Eskom and Sasol are among the companies that will be reporting under the carbon disclosure project in 2007. South Africa is the first developing nation, alongside Brazil, to participate, says a report by global wildlife fund WWF released this week.
”Eskom will in all likelihood rate as the highest greenhouse gas producing company to report from any country, with 200million tons of carbon dioxide per year, compared to Shell’s 105million tons.
”Sasol will report about 70million tons a year. Its Secunda coal-to- liquids plant is the largest single point source of greenhouse gas emissions in the world, according to a recent submission to the South African Cabinet by the department of environmental affairs and tourism,” says the WWF.
The report, Re-thinking Investment, was released this week at a function hosted by the department of trade and industry, which announced it was setting up a desk to promote environmental goods and services. It highlights South Africa’s disproportionate contribution to global warming and suggests remedies.
It says the country’s consumption of oil and coal places it among the world’s top 20 greenhouse gas emitters. On a per capita basis, South Africans emit 20 times more CO2 than the United States for each unit of GDP produced. South Africa and Russia are the most energy intensive of the Brics (Brazil, Russia, India, China and South Africa).
China halved its carbon intensity in the last decade of the 20th century. South Africa’s emissions per capita, at 7,6 tons, are nearly three times that of China’s 2,7 tons.
The report says present tax in South Africa encourages vehicles with larger engines, while an import duty of 15% is levelled on sustainable products such as components for solar water heaters.
”In terms of the promotion of sustainability practices, both of these measures constitute perverse taxes.”
The report says the large-scale implementation of solar heating holds the potential for between 50 000 and 120 000 new jobs.
”Recognising the huge potential of this sector, Eskom recently announced that it will be expanding its demand-side management programme to provide R2billion in financial incentives for installing one million solar water heaters.”
Re-thinking Investment sees the imposition of carbon taxes as a key reform to move the economy to a sustainable environmental footing.
”While increasing an input cost requires a sacrifice, increasing the price of environmentally detrimental resources, such as fossil fuels, through market-based instruments will serve to make resource-efficient technologies such as renewable energy more competitive.”
Importantly, these new taxes should not increase the overall tax take.
A carbon tax (or any resource tax) need not increase the overall level of taxation in an economy, but could simply be applied as a tax shift, with additional revenues generated by the tax being applied to reducing taxes on consumer goods, personal income or corporate profits, a process also known as tax recycling, the report says.
”Research for South Africa has shown that a carbon tax with recycling to personal and corporate taxes will have a positive economic, social (redistributive) and environmental effect.
”In such a scenario, it may also prove viable to provide a ‘tax back’ option, in which companies can claim tax relief by reducing their carbon footprints through energy efficiency or investing in renewable energy.”
The report suggests the country’s two heaviest users of coal are not against the idea of carbon taxes: ”As part of the 3C advocacy group, Eskom stated in 2007 that greenhouse gases must have a global price.
”In dialogue with civil society representatives in August 2007, the senior management of Sasol also indicated the company’s openness to and cautious optimism regarding the role of a carbon tax.”
The Western Cape, which will be among the areas worst affected by climate change in South Africa, ”has been the most progressive in developing sustainability.”
At a conference in June, the Western Cape government undertook to treble the national renewable energy target of 4% by 2015 and committed to investing R12billion in new renewable energy generation capacity by 2015. The province is also developing legislation requiring the installation of solar water heaters in new homes of more than a certain threshold value and has indicated its willingness to consider the implementation of a carbon tax in the province.
Re-thinking Investment says regulatory support for green energy and carbon trading markets should include ”reverse metering” and a feed-in tariff, which allows potential renewable energy producers to sell energy back into the national grid at competitive prices.