Chemical Technology March 2016

Chemical Technology • March 2016

art 1 (How the tax is calculatedbasedonCO

equivalent

emissions for stationary and non-stationary/mobile

sources)appearedintheFebruaryissue.Part3-Fugitive

emissions, Industrial emissions, will be published next month.

From the media statement by the National Treasury of the

Publication of the Draft Carbon Tax Bill for public comment

on 2 November 2015, the following emerged:

Carbon tax design as contained in the Draft Carbon

Tax Bill

includes the following features:

A basic 60 % tax-free threshold during the first phase of the

carbon tax, from implementation date up to 2020;

• An additional 10 % tax-free allowance for process

emissions;

• Additional tax-free allowance for trade exposed sectors

of up to 10 %;

• Recognition for early actions and/or efforts to reduce

emissions that beat the industry average in the form of

a tax-free allowance of up to 5 %;

• A carbon offsets tax-free allowance of 5 to 10 %;

• To recognize to role of carbon budgets, an additional

5 % tax free allowance for companies participating in

phase 1 (up to 2020) of the carbon budgeting system;

• The combined effect of all of the above tax-free thresh-

olds will be capped at 95 %; and

• An initial marginal carbon tax rate of R120 per ton CO

will apply. However taking into account all of the above

tax-free thresholds, the effective carbon tax rate will vary

between R6 and R48 per ton CO

These tax-free exemptions will range between 60 and

95 % of total emissions. This implies that the carbon tax

will be imposed on only 5 to 40 % of actual emissions dur-

ing this period.

The Department of Environmental Affairs (DEA) and the

National Treasury have embarked on a process to ensure that

the carbon tax is aligned with the proposed carbon budget

system. During the first phase of the carbon tax (up to 2020),

companies participating in the carbon budgeting process will

qualify for an additional tax-free allowance of 5 %.

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.

The

Draft Carbon Tax Bill

Part 2 - Allowances and offsets

by Carl Schonborn Pr Eng