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Johannesburg - Economist Brent Cloete has urged South Africa to adopt the appropriate climate policies and carbon taxes early, if it is to meet the ambitious emissions targets it committed itself to in the Copenhagen Accord on climate change.
"The Treasury is considering a broad-based carbon tax that will increase the price of products that are carbon-intensive to produce, like cars. If implemented as a tax on coal, which seems likely, it may also increase the cost of fuel," he said in Nedbank's Sustainability Outlook for December 2010.
At least 23% of local fuel is produced from coal-to-liquid technology.
"All indications point to the fact that, whether through enlightened cooperation or trade restrictions, the cost of carbon will become internalised in the near future. Science makes it clear we have no alternative," Cloete said.
For investors, the implications of possible border carbon adjustment (BCA) is that they probably cannot afford to wait for finalised legislation before seriously considering the impact of carbon pricing on companies, he said.
BCA is a trade measure that will try to level the playing field between domestic producers facing costly climate change measures and foreign producers facing very few.
While a BCA could conceivably work in conjunction with any number of domestic climate change regimes, it has been proposed to date as a companion either to a domestic carbon tax or a cap-and-trade scheme.
"The Treasury is considering a broad-based carbon tax that will increase the price of products that are carbon-intensive to produce, like cars. If implemented as a tax on coal, which seems likely, it may also increase the cost of fuel," he said in Nedbank's Sustainability Outlook for December 2010.
At least 23% of local fuel is produced from coal-to-liquid technology.
"All indications point to the fact that, whether through enlightened cooperation or trade restrictions, the cost of carbon will become internalised in the near future. Science makes it clear we have no alternative," Cloete said.
For investors, the implications of possible border carbon adjustment (BCA) is that they probably cannot afford to wait for finalised legislation before seriously considering the impact of carbon pricing on companies, he said.
BCA is a trade measure that will try to level the playing field between domestic producers facing costly climate change measures and foreign producers facing very few.
While a BCA could conceivably work in conjunction with any number of domestic climate change regimes, it has been proposed to date as a companion either to a domestic carbon tax or a cap-and-trade scheme.
