South Africa's Carbon Tax Matters -- For The Economy And Tackling Climate Change

South Africa's Carbon Tax Matters -- For The Economy And Tackling Climate Change South Africa’s agriculture and food production industries are exempt from the carbon tax - for now. Shutterstock

Carbon tax is likely to be an effective way of mitigating greenhouse gas emissions, which lead to climate change and have negative consequences for human life. But the carbon tax that’s been introduced in South Africa could cost jobs, unless people acquire skills that can be used in sectors that are not carbon-intensive.

Despite the fact that there will be winners and losers, overall, the tax should benefit South Africans.

Greenhouse gas emissions mainly from human activities such as carbon dioxide trap heat in the atmosphere, resulting in increased global temperatures and, in turn, unpredictable weather patterns. These changes – simply referred to as climate change – have led to devastating outcomes such as severe drought, heatwaves, flooding and wildfires.

Climate change also affects agriculture, water resources, human health, infrastructure, ecosystems and energy. In 2015 United Nations member countries agreed in the Paris Agreement to move faster towards a low-carbon future.

As one of the first measures to combat climate change, South Africa recently introduced a carbon tax. It’s the only African country and one of only 57 globally to have done so.

The carbon tax is a tax on energy as most of South Africa’s carbon emissions are from energy generation and the industrial use of energy. As much as 80% of South Africa’s primary energy is powered by coal.

In a recently published article we showed that the carbon tax should reduce emissions by 33% relative to the baseline by 2035.

But the tax could lead to a welfare loss by reducing disposable incomes of consumers by about R100 billion over a 20 year period. Workers in carbon-intensive sectors are at particular risk of losing their jobs.

The impact

Sectors that are closely tied to fossil-fuel based energy will be worst affected. They include transport, iron and steel, and coal-generated electricity. Their output will decline relative to a business-as-usual baseline.

But the carbon tax will be good for jobs and production in the agriculture and food sectors. This is mainly due to some tax exemptions. It’s also because agriculture contributes just 1% of carbon emissions.

In the short term the exemption will support food security and some of the most vulnerable workers in South Africa. In the long term there’s a possibility that it will be phased out.

Understanding the effects of carbon tax is important for the environment and also for the South African economy. Economic growth has been sluggish for the past decade and unemployment has risen from 21% to more than 27%.

The carbon tax could affect this as it provides an opportunity to create more jobs as energy sources shift from fossil fuels to renewables. The most suitable renewable energy sources for South Africa are solar and wind.

Benefits might also flow from a reduction in cap carbon emissions – the main point of the tax. This would help farmers and low-income households because they’re the most affected by adverse weather conditions.

Other benefits could be better air and water quality.

In addition, a shift towards renewable energy could make the country more appealing, helping the efforts of South African President Cyril Ramaphosa to attract foreign direct investment. The target is $100 billion within five years.

What needs to be done

Some important steps need to be taken in addition to the tax coming into force. The money should be used to build clean energy generation, otherwise the policy benefits will be limited and might not reduce emissions. Recycling the revenue is a necessary condition for this carbon tax to have long-term economic benefits.

Other policies must be adjusted and updated to work together with the newly introduced policy, and not against it. The carbon tax should apply to all producers and sellers, wherever production takes place. Trade policy should penalise imported goods that were produced using carbon-emitting processes. If the trade policy is not updated, imports will be more appealing than local products.

The food and agricultural sector must ensure it will have alternative energy sources in future. One way to adjust is to reduce food wastage, thus reducing production and energy. South Africans waste approximately 10 million tons of food per year, which is one third of all food produced in the country and is valued at about R60 billion.

As new ways of generating energy change the structure of the economy, workers will need to acquire new skills. Some of the revenue collected will have to be used for this.

Most of South Africa’s energy supply is concentrated in the state-owned entity, Eskom. Market concentration is usually inefficient and the losers are the consumers of the product or service. The movement towards renewable and cleaner energy will provide an opportunity for more players in this sector.

