Articles Posted in the Business, Renewable energy category

Budget: Coal still gets more support than clean

February 16, 2009
Posted in Business, Renewable energy

coal-fired-plantEnvironmental organisation WWF South Africa has welcomed the taxes targeting “unsustainable spending” in this year’s Budget, but says that the government needs to help to reduce the cost of sustainable alternatives by providing renewable energy with the same finance support it gives to fossil fuel.

The group describes as “very positive moves” the carbon tax on new vehicles, which means that people who buy the most fuel-efficienct vehicles will pay less tax; the increase in the fuel levy; the levy on inefficient incandescent light-bulbs; the tax breaks for investments in energy efficiency; and the clarity on tax exemption for carbon credits, which encourages the generation of carbon credit and greenhouse gas savings, but not speculation in carbon credit.

But the government has agreed to guarantee R176-billion worth of debt for the national power utility, Eskom, in order to reduce the cost of finance for its R343-billion investment, most of which will go towards financing massive new coal power stations.

Peet du Plooy, WWF’s Trade and Investment Advisor in South Africa, says: “It would not be reasonable in a country that pursues climate leadership, to exclude the renewable energy sector from the same much-needed finance support that government is extending, via Eskom, to investment in fossil fuel infrastructure.”

“WWF does not support the planning basis for the present Eskom expansion, or the selection of conventional coal technology as a result of such planning. However, if this public investment were accepted as a ship that’s already sailed, there is still a case to be made that the same provisions should also be available to guarantee the finance of clean, renewable energy,” says Du Plooy.

Motor vehicle manufacturing, airlines and mining, “some of the most environmentally risky industries”, have also received support worth billions of rands in this year’s Budget, the WWF points out in a statement.

Photo by Arnold Paul, licensed under Creative Commons Atr

The organisation also says that the R6.4 billion that will be made available for public transport, roads and rail infrastructure would be made more sustainable if the money were “channelled more towards public transport and rail infrastructure rather than roads”.

Du Plooy also said that: “A tax on emissions-intensive industries like private cars or fossil-fuelled electricity, should be balanced with incentives for job-intensive, low-emissions alternatives like public transport and renewable energy.”

Source: WWF

Photo by Arnold Paul licensed under Creative Commons Attribution ShareAlike 2.5

Budget: save energy or pay up

February 12, 2009
Posted in Business

Despite the challenges posed by the global economic crisis, energy efficiency and climate change feature prominently in this year’s national budget, presented by Trevor Manuel, the finance minister, in Cape Town on Wednesday.

South Africa is playing a key role in the post-Kyoto climate negotiations and there is increased government policy focus on “environmental initiatives that mitigate the impact of climate change and promote sustainable development, energy efficiency and investment in new technologies”, the National Treasury says in its Budget Review.

Among the main tax proposals outlined in the budget were a number that addressed environmental concerns, namely:

  • incentives for companies to invest in energy-efficient technologies and cleaner production;
  • implementation of the electricity levy announced in Budget 2008;
  • reforms on motor vehicle excise duties to include carbon emissions;
  • introducing a new tax on energy-intensive lightbulbs;
  • making certified emission reduction credits tax exempt or subject to capital gains tax, instead of normal income tax; and
  • increasing the levy on plastic shopping bags

Incentives for investments in energy-efficiency
A number of environmental statutes and regulations require the private sector to eliminate inefficiencies in the use of energy, water and raw materials. Incentives for energy efficient investments are seen as market-based measures to complement these regulations, states the Budget Review. Existing legislation allows for a three-year 50:30:20 percent accelerated depreciation allowance for investments in renewable energy and biofuels production. A supplementary depreciation allowance of up to 15 percent is proposed. This means that companies can write off 115 percent of the value of the equipment, says one report. To qualify for the additional allowance companies would need to provide documentary proof of the energy efficiencies (after a two- or three-year period), certified by the Energy Efficiency Agency. There will be a consultation process to establish which equipment will qualify for the tax perk, says the report.

Tax on incandescent lightbulbs
To encourage consumers to use energy-efficient compact fluorescent lightbulbs (CFLs) – thus reducing energy demand and lowering greenhouse gas emissions from power stations – an environmental levy of about R3 is proposed for old-fashioned incandescent bulbs to be implemented from October 1 2009. The levy is expected to generate an about R20-million.

Tax proposals for Clean Development Projects
Under the Kyoto Protocol’s Clean Development Mechanism (CDM), projects in developing countries that significantly reduce greenhouse gas emissions can be issued carbon emission reductions (CERs). But South Africa is lagging behind other countries, such as India and China, in taking up CDM projects.

“South Africa’s greenhouse gas emissions rank in the top 20 in the world, contribute 1.8 percent to global emissions and are responsible for 42 percent of Africa’s emissions”

To encourage South African companies to take up these projects it is proposed that income gained from the disposal of primary CERs be tax–exempt or subject to capital gains tax instead of normal income tax. Secondary CERs are to be classified as trading stock and taxed accordingly, says the Budget Review.

Excise duties on vehicles
To encourage improvements in fuel efficiency and curb the growth of greenhouse gas emissions, the Budget proposes that excise duties on motor vehicles be adjusted to take into account carbon emissions as of March 1 2010.

“Policy measures to address the environmental and social costs associated with the transport sector, such as reforms to vehicle and fuel taxation [an increase in the levy on both petrol and diesel has also been proposed], seek to promote fuel efficiency, limit the rapid growth of the number of vehicles on the roads and encourage the use of public transport,” says the Budget Review.

International air passenger departure tax
This tax proposal is also listed under the environmental fiscal reforms in the budget reviews, presumably because of the carbon emissions associated with air transport. International air passenger departure tax currently stands at R120 per passenger on international flights and R60 per passenger on flights to the Southern African countries, the proposal is to increase the taxes to R150 and R80 respectively from October 1.

Increased levy on plastic bags
The budget proposes increasing the levy on plastic shopping bags from 3 cents to 4 cents a bag. This levy was introduced in 2004/05 and it has reportedly helped to reduce waste. The plastic bag levy is expected to generate R15-million in revenue.

Electricity levy
A levy of 2c per kw/h for electricity generated from non-renewable sources was proposed in last year’s budget and this is expected to be implemented in July this year. The electricity tax is expected to generate R2,78-billion, according to this year’s Budget Review.

The National Treasury notes that South Africa’s natural resources need to be “adequately managed” or economic growth will worsen environmental problems such as “excessive greenhouse gas emissions, the large-scale release of pollutants that result in poor air quality, inappropriate land use that leads to land degradation and biodiversity loss, deteriorating water quality and increasing levels of solid waste generation”.

The Treasury is showing that it is trying to practice what it preaches. Last year it started to measure the Budget’s environmental impact. This year it reports that it has managed to reduce the carbon dioxide emissions from transport (flights and vehicle use) by more than 3,000kg; it reduced the amount of paper it used and in the process saved 119.5 trees; and it used 200MW less electricity than during last year’s budget period.

All we can say is, keep up the good work, and what about aiming for carbon neutral next year?