/ 25 February 2011

No carbon tax, but power levy up

No Carbon Tax

Carbon taxes have been shelved for a year, but the levy on electricity generated from non-renewable and nuclear energy will rise from 0,5c/kWh to 2,5c/kWh from April.

Finance Minister Pravin Gordhan said the levy would not have an impact on electricity tariffs because it had already been factored into the National Energy Regulators approved tariff structure for 2010 to 2013, in which power prices would rise by an average of 25% a year.

Carbon taxes would be dealt with in the 2012 budget, he said. Treasury released a discussion paper last December proposing several options, including a R75/tonne tax on carbon dioxide emissions and comments were expected by the end of February.

Whether the increased electricity levy would be spent on subsidising the roll-out of renewable energy sources was not stipulated.

But Gordhan did set aside R66,5-million in the 2011 budget for the establishment of a South African Energy Development Institute to conduct research and development into energy-efficient technologies.

Funding for the institute is part of the R369,7-million allocated to the energy department over the next three years to support demand-side energy reductions.

Research and development conducted by this institute will support energy-efficiency objectives pioneered through the electricity demand-side management grant, which is scheduled to come to an end at the end of 2011-12, said the Budget Review. Gordhan also dedicated R800-million to green economy initiatives over three years, but said specific allocations would be made in the adjustments budget.

The government has pledged to reduce domestic greenhouse gas emissions by 34% by 2020 and by 42% by 2025.

Parliamentary hearings into a draft climate change policy to achieve this are due in early March.

Unlike the State of the Nation address, the budget speech did mention the global climate change negotiations, dubbed COP17 (Conference of Parties 17), that will be hosted in Durban from late November.

Gordhan said funding had been provided for COP17. Exactly how much is expected to be outlined in Environment and Water Affairs Minister Edna Molewas budget.

Inclusive growth also means addressing the climate change challenges that confront the long-term global outlook, Gordhan said.

Mitigation initiatives are not just about reducing the dangers associated with a hotter future, they also offer significant opportunities to create jobs and reduce costs in our economy.

He allocated R2,2-billion over three years for environmental employment programmes and said there were additional allocations for efforts to prevent wildlife trafficking and improve air quality, coastal management and waste disposal.

The budget also set aside R225-million in the medium-term expenditure framework to tackle the threats of acid mine drainage (AMD) caused by gold mining in Gauteng. AMD was in the headlines this week after the Cabinet approved recommendations made by a team of experts and National Planning Commission Minister Trevor Manuel said there was no need to panic about the toxic tide decanting.

The expert report, which sets out control measures to reduce the rate of flooding, is expected to be made public on Thursday.

The R225-million allocation will be used to construct a pump station on the East Rand that will be in operation by the end of next year to divert polluted water.

Other measures include ingress control, removing harmful deposits and improving water quality.

Gordhan also announced bulk-water infrastructure allocations, including R1-billion for the completion of bulk distribution pipelines for the De Hoop dam in Limpopo and R952-million for regional bulk infrastructure.

He allocated R450-million for mitigation and drought relief in the Nelson Mandela Bay metropole.