transition to a low carbon economy - department of energy · 2011. 12. 15. · the carbon tax...

Transition to a low carbon economy.What does it mean for your business?

November 2011

Agenda

• Carbon Market

• Carbon Tax

• NAMAs

© 2010 Deloitte Touche Tohmatsu Limited.

• Climate Change White Paper

Carbon MarketCarbon Market

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Carbon Market

© 2010 Deloitte Touche Tohmatsu Limited.Deloitte5Source: World Bank. State and Trends of the Carbon Market. 2011

CDM Post 2012

• The first commitment period of the Kyoto Protocol expires at the end of 2012.

• The CDM was established under the Kyoto Protocol.

• Will there be an international climate change agreement post 2012?

© 2010 Deloitte Touche Tohmatsu Limited.6 Source: World Bank. State and Trends of the Carbon Market. 2011

CDM Post 2012 cont.

What do we know about the CDM Post 2012?

• European Union will accept post 2012 credits from CDM Projects registered by 2012

• European Union will accept projects from LDCs & SIDS after 2012.

• Europe Union will form bilateral agreements with some countries and accept


their carbon credits

• Why EU? They are major buyers of credits

• CDM principles will likely continue but the form may change. The CDM needs to be reformed to handle larger volumes of credits etc.

Deloitte7

Carbon TaxCarbon Tax

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Carbon Tax – what does it mean for your business??

• South African National Treasury released a discussion paper on carbon tax in November 2010.

• Using a tax rate of R165 per ton CO2 (draft IRP2010), Government could collect R82.5 billion per annum from a carbon tax. � More than collections from custom duties, excise duties and other indirect

taxes.


�

taxes.

• The price of electricity could increase by R165 per MWh and Government could collect R34 billion per annum from businesses (based on Eskom’s 2010 Annual Report).

The Carbon Tax design

• There are a number of different tariffs that have been mentioned by Government:� The IRP2010 uses an initial price of R165 per ton carbon� The discussion paper mentions an initial price of R75 per ton (2005 price)

• National Treasury suggests different models for levying the carbon tax. � leaning towards taxing at source. � Example, taxing Eskom and then Eskom will recover by increasing the


�

� Example, taxing Eskom and then Eskom will recover by increasing the electricity price (passing on to customers)

• Will we really see the introduction of a carbon tax? � Yes, Government has emphasised their support for a carbon tax. We may not

have control over whether the tax is implemented or not, but we potentially can influence the timing and the design of the tax.

• We may transition to a cap-and-trade model afterwards.

NAMAsNAMAs

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What are NAMAs?

Bali Action Plan (COP 13) “Nationally Appropriate Mitigation Actions (NAMAs) by developing countries in

the context of sustainable development, supported and enabled by technology, financing and capacity building, in a measureable, reportable and verifiable manner”

Copenhagen Accords (COP 15) • Those undertaken by developing countries themselves must be “subject to

domestic measurement, reporting and verification”

© 2010 Deloitte Touche Tohmatsu Limited

domestic measurement, reporting and verification”• Those “seeking international support” must be “subject to international

measurement, reporting and verification”

SA Emission Reduction Goal (NAMA Pipeline www.cd4cdm.org )• “34% below BAU by 2020”• Based on LTMS � Peak, Plateau, Decline

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What are NAMAs?

© 2010 Deloitte Touche Tohmatsu Limited.Deloitte13Source: Ecofys policy update, April 2011

Climate Change WhiteClimate Change WhitePaper

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Climate Change White PaperObjective• Manage Climate Change impacts

• Contribute to the global effort to avoid anthropogenic Climate Change

Approach• Sector & sub-sector responses adopted within 2 years

• Carbon budgets into “company level desired emission reduction outcomes”


• Carbon budgets into “company level desired emission reduction outcomes”

• Each to prepare & Submit mitigation plans

Priorities• Sustainable Development

• Job Creation

• Improved public & environmental health

• Poverty Eradication

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Climate Change White Paper cnt’dTimelines (2 years)• Develop up to date Data information of GHG inventory and MRV system

• Sector & sub-sector responses

Finance

• A mix of economic instruments

� Incl. market-based instruments: carbon taxes, emission trading schemes,


� Incl. market-based instruments: carbon taxes, emission trading schemes, incentives

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The New Business ContextContext

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Questions??

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Sizwe KuzwayoSustainability & Climate ChangeDeloitte [email protected] 209 6872


transition to a low carbon economy - department of energy · 2011. 12. 15. · the carbon tax...

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