SA Carbon Tax set to Complicate Cultivation

Author: Bruce Coetzee

The world is changing, and not all of these changes translate into milestone achievements for humankind. The catchphrase for our constant and unrelenting damage to the environment, and our survival on this planet, has been at the centre of global focus since witnessing the repercussions of human activity over the past fifty years.

South Africa is ranked the 14th biggest greenhouse gas emissions producer worldwide. With mounting pressure from international and domestic governance, many sectors within South Africa are looking for a means to achieve the expectations outlined in our government's commitment to satisfying the critical role we have to play while resolving some of the most burning issues.

The South African government has been on a path of resolution since the Paris Climate Agreement, whereby a commitment to mitigating the detrimental cause and effects of greenhouse gas emissions, through concise policy and hands-on involvement, assists our economy through a guided and realistic transition. Whilst many believe the eventuality and predicted outcomes cannot be guaranteed essentially due to incalculable variables, the plan to steamroll a direct action plan outlined in the 2022 National budget speech gave concise directives regarding how and when significant critical implementation strategies would come into effect.

Essentially, carbon tax is aimed at pricing per unit or ton of greenhouse gas emissions emitted through combustion, process, and fugitive emissions. With a detailed plan incorporating several phases, the government has set its sights on 2050 as the net zero emissions goal.

The first phase would have given way to phase two; however, government has extended phase one by three years. Details outlined in the revised National Determined Contribution documents, which reaffirm South Africa's obligations under the Paris Climate Agreement to facilitate a reduction in emissions, were undertaken on September 27, 2021, and have subsequently been praised internationally by many who feel the proposal is achievable only through a multi-faceted approach, and international support. The initial limits presented in 2016 were amended, and the proposal now sets these limits at substantially lower levels than those first communicated in 2016.

Carbon tax became effective in 2019 and, according to the government's manifesto, will undoubtedly impact a diverse range of economic sectors. Farmers and agribusinesses that also incorporate a multitude of subsidiary interests now begin to brace themselves as the culmination of legislation and active participation in assisting farmers by the government have turned into a realistic, tangible plan!

Whilst several avenues aimed at provisioning an attainable set of goals within the agricultural sector have been set in motion; the Carbon Tax Bill will undoubtedly see the industry needing to readjust if it is to fall in line with governmental timeframes. Carbon tax exemptions that pertain to dyed fuels like diesel and petrol provide some relief for the agricultural sector, whilst other taxes will see farmers undoubtedly remain liable for a number of tax subsidiary inputs.

The extension of phase one (1) is focused primarily on preparing South Africans for the fundamental transition to a climate resilient economy, achieved through gradual increases in carbon taxes, with the plan to reach pinnacle levels of emissions by 2025 and progressively decrease the levels to absolute net values of zero emissions, by 2050.

In her statement, Helen Mountford, who holds the position of Vice president for Climate and economics at the World Resource Institute, offered clarity for sectors that see the new governmental commitments as viable, realistic, and practical.

"South Africa's new climate commitment is much more ambitious than what the country put forward five years ago, when the Paris agreement was struck".

The National Climate Plan seeks to strengthen the resilience to climate impacts, and the implementation of these adaptive investments is crucial to assist the people of SA in dealing with the devastation caused by adverse weather conditions and droughts, something we have become very familiar with.

Some notable success stories are helping to grow the confidence and commitment of farmers and the agricultural sector in light of the government's affirmation of achieving set goals. One such initiative falls under the dairy farmers sector domestically and comprises a pool of similar operations spanning 40 such farms nationally. The first of its kind, and a milestone in the effort to capitalize on the extension of phase one (1), has seen the implementation of the AgriCarbon program, piloted by the Climate Neutral Group (CNG). The AgriCarbon initiative was introduced in 2021 and aims to reward farmers adopting progressive farming methods underpinned by concise farm-based data statistics, which leads to a reduction in environmental damage and emissions.

The responsibility for preserving our natural world, and our own existence, falls upon every individual globally. Implementing the Carbon Tax Bill has unfortunately become necessary, as our technology has overtaken humanity. The agricultural sector faces several pressing challenges due to climate change; however, through working alongside the government's systems, we can look to the future with a renewed sense of optimism.