CARBON TAX POLICY PAPER

The document outlines a proposed carbon tax for South Africa, starting at R120 per tCO2-eq in 2015 with annual increases of 10% through 2019. It argues that a carbon tax is more suitable than an emissions trading system (ETS) in the short term due to the oligopolistic nature of the domestic energy sector. The design includes a basic tax-free threshold of 60%, with additional allowances for trade-exposed and process-emission sectors, and the possibility of using carbon offsets to reduce tax liability. Economic modelling suggests the tax would have a largely neutral impact on GDP and employment if revenues are recycled effectively through tax shifting or government investment. The paper also details complementary flagship programmes in energy efficiency, renewable energy, and public transport to support a just transition.

• The South African government proposes introducing a carbon tax on 1 January 2015 at a rate of R120 per ton (t) CO2-eq for emissions above established tax-free thresholds.
• The proposed tax rate is intended to increase by 10 per cent annually until 31 December 2019, with a revised regime to be announced by February 2019.
• A carbon tax is deemed more appropriate for South Africa than an emissions trading system (ETS) in the short to medium term because the energy sector's oligopolistic structure would likely result in a 'thin' market with insufficient trading volumes.
• The tax base will focus on Scope 1 emissions, specifically those resulting from fuel combustion, gasification, and non-energy industrial processes, using a fuel input tax approach.
• To mitigate competitiveness concerns and carbon leakage, the policy proposes a basic tax-free threshold of 60 per cent for the first five years, with total thresholds capped at 90 per cent including offsets.
• The agriculture, forestry, land use, and waste sectors will be completely exempt from the carbon tax during the first phase (2015–2019) due to administrative and measurement difficulties.
• Economic modelling by the National Treasury and UNU-WIDER indicates that a gradually implemented carbon tax with effective revenue recycling would have a largely neutral impact on economic growth, employment, and income inequality.
• The government intends to use revenue recycling through tax shifting (reducing taxes on 'goods' like labour income) and funding flagship programmes in energy efficiency, renewable energy, and public transport.
• Firms may use verified carbon offsets from internationally recognised standards, such as the Clean Development Mechanism (CDM) or Verified Carbon Standard (VCS), to reduce their tax liability by 5 to 10 per cent.
• The policy includes a proposed energy efficiency savings tax incentive allowing businesses to claim a deduction against taxable income of 45 cents per kWh equivalent for proven savings.

APA

Centre for Environmental Rights (2013). CARBON TAX POLICY PAPER. https://cer.org.za/wp-content/uploads/2014/05/Carbon-Tax-Policy-Paper-2013.pdf?x21779

Chicago

Centre for Environmental Rights. CARBON TAX POLICY PAPER. 2013. https://cer.org.za/wp-content/uploads/2014/05/Carbon-Tax-Policy-Paper-2013.pdf?x21779.

Wikipedia

{{cite report |author=Centre for Environmental Rights |title=CARBON TAX POLICY PAPER |date=May 2013 |url=https://cer.org.za/wp-content/uploads/2014/05/Carbon-Tax-Policy-Paper-2013.pdf?x21779 |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{centreforenvironmentalrights2013carbon, author = {{Centre for Environmental Rights}}, title = {{CARBON TAX POLICY PAPER}}, institution = {Centre for Environmental Rights}, year = {2013}, month = may, url = {https://cer.org.za/wp-content/uploads/2014/05/Carbon-Tax-Policy-Paper-2013.pdf?x21779}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }