better together … we deliver national treasury carbon tax workshop 1 november 2013
TRANSCRIPT
better together … we deliver
National Treasury Carbon Tax Workshop 1 November 2013
22better together…we deliver
Confidential – not for further distribution
Sasol is committed to engaging in climate change policy development for a transition to a lower carbon economy
To this end, an effective policy should:
• sufficiently take account of South Africa’s mitigation and socio-economic challenges
• reflect the constraints of a transition to a lower carbon and climate resilient South African economy
• be based on analysis that uses clear and accurate information
• effectively contribute to the reduction of GHG emissions
• consider South Africa’s international competitiveness
• achieve alignment between different policy instruments
33better together…we deliver
Confidential – not for further distribution
Sasol has substantially reduced its carbon footprint in South Africa
2000 2005 2010 50
55
60
65
70
75
actual without mitigation
GH
G e
mis
sio
ns
(Mt C
O2
e)/
cale
nd
ar
yea
r
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instrument
carbon tax needs to be seen in the broader policy context
National Climate Change Response White Paper
Durban Platform
IRP 2010 & IEP
Carbon tax
International negotiations
Environmental policy
Energy policy
Fiscal policy
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the current tax proposals are running ahead of the broader climate change policy formulation
2011 2012 2013 2014 2015
INTERNATIONAL NEGOTIATIONS
WHITE PAPER IMPLEMENTATION
COP17Durban Platform agreed
COP21Durban Platform finalised
draft policy document Design appropriate policy mix
Draft carbon tax policy document
MitigationPotential analysis
Sector / companyCarbon budget
White PaperGazetted
* Page 54 par 187
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current proposal
fiscal instruments need to be specifically designed to achieve the required mitigation outcomes
Recycling options not linked to mitigation
outcomes
Tax on all emissions with discounts
requirements to align with budgets
Z factor incentivising low carbon production – even at cost of higher emissions
Targeted measures aimed to ensure meeting of DEROs
Taxes, incentives & investments aimed at marginal tons of GHG
Measures to support meeting of absolute emission targets
88better together…we deliver
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this lack of alignment has consequences for Sasol and industry
• conflicting policy outcomes create uncertainty and impact negatively upon investment
• paying a carbon tax on emissions that cannot be mitigated reduces capital availability for emissions reduction we can achieve
• multiple carbon prices are being created in the economy – IRP, DEROs and carbon tax
• increased administrative and regulatory complexity for both companies and government
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we remain with a number of specific concerns regarding the carbon tax policy
energy sector regulated
• no clarity on price pass-through
• tax effectiveness doubtful
further careful analysis required
• micro-economic impacts
• impact upon competitiveness
• impact upon households and labour market
electricity pricing
• industrial competitiveness
• households
Analysis
Regulated sectors
Energy price impacts
guiding principles for mitigation policy required
• price certainty only provided to 2019
• future thresholds unclear
Policy certainty