The transport sector is also a large contributor to greenhouse gas emissions due to its reliance on fossil fuels. The number of vehicles on the road need to be reduced. This requires investment in public transport; the number of busses and trains needs to be increased and their conditions have to be improved.

Reducing carbon emissions comes at a cost, and the benefits may not show for two or three decades. But it will be worth the wait.

About The Author

Mmatlou Kalaba, Senior Lecturer in Agricultural Economics, University of Pretoria and Heinrich Bohlmann, Senior Lecturer, University of Pretoria. Dr Sifiso Ntombela, chief economist at the National Agricultural Marketing Council, also contributed to the research and this article.The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Related Books

Drawdown: The Most Comprehensive Plan Ever Proposed to Reverse Global Warming

by Paul Hawken and Tom Steyer
9780143130444In the face of widespread fear and apathy, an international coalition of researchers, professionals, and scientists have come together to offer a set of realistic and bold solutions to climate change. One hundred techniques and practices are described here—some are well known; some you may have never heard of. They range from clean energy to educating girls in lower-income countries to land use practices that pull carbon out of the air. The solutions exist, are economically viable, and communities throughout the world are currently enacting them with skill and determination. Available On Amazon

Designing Climate Solutions: A Policy Guide for Low-Carbon Energy

by Hal Harvey, Robbie Orvis, Jeffrey Rissman
1610919564With the effects of climate change already upon us, the need to cut global greenhouse gas emissions is nothing less than urgent. It’s a daunting challenge, but the technologies and strategies to meet it exist today. A small set of energy policies, designed and implemented well, can put us on the path to a low carbon future. Energy systems are large and complex, so energy policy must be focused and cost-effective. One-size-fits-all approaches simply won’t get the job done. Policymakers need a clear, comprehensive resource that outlines the energy policies that will have the biggest impact on our climate future, and describes how to design these policies well. Available On Amazon

This Changes Everything: Capitalism vs. The Climate

by Naomi Klein
1451697392In This Changes Everything Naomi Klein argues that climate change isn’t just another issue to be neatly filed between taxes and health care. It’s an alarm that calls us to fix an economic system that is already failing us in many ways. Klein meticulously builds the case for how massively reducing our greenhouse emissions is our best chance to simultaneously reduce gaping inequalities, re-imagine our broken democracies, and rebuild our gutted local economies. She exposes the ideological desperation of the climate-change deniers, the messianic delusions of the would-be geoengineers, and the tragic defeatism of too many mainstream green initiatives. And she demonstrates precisely why the market has not—and cannot—fix the climate crisis but will instead make things worse, with ever more extreme and ecologically damaging extraction methods, accompanied by rampant disaster capitalism. Available On Amazon

From The Publisher:
Purchases on Amazon go to defray the cost of bringing you InnerSelf.comelf.com, MightyNatural.com, and ClimateImpactNews.com at no cost and without advertisers that track your browsing habits. Even if you click on a link but don't buy these selected products, anything else you buy in that same visit on Amazon pays us a small commission. There is no additional cost to you, so please contribute to the effort. You can also use this link to use to Amazon at any time so you can help support our efforts.

 

 

enafarzh-CNzh-TWdanltlfifrdeiwhihuiditjakomsnofaplptruesswsvthtrukurvi

follow InnerSelf on

facebook-icontwitter-iconrss-icon

 Get The Latest By Email

{emailcloak=off}

LATEST VIDEOS

Tiny Plankton Drive Processes In The Ocean That Capture Twice As Much Carbon As Scientists Thought
Tiny Plankton Drive Processes In The Ocean That Capture Twice As Much Carbon As Scientists Thought
by Ken Buesseler
The ocean plays a major role in the global carbon cycle. The driving force comes from tiny plankton that produce…
Climate Change Threatens Drinking Water Quality Across The Great Lakes
Climate Change Threatens Drinking Water Quality Across The Great Lakes
by Gabriel Filippelli and Joseph D. Ortiz
“Do Not Drink/Do Not Boil” is not what anyone wants to hear about their city’s tap water. But the combined effects of…
Talking About Energy Change Could Break The Climate impasse
Talking About Energy Change Could Break The Climate Impasse
by InnerSelf Staff
Everyone has energy stories, whether they’re about a relative working on an oil rig, a parent teaching a child to turn…
Crops Could Face Double Trouble From Insects And A Warming Climate
Crops Could Face Double Trouble From Insects And A Warming Climate
by Gregg Howe and Nathan Havko
For millennia, insects and the plants they feed on have been engaged in a co-evolutionary battle: to eat or not be…
To Reach Zero Emissions Government Must Address Hurdles Putting People Off Electric Cars
To Reach Zero Emissions Government Must Address Hurdles Putting People Off Electric Cars
by Swapnesh Masrani
Ambitious targets have been set by the UK and Scottish governments to become net-zero carbon economies by 2050 and 2045…
Spring Is Arriving Earlier Across The US, And That's Not Always Good News
Spring Is Arriving Earlier Across The US, And That's Not Always Good News
by Theresa Crimmins
Across much of the United States, a warming climate has advanced the arrival of spring. This year is no exception.
The Last Ice Age Tells Us Why We Need To Care About A 2℃ Change In Temperature
The Last Ice Age Tells Us Why We Need To Care About A 2℃ Change In Temperature
by Alan N Williams, et al
The latest report from the Intergovernmental Panel on Climate Change (IPCC) states that without a substantial decrease…
A Georgia Town Gets Half Of Its Electricity From President Jimmy Carter's Solar Farm
A Georgia Town Gets Half Of Its Electricity From President Jimmy Carter's Solar Farm
by Johnna Crider
Plains, Georgia, is a small town that is just south of Columbus, Macon, and Atlanta and north of Albany. It is the…

LATEST ARTICLES

Hurricanes And Other Extreme Weather Disasters Prompt Some People To Move And Trap Others In Place
Hurricanes And Other Extreme Weather Disasters Prompt Some People To Move And Trap Others In Place
by Jack DeWaard
If it seems like extreme weather disasters such as hurricanes and wildfires are becoming more frequent, severe and…
If All Cars Were Electric, UK Carbon Emissions Would Drop By 12%
If All Cars Were Electric, UK Carbon Emissions Would Drop By 12%
by George Milev and Amin Al-Habaibeh
The COVID-19 lockdown has led to reduced pollution and emissions in the UK and around the world, providing a clear…
Brazil’s Jair Bolsonaro Is Devastating Indigenous Lands, With The World Distracted
Brazil’s Jair Bolsonaro Is Devastating Indigenous Lands, With The World Distracted
by Brian Garvey, and Mauricio Torres
The Amazon fires of 2019 drove the greatest single year loss of Brazilian forest in a decade. But with the world in the…
Why Countries Don't Count Emissions From Goods They Import
Why Countries Don't Count Emissions From Goods They Import
by Sarah McLaren
I would like to know if New Zealand’s carbon emissions of 0.17% include emissions produced from products manufactured…
Green Bailouts: Relying On Carbon Offsetting Will Let Polluting Airlines Off The Hook
Green Bailouts: Relying On Carbon Offsetting Will Let Polluting Airlines Off The Hook
by Ben Christopher Howard
The coronavirus pandemic has grounded thousands of aircraft, contributing to the largest-ever annual fall in CO₂…
Longer Growing Seasons Have A Limited Effect On Combating Climate Change
Longer Growing Seasons Have A Limited Effect On Combating Climate Change
by Alemu Gonsamo
Climate warming is leading to early springs and delayed autumns in colder environments, allowing plants to grow for a…
Both Conservatives And Liberals Want A Green Energy Future, But For Different Reasons
Both Conservatives And Liberals Want A Green Energy Future, But For Different Reasons
by Deidra Miniard et al
Political divisions are a growing fixture in the United States today, whether the topic is marriage across party lines,…
How The Climate Impact Of Beef Compares With Plant-based Alternatives
How The Climate Impact Of Beef Compares With Plant-based Alternatives
by Alexandra Macmillan and Jono Drew
I am wondering about the climate impact of vegan meat versus beef. How does a highly processed patty compare to…