Chemical Technology February 2016

The Draft Carbon Tax Bill Part 1 - How the tax is calculated 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 a three-part series.

P art 1 (How the tax is calculated based on CO 2 equivalent emissions for stationary and non-sta- tionary/mobile sources) is covered in this article. art 2 – Allowances and Offsets, will follow in a future issue as will Part 3 – Fugitive emissions, Industrial emissions. The Bill as published is the Carbon Tax Act, 2017, which will come into operation on January 1, 2017. It is to provide for the imposition of a tax on the carbon dioxide (CO 2 ) equivalent of greenhouse gas emissions, to be levied and collected for the benefit of the National Revenue Fund, or to be known as the Carbon Tax. In brief, the Preamble to the Bill states the following: • Greenhouse gas emissions have been scientifically confirmed. • The inevitable climate change impact needs to be man- aged. • It is necessary to make a contribution to the global ef- fort to stabilise greenhouse gas concentrations in the atmosphere. • The costs must be paid for by those responsible for harm- ing the environment. • The government is desirous to utilise measures to ad- dress the challenges posed by climate change. • This will require the deployment of carbon and economic incentives, as well as the use of emissions offsets. • The government believes that imposing a tax on green- house gas emissions and concomitant measures, such as providing tax incentives for rewarding the efficient

use of energy, will provide appropriate price signals to help nudge the economy towards a more sustainable growth path. Abbreviations “allowance” means any amount allowed to be taken into account in determining the carbon tax payable; “carbon budget” means a limit on total greenhouse gas that would cause the same amount of radiative forcing [1] (the difference of sunlight absorbed by the earth and energy radiated back to space) as a given mixture of CO 2 and other greenhouse gases. “combustion” means the exothermic reaction of a fuel with oxygen. “Commissioner” means the Commissioner for the South African Revenue Service. “emissions” means the release of greenhouse gases or their precursors and aerosols into the atmosphere over a specified area and period of time. “emission factor” means the average emission rate of a given greenhouse gas for a given source, relative to the activity data of a source stream, assuming complete oxida- tion for combustion and complete conversion for all other chemical reactions: GHG emission factor (CO 2 e) per tonne. emissions from a specific company “carbon tax” means a tax on the CO 2 equivalent of green- house gas emissions “CO 2 equivalent” means the concentration of CO 2

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Chemical Technology • February 2016