CRA Economic Impact – South Africa
Carbon has become somewhat of a four-letter word. Efforts to fight climate change are largely focused on reducing the world’s reliance on fossil fuels. Idealists would have the combustion engine and coal powered electricity plants obsolete within the next 25 years. Indeed first world economies are shutting down coal powered electricity generation. China announced in 2019 that it would shut down 8.7 GW of coal-fired capacity there by the end of that year. However, a study released in June reveals that China now has nearly 250 gigawatts of coal-fired power under development in countries across the globe. That’s more than the entire coal power capacity of the United States, according to the US Energy Information Administration. The carbon tax was introduced on 5 June in South Africa. It gives effect to the polluter-pays principle and has been met with mixed reaction from both industries reliant on energy and climate campaigners, says Deloitte. South Africa, the largest polluter on the continent, is cautiously adopting the levy approach. In December 2015 the Paris Agreement was signed by 195 countries, recognising the importance of cutting back on carbon emissions to limit the global temperature increase to 2°C above preindustrial levels. South Africa is a signatory to this. Izak Swart, director: carbon tax and government at Deloitte Africa, says, “You and I would have felt it directly in the petrol and diesel price increases, but this hasn’t been in huge increments and was part of overall fuel price fluctuations.” The cement industry is an example of one sector that has already raised prices to offset the carbon tax cost, according to Swart. He adds that the carbon tax is currently set at a “very low price” but that in five years, it will represent “a significant cost” for companies and consumers, and the economic impact will be clear. The Carbon Tax Act was signed into law by President Cyril Ramaphosa on May 26 2019 and became effective from June 1 last year.– Melani Nathan
Renewable energy drive threatens 120,000 South African jobs
By Gemma Gatticchi
(Bloomberg) – A drive to shift South Africa’s electricity production to renewable energy is threatening as many as 120,000 jobs at coal mines and power plants that use the fuel, a research consultancy said.
In addition the transition could threaten economic activity in four municipalities with a population of more than 2.3 million people. In the Emalahleni municipal area coal-related activities make up 44% of the economy. Most of the country’s coal is mined in the municipal areas which lie in the eastern province of Mpumalanga.
“Because these municipalities are so highly reliant on the coal value chain activities this is going to leave a huge gap,” said Muhammed Patel, an economist at Trade & Industrial Policy Strategies, on a webinar on Tuesday. “This is a key concern for South Africa given our high levels of unemployment, inequality and poverty.”
South Africa produces almost all of its electricity from a suite of coal-fired power plants run by Eskom Holdings SOC in the eastern province of Mpumalanga. Many of the plants have been running for decades and there is a push to retire them and switch to alternatives such as solar energy as South Africa emits the same amount of climate-warning greenhouse gases as the U.K., which has an economy eight times the size.
Coal mines and power stations are more labor intensive than renewable energy plants and Mpumalanga will also face competition from other provinces for the siting of solar power plants as the Northern Cape, which has a more arid climate, has clearer skies.
“Moving to a low-carbon economy will change the structure of the economy and impact on the working class,” said Pulane Mafoea-Nkalai, a senior research specialist at the Sam Tambani Research Institute, which is affiliated to the National Union of Mineworkers. “NUM, as a union organizing in both the coal and energy sector, recognizes that their members and their communities will be affected.”
Article Credit To Business News.