Carbon taxes could open the door for greater investment in renewable energy

The Democratic Alliance last week welcomed the announcement by Cabinet of a policy framework on climate change – most notably the announcement that a new series of carbon taxes will likely be introduced.

“South Africa is one of the most carbon-intensive countries in the world and it is incumbent on this country to reduce its emissions in the future in order to play its role in stabilising the world’s climate,” said DA environmental affairs spokesman Gareth Morgan.

While cautious of the additional costs placed on business by carbon taxes, Morgan said they were essential for the creation of a price for carbon, which was a prerequisite for creating a carbon market. He added that they should be introduced gradually to allow businesses to adjust, and in conjunction with other fiscal measures that would reduce the costs of doing business in South Africa.

Morgan also appealed for the revenue from such taxes to be ring-fenced for projects involving renewable energy, energy efficiency, and research and development.

“Ring-fencing of taxes is seldom done but if government is going to induce behaviour-change then producers and consumers must have the assurance that their taxes are being spent on projects that will reduce the country’s carbon footprint.”

He also said that government needed to allow the private sector to flourish in sectors that it previously could not.

“Breaking the Eskom monopoly and introducing feed-in tariffs for renewable energy could unleash a wave of investment into clean energy,” said Morgan. “It would also allow consumers of electricity greater choice in whom to buy electricity from, giving them more options to reduce their individual carbon footprints.”