Western Cape Business News

Send  Share  RSS  Twitter  14 Mar 2011

POWER SUPPLY: No Sense In Carbon Tax


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IT is difficult to see what the planned carbon tax will achieve other than produce more revenue for the government,” says the Cape Chamber of Commerce.

The whole idea of a carbon tax is to change behaviour to ensure that we produce less carbon dioxide and other green house gasses because of their contribution to global warming, but this won’t work in South Africa,” said Michael Bagraim, President of  the Chamber.

He explained that in South Africa most CO2 was produced from coal burned by Eskom to produce electricity, from coal used by SASOL to make petrol and from imported liquid fuels.

The intention is to make us use less electricity, petrol and diesel but it is difficult to see how a tax will do this. We have had massive increases in the price of electricity and fuel in the past few years and there are more are to come. If this doesn’t make us use less electricity and fuel then nothing will.”

An electricity bill of R 1000 a month in 2007 would escalate to about R5 000 by 2013. That should be more than enough to change behaviour and any tax on top of that would serve no purpose other than to raise revenue for the Government.

In fact, the Government was doing very nicely out of electricity from its VAT receipts on ever-increasing electricity accounts and that should be enough. Some of this money should be used to create incentives for industry to use alternate sources of energy.

Bagraim said it would make more sense to target other green houses gases such as methane which was 10 times worse than carbon dioxide. “Methane, however, has commercial value as a fuel and it could be harvested from landfill sites, sewage works and other waste products. In fact, the City of Lille in France runs its public transport buses on methane from the local sewage works. This is the sort of thing that should be encouraged. Cape Town could, for instance, run some of its municipal refuse trucks on methane.”

He also pointed out that loading the prices of electricity and fuel would simply add to the cost of doing business and make it more difficult for local companies to be competitive in the global market place.

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