SA’s Environmental Levy Put on Hold

The implementation of an environmental levy on electricity generated from nonrenewable resources has been postponed until July, despite the initial efforts by South African Finance Minister Trevor Manuel in the 2008 Budget.

Electricity created from renewable sources like wind, water, and solar, in addition to cogeneration-produced power would be exempt from the levy.

“The electricity levy should be seen as the first step towards the introduction of a more comprehensive emissions based carbon tax,” the National Treasury said in its 2008 Medium Term Budget Policy statement (MTBPS).

Carbon trading has increased in popularity with several countries jumping on the bandwagon and groups such as the International Energy Agency stating this method is the most beneficial to curb greenhouse gas emissions. The National Treasury noted that throughout the world, the carbon trading market was maturing, and slowly beginning to have the desired effect of moving resources from energy inefficient producers, to more efficient ones.

“South Africa is exploring the use of similar market based mechanisms to encourage companies to produce more efficiently,” the treasury said.

The 2c/kWh levy was an attempt to begin addressing the challenges of climate change and promote more sustainable renewable energy generation, as well as to increase energy efficiency, given South Africa’s electricity supply shortage.

South Africa ranks among the 20 largest CO2 emitting countries, and has one of the highest rates of greenhouse gas emissions per unit of gross domestic product.