The Parliament of South Africa has approved a law that will implement a carbon tax as of June 2019. The carbon tax was set at ZAR120/tCO2eq (US$8.85/tCO2eq) but due to many tax-free allowances, the effective tax will range from ZAR6/tCO2eq (US$44c/tCO2eq) to ZAR48/tCO2eq (US$3.5/tCO2eq). The tax-free allowances are limited to 95% of the tax amount and could be eliminated in 2022.
The tax will be applied in two phases. The first phase will go from June 2019 to December 2022 and will impact sectors with a thermal capacity above 10 MW (except the agriculture forestry and other land use and waste), while the second phase will go from 2023 to 2030. After the first phase, a study on the impacts in emissions will be conducted.
Following the COP21 in 2015, South Africa ratified the Paris Agreement in November 2016 and submitted its NDC, in which the country committed to unconditionally keep its GHG emissions between 398 MtCO2eq and 614 MtCO2eq by 2025 and 2030. These efforts will lead GHG emissions to peak between 2020 and 2025, plateau for a ten-year period from 2025 to 2035 and decline from 2036 onwards.