South Africa has introduced a new Carbon Tax to reduce the country’s dependence on fossil fuels. The first phase of the tax will run until December 2022, with the second phase running from 2023–2030. Agriculture will not be included in the first phase, but may be included in the second phase, although it is not clear what form it will take.
Fossil fuels are included in the first phase of the Act. As a result, we are likely to see a shift of the additional tax burden for energy producers passed on in the value chain, resulting in higher prices for the affected goods. The effect of the tax on liquid fuels is already being felt, with the fuel price increasing by 9c/litre on petrol in June and 10c/litre on diesel.
Electricity prices are not expected to see an immediate increase, as Eskom has requested exemption from the tax until 2022 to support investment in renewables. However, from 2023 onwards, there is likely to be a significant rise in electricity bills.
For firms to deal with this change, it is vital to understand where emissions are coming from and the relative carbon intensity of different agricultural inputs. The Confronting Climate Change (CCC) Initiative provides data to guide firms to adjust their practices over time.
Source: Confronting Climate Change