Shades of green in this year’s budget

Posted by Laura Grant on February 21, 2008
Posted in Business, Green News

Finance Minister Trevor Manuel The Budget is going green it would seem. Not only were this year’s budget documents printed on Triple Green paper – chlorine free, biodegradable and comprising 60 percent sugar cane fibre – but the National Treasury actually went to the trouble of calculating its carbon footprint (it’s work since the beginning of this year apparently produced 38,000kg of carbon emissions). Indeed, Finance Minister Trevor Manuel announced in his 2008 Budget yesterday that the treasury has pledged to measure and reduce its environmental footprint and it calls on other government departments to take up the same challenge.

In his speech, Minister Manuel encouraged us all to work together to “adjust to an environmentally responsible future”. We have to take steps to change the legacy we leave our children, he said, and make adjustments to our growth path as a global community in response to the challenge of climate change and environmental responsibility.

Last year’s Intergovernmental Panel on Climate Change (IPCC) report put paid to any doubts that may have lingered about the effects human activity is having on the global climate, and its projections of what the consequences of inaction are likely to be were grim. South Africa is one of the countries that is expected to be hit hard.

The minister said that the findings of the IPCC had added impetus to the need for policy change. “Options that will now come under scrutiny for implementation include the use of emission charges and tradable permits, tax incentives for cleaner production technologies and reform of the existing vehicle taxes to encourage fuel efficiency,” he said. A proposal to encourage biodiversity conservation by private landowners through an income tax deduction is also under consideration.

He said that much needed to be done to develop specific and practical measures to support sustainable development, both on the tax and spending side of the budget and he encouraged “energetic debate” in this regard.

The energy crisis has also played a large part in this shift towards a greener future. The minister said that careful thought needs to be given to the fiscal measures the country adopts in response to the electricity shortage and that time is needed to “absorb and assess reform options more fully”.

He said: “We have an opportunity over the decade ahead to shift the structure of our economy towards greater energy efficiency, and more responsible use of our natural resources and relevant resource-based knowledge and expertise. Our economic growth over the next decade and beyond cannot be built on the same principles and technologies, the same energy systems and the same transport modes, that we are familiar with today.”

This all sounds very promising. The minister even said that a shift towards a more energy-efficient economy would be positive for employment creation. But R60-billion is proposed to support the financing of Eskom’s investment programme over the next five years. This entails returning to service three decommissioned coal-fired power stations and the building to two huge new 4,500MW coal-fired plants, among other things. Government has set aside only R2-billion over the next three years for energy efficiency, renewable energy, the installation of energy-saving devices and co-generation projects.

To encourage households and businesses to reduce their electricity consumption, a new levy will be introduced this year. Those that fail to lower their consumption by 10 percent will be charged 2 cents per kilowatt hour. No details were given in the budget speech to clarify what consumption figures will be used as a baseline from which the 10 percent reductions will be calculated. Reports on Talk Radio 702 yesterday indicated that it was likely to be based on 2007 consumption figures. This levy is expected to raise about R2-billion in 2008/9 and R4-billion a year thereafter. Let’s hope this money doesn’t end up paying for more dirty coal-fired power plants – the renewable energy budget could do with a boost.

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