and 26 to 33 per cent by 2035 compared to business-as-usual, with a marginal impact on average annual economic growth (0.05–0.15 percentage points below business-as-usual).
• The headline marginal tax rate is set at R120/tCO2e. For the first phase (up to 2022), the nominal rate will increase annually by the rate of inflation plus 2 per cent, with only inflationary adjustments applied thereafter.
• The government rejected the implementation of a domestic Emissions Trading Scheme (ETS) as an efficient primary measure because South Africa's emissions profile is oligopolistic, with approximately four companies accounting for 55 to 60 per cent of the country's GHG emissions.

APA

Centre for Environmental Rights (2017). FIRST DRAFT CARBON TAX BILL 2015: RESPONSE DOCUMENT. https://cer.org.za/wp-content/uploads/2015/11/Response-document.pdf?x21779

Chicago

Centre for Environmental Rights. FIRST DRAFT CARBON TAX BILL 2015: RESPONSE DOCUMENT. 2017. https://cer.org.za/wp-content/uploads/2015/11/Response-document.pdf?x21779.

Wikipedia

{{cite report |author=Centre for Environmental Rights |title=FIRST DRAFT CARBON TAX BILL 2015: RESPONSE DOCUMENT |date=December 2017 |url=https://cer.org.za/wp-content/uploads/2015/11/Response-document.pdf?x21779 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{centreforenvironmentalrights2017first, author = {{Centre for Environmental Rights}}, title = {{FIRST DRAFT CARBON TAX BILL 2015: RESPONSE DOCUMENT}}, institution = {Centre for Environmental Rights}, year = {2017}, month = dec, url = {https://cer.org.za/wp-content/uploads/2015/11/Response-document.pdf?x21779}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }