Over the weekend the National Treasury revealed that President Cyril Ramaphosa signed the Carbon Tax Act, with it coming into law on 1st June this year.
According to Engineering News, the Carbon Tax Act will give effect to the popular-pays principle for large emitters, helping to ensure that firms and consumers take the negative adverse costs into account for future production, consumption and investment decisions.
“Climate change represents one of the biggest challenges facing humankind, the primary objective of the carbon tax is to reduce greenhouse gas (GHG) emissions in a sustainable, cost-effective and affordable manner,” noted the Treasury.
Engineering News adds that firms were incentivised to adopt cleaner technologies over the next decade and beyond. The Carbon Tax will initially only apply to scope one emitters from 1st June to 31st December and the second phase from 2023 to 2030.
“Government has outlined its strong commitment to play its part in global efforts to mitigate GHG emissions as outlined in the National Climate Change Response Policy (NCCRP) of 2011 and the National Development Plan (NDP) of 2012,” added the Treasury.
Furthermore, the publication adds that the design of the Carbon Tax Act also provides significant tax-free emissions allowances ranging from 60 percent to 95 percent in the first phase.
“The introduction of the carbon tax will also not have any impact on the price of electricity for the first phase, this will result in a relatively modest carbon tax rate ranging from R6 to R48 per tonne of C02 equivalent emitted,” concluded the Treasury.