Reducing Greenhouse Gas Emissions:
The Carbon Tax Option
Climate change is a serious global problem that requires both a concerted international response and national efforts to reduce greenhouse gas (GHG) emissions.
The United Nations Framework Convention on Climate Change (UNFCCC) is the main global response to climate change. The associated Kyoto Protocol is an international agreement that classifies countries by their level of industrialisation and commits certain countries to GHG emission-reduction targets. The Kyoto Protocol commits annex 1 (developed) countries to reduce GHG emissions to 5 per cent below 1990 levels by 2012.
South Africa, a non-annex 1 developing country, is ranked among the top 20 countries measured by absolute carbon dioxide (CO2) emissions. The vast majority of South Africa’s CO2emissions (about 80 per cent) are produced by the electricity sector, the metals industry and the transport sector. The electricity sector’s reliance on low-cost fossil fuels-based electricity generation is one of the main reasons for the carbon-intensive nature of our economy. These already high levels of GHG emissions are expected to increase as the economy grows.
Government is of the view that South Africa needs to reduce GHG emissions while working to ensure economic growth, increase employment, and reduce poverty and inequality. These goals are not necessarily mutually exclusive. Environmentally related taxes have an important role to play in discouraging activities that impose high social costs and in helping to ensure that economic growth and development are sustainable.
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