Green Fund may mean more taxes

South Africa and other developing countries could escape payment of levies to the new Green Climate Fund set up by the United Nations (UN).

But on Friday Trevor Manuel, Planning Minister in the Presidency, who had been appointed joint chair of the Climate Fund’s transitional committee, indicated that this concession could result in rising domestic petrol prices.

This is because developed countries – which would have to make the biggest contribution, $100bn, to the proposed Climate Fund – would expect developing countries to do their part by reducing greenhouse gases. One of the proposals to bring this about is to tax greenhouse gas emissions.

The National Treasury has already released a discussion document on environmental tax, while the green tax on new vehicles came into effect on September 1.

Manuel said that the Climate Fund would have teeth only if accompanied by taxes on greenhouse gas emissions. This could mean that South Africa would no longer be protected from the extreme volatility of Brent crude prices because SASOL, which supplies about 30% of the country’s fuel, would probably be levied with a green tax in line with the rule that the polluter pays.

Sasol’s contribution has enabled South Africa to reduce oil-price volatility but through its coal-to-fuel technology Sasol has become one of the biggest offenders in terms of greenhouse gas emissions – even bigger than Eskom, said Manuel.

Those like Sasol that will continue producing greenhouse gases will probably have to pay a levy with an increasing impact on fuel prices, he said. Those are the sorts of choices that South Africa will have to make.

He hoped South Africa would remain neutral and not have to contribute to the fund.

But he pointed out that South Africa's greenhouse gas emissions per unit of gross domestic product are pretty hefty for a developing country.

At the 2009 Copenhagen Climate Conference President Jacob Zuma made an undertaking that South Africa would target a 34% reduction in greenhouse gas emissions by 2020 and 42% by 2025.

Manuel was elected joint chair of the Climate Fund’s Transitional Committee in absentia.

Source: Sake24 - Tuesday, 3 May 2011