Having alerted the world to the dangers of deep-sea drilling in the Arctic, Greenpeace brought its in-your-face brand of activism home yesterday when it dumped 5 tons of coal on Eskom’s doorstep at Megawatt Park.
It took three dumper trucks to deposit, although the load represents just 0.00000025 percent of the 2 billion tons of coal Eskom estimates its current and planned coal-fired power stations will require over their operational lives.
Imagine if this full load of Eskom’s needs were dumped – it would have taken 1.2 billion trips in trucks of similar size. This brings home the point that, even though Eskom plans for big investments in technologies like solar power and nuclear, it remains a significant driver of new coal mine development in South Africa, and this continued dependency on fossil fuels may have implications for electricity prices as the government mulls a carbon tax.
At last week’s Coaltrans conference, Ian Hall of the steering committee for SA Coal Road Map, was quoted saying that while Eskom paid R200 a ton for coal last year, a carbon tax could raise this to R300 or R400.
It’s uncertain whether the Treasury will opt to apply an upstream tax at the point at which fuels enter the economy or to apply taxes directly on emissions of carbon dioxide. Or for that matter whether to exempt Eskom or any other number of hopeful industries. These are among the many uncertainties about the design of a future South African carbon tax, and a way forward is likely to be spelt out only when the Treasury publishes its draft carbon tax policy, expected in November ahead of the COP17 climate conference in Durban.
The Treasury says a carbon tax announcement is expected during next year’s Budget, but doesn’t specify at what point commentary will be invited on these issues. Given the level of interest from the business lobby – whose members will pay or pass on these taxes – it might be a small miracle if the Treasury were to make an announcement next February that also has the buy-in of these stakeholders.
To achieve a speedy outcome, business and the Treasury may first need to acknowledge that their wish lists are penned in different languages. In particular, the business sector tends to favour a cap-and-trade emissions trading scheme over a carbon tax, but the Treasury intends to release its discussion paper on emissions trading only in August 2012, after carbon tax legislation has been published for comment. Business also wants greater emphasis on interventions such as energy efficiency incentives ahead of a carbon tax.
Second, South Africa needs a philosophical debate about its duty to bear the costs of moving to a low-carbon economy. The country’s Copenhagen commitments specify a 34 percent cut in carbon emissions off a business-as-usual trajectory by 2020, with the caveat that financial assistance should be forthcoming. And yet National Planning Minister Trevor Manuel has said South Africa is likely to be neutral in terms of contributions and benefits from the UN’s Green Climate Fund, whose transitional committee he co-chairs. This begs the question: where will the finance come from to meet South Africa’s expressly conditional climate commitments?
There are a host of other issues requiring consensus, among them mechanisms for price increases from carbon taxes in regulated industries. Will Sasol be allowed to pass on its carbon tax burden to motorists? Will Eskom be enabled to do the same to electricity consumers?
The mess Greenpeace left at Eskom’s headquarters yesterday reminds us of the messy facts South Africa has yet to tackle about its addiction to coal.