S African president signs Carbon Tax Act into law to combat climate change

CAPE TOWN -- South African President Cyril Ramaphosa has signed into law the Carbon Tax Act (CTA) as a fresh bid to combat climate change, the National Treasury said on Monday.

The CTA, which comes into effect from June 1 this year, is designed to reduce greenhouse gas (GHG) emissions in a sustainable, cost effective and affordable manner, the Treasury said.

The Act gives effect to the polluter-pays-principle for large emitters and helps to ensure that firms and consumers take the negative adverse costs into account in their future production, consumption and investment decisions, according to the Treasury.

Under the Act, firms are incentivized toward adopting cleaner technologies over the next decade and beyond.

The carbon tax will initially only apply to scope 1 emitters in the first phase. The first phase will be from June 1, 2019 to December 31, 2022, and the second phase from 2023 to 2030.

The design of the carbon tax also provides significant tax-free emission allowances ranging from 60 percent to 95 percent in the first phase.

A review of the impact of the tax will be conducted before the second phase, after at least three years of implementation of the tax, and will take into account the progress made to reduce GHG emissions in line with South Africa's NDC (Nationally Determined Contributions) commitments.

"Climate change represents one of the biggest challenges facing human kind," the Treasury said.

South Africa has been criticized for its over dependence on coal.

Its climate target is not in line with the Paris Agreement due to the country's heavy dependence on coal, according to a G20 climate action report released late last year.

The report laments the country's failure to introduce policies aimed at phasing out coal, as many other G20 countries have done, as well as its decision to build new coal power plants until 2024.

South Africa has the G20's highest emissions intensity in the power sector due to its extensive reliance on coal for electricity generation, according to Andrew Marquard of the Energy Research Center at the University of Cape Town.