Chemical Technology June 2016

The Draft Carbon Tax Bill Part 3 - Fugitive emissions and industrial emissions by Carl Schonborn Pr Eng

In November, 2015, the South African National Treasury published for comment the Draft Carbon Tax Bill. To enable engineers to better understand the Bill, its contents have been edited for brevity and examples included to introduce the structure of the Bill as a commentary. This is the last of a three- part series.

P art 1 (How the tax is calculated based on CO 2 – Allowances and offsets, was published in the March issue. Where reference is made to Schedule 2 in this commentary, it refers to Schedule 2 in the Draft Bill or as published in Part 2 of this series. The numbering used in this commentary will correspond to the Sections in the Draft Bill. Certain items in the tables have been deleted from the original text for the sake of brevity and included where the examples draw factors from the table. Tax base (Section 4 of the Draft Bill) (b) Fugitive emissions from which the greenhouse gas is emitted. Numbers determined by: F = (N x Q) where N is either tonnes of solid fuel or m 3 other than solid, emitting the greenhouse gas. Q is the emission factor from Table 2. (Discussion of emission factors typically referenced from [1]) (c) Industrial Process and Product Use (IPPU) (emissions) P = (G x H) where G is the mass of each raw material used or product produced expressed in tonne in respect of the greenhouse gas emitted. H is greenhouse gas emission factor from Table 3. equiva- lent emissions for stationary and non-stationary/mo- bile sources) appeared in the February issue. Part 2

Example 3 (b) Industrial Process and Product Use (IPPU) emissions

As an example of IPPU emission a typical smaller cement plant would produce about 1 425 000 tonnes per annum of clinker. (Cement is 95 % clinker.) From Table 3 the GHG emission factor is 0,5200 for clin- ker. Annual carbon tax liability will be 1 425 000 x 0,5200 = 741 000 tCO 2 e 741 000 CO 2 e x R120 = R88 920 000 Allowance for industrial process emissions 8(1) A taxpayer that conducts an activity in respect of industrialprocess emissions that is listed in Schedule 2 in the column ‘Sector’ may receive an allowance in respect of those emissions, determined in terms of subsection (2). 8(2) The percentage of the allowance referred to in subsec- tion (1) must be calculated by matching the line in which the activity is contained in the column ‘Sector’ with the cor- responding line in the column “Basic tax-free allowance for process emissions %” in Schedule 2 of the total percentage of greenhouse gas emissions in respect of a tax period in respect of thatactivity. From Schedule 2 from the Sector Column, Cement

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Chemical Technology • June 2016