The government of South Africa plans to introduce a carbon tax of ZAR 120/tCO2eq (US$10/tCO2eq) as of January 2019. The project was first proposed in 2010, has been postponed at least three times but came back on the agenda as part of broader tax changes aimed at improving state revenues.
A second draft carbon tax bill was released in December 2017. The new carbon tax would impact 1,000 to 1,500 companies and cover 75% of domestic CO2 emissions. Companies could benefit from tax breaks and progressive increases in the early years, paying ZAR 6 to ZAR 48 per tonne (US$0.5-4.1/tCO2eq) in the first phase. In addition, total tax-free allowances could be as high as 95% in the first phase until 2022.
The carbon tax project would help South Africa meet its Paris Agreement pledge to halve CO2 emissions by 2030, when they should peak between 398 and 614 MtCO2eq. Large emitters, such as state-owned power utility Eskom, mining companies and steel groups, are fiercely opposed to this tax, which would erode their profits and increase electricity prices.
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