Environment

Carbon tax delayed, fracking favoured in Gordhan's Budget

Sipho Kings

The 2014 Budget has delayed the carbon tax, punted shale gas, budgeted for more independent energy, and asked that mines help fix acid mine drainage.

Treasury has endorsed the fracking of shale gas in this year's Budget. (Reuters)

Finance Minister Pravin Gordhan has delayed the carbon tax by one more year to 2016. Last year, he said it would start by January 1 2015. This was "to allow further consultation".

The point of the tax is to punish companies that do not lower their carbon emissions, but also to provide incentive to companies that change the way they do business. This will be done by with a tax that steadily increases, while companies can lower how much they pay by offsetting their emissions. "This will support the shift to a sustainable economy."

But several of the queries raised by people giving feedback about the tax have been included – the tax on dirtier forms of energy will be lowered as the carbon tax is introduced, allowing the tax to be near neutral. While the tax would be not ring-fenced and be spent on purely environmental projects, some of the revenue would be aimed at funding the newly started energy-efficiency tax initiative. This gives tax breaks to campaigns and projects that lower energy use.  

Half of the respondents to the proposed carbon tax supported it, while 94% supported the intention of the tax. South Africa voluntarily committed to lowering its carbon emissions by 42% by 2025 at the Copenhagen climate conference in 2009. 

Treasury had worked with the department of environmental affairs and "agreed that a package of measures is needed to address climate change and to reduce emissions". It would work alongside environmental regulations that the department was implementing, renewable energy projects, and other programmes that worked in the environmental sector. 

Fracking
In the energy mix, he also gave treasury's endorsement of fracking of shale gas in the medium term, "to provide an additional source of energy for our economy". In the last two years, procurement contracts had been signed for 47 renewable energy projects for a total of R70-billion. These were now breaking ground to add 2 460MW to the grid. A further R45-billion of projects would be signed this year. 

Treasury has already give funding to the department of water affairs to help solve the acid mine drainage problem, and will continue to do so. But mines would be included, to "ensure that the mining sector makes a fair contribution to continuing acid mine drainage expenses". Consultations with affected parties would start to see which was the best way to fund these measures. 


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