The impact of a carbon pricing policy on the competitiveness of South African firms
Date
2012-01-17
Authors
Singh, Nishani
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Abstract
South Africa is a high carbon emitting nation with fossil fuels accounting for more than 90% of the country’s primary energy needs. As a rapidly developing country there is increasing pressure from international partners for the country to demonstrate its commitment to climate change mitigation.
This type of environmental market failure in South Africa can be addressed by fiscal reform and taxation which will motivate industry towards investing in a green economy.
It is the intention of the South African National Treasury to adopt a carbon pricing policy to address the country’s carbon dependency. In its simplest form carbon pricing or “putting a price on carbon” describes a move by government to institutionally price carbon as a factor of production.
In South Africa it is expected that the carbon tax will be applied to fossil fuels entering the economy and is expected to increase the price of electricity and liquid fuels. The net effect of a carbon taxation policy is the market transition to low carbon practises and alternatives as a result of increased costs.
The South African economy is expected to benefit from carbon pricing in the medium to long term even though the increased energy prices will negatively impact South African firms in the short term.
This research report examines the key principles of a carbon tax policy and the anticipated impact that this regulation will have on the South African private sector. The study is predominantly a literature based one and focuses on the theoretical results of environmental taxation and market based instruments to address environmental fiscal reform.
The outcome of this report is a strategy which South African firms may adopt to benefit from the opportunities created from the market transition. The strategy is twofold and looks at both short and long term initiatives that will allow South African firms to create and sustain value in a green economy.
Description
MBA thesis - WBS
Keywords
Carbon pricing, Competitiveness of companies