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Better together … we deliver National Treasury Carbon Tax Workshop 1 November 2013.

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Presentation on theme: "Better together … we deliver National Treasury Carbon Tax Workshop 1 November 2013."— Presentation transcript:

1 better together … we deliver National Treasury Carbon Tax Workshop 1 November 2013

2 22 better together…we deliver Confidential – not for further distribution Sasol is committed to engaging in climate change policy development for a transition to a lower carbon economy To this end, an effective policy should: sufficiently take account of South Africas mitigation and socio- economic challenges reflect the constraints of a transition to a lower carbon and climate resilient South African economy be based on analysis that uses clear and accurate information effectively contribute to the reduction of GHG emissions consider South Africas international competitiveness achieve alignment between different policy instruments

3 33 better together…we deliver Confidential – not for further distribution Sasol has substantially reduced its carbon footprint in South Africa

4 44 better together…we deliver Confidential – not for further distribution instrument carbon tax needs to be seen in the broader policy context National Climate Change Response White Paper Durban Platform IRP 2010 & IEP Carbon tax International negotiations Environmental policy Energy policy Fiscal policy

5 55 better together…we deliver Confidential – not for further distribution the current tax proposals are running ahead of the broader climate change policy formulation INTERNATIONAL NEGOTIATIONS WHITE PAPER IMPLEMENTATION COP17 Durban Platform agreed COP21 Durban Platform finalised draft policy document Design appropriate policy mix Draft carbon tax policy document Mitigation Potential analysis Sector / company Carbon budget White Paper Gazetted * Page 54 par 187

6 66 better together…we deliver Confidential – not for further distribution carbon tax...which is giving rise to different policy instruments with at times contradictory outcomes all emissions taxed regardless of mitigation potential reducing emissions intensity – may lead to higher emissions alignment with budgets perhaps after 2025 Likely outcome Tax basis Timing & enforcement carbon budget sector & company budgets to be set based on mitigation potential emissions reduction along a target trajectory implementation by late 2014 / 2015

7 77 better together…we deliver Confidential – not for further distribution current proposal fiscal instruments need to be specifically designed to achieve the required mitigation outcomes Recycling options not linked to mitigation outcomes Tax on all emissions with discounts requirements to align with budgets Z factor incentivising low carbon production – even at cost of higher emissions Targeted measures aimed to ensure meeting of DEROs Taxes, incentives & investments aimed at marginal tons of GHG Measures to support meeting of absolute emission targets

8 88 better together…we deliver Confidential – not for further distribution this lack of alignment has consequences for Sasol and industry conflicting policy outcomes create uncertainty and impact negatively upon investment paying a carbon tax on emissions that cannot be mitigated reduces capital availability for emissions reduction we can achieve multiple carbon prices are being created in the economy – IRP, DEROs and carbon tax increased administrative and regulatory complexity for both companies and government

9 99 better together…we deliver Confidential – not for further distribution we remain with a number of specific concerns regarding the carbon tax policy energy sector regulated no clarity on price pass-through tax effectiveness doubtful further careful analysis required micro-economic impacts impact upon competitiveness impact upon households and labour market electricity pricing industrial competitiveness households Analysis Regulated sectors Energy price impacts guiding principles for mitigation policy required price certainty only provided to 2019 future thresholds unclear Policy certainty

10 better together … we deliver thank –you


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