The implications of low-carbon trajectories in South Africa

Abstract

This brief outlines a number of findings and policy recommendations for the introduction of a carbon tax and the transition to a low-carbon economy in South Africa. The National Treasury proposed the partial implementation of a carbon tax in 2015, along with a number of tax exemptions for energy-intensive sectors. Tara Caetano and James Thurlow used a Computable General Equilibrium model to simulate the proposed carbon tax in order to gain some insight into two important research questions: First to see what the potential impact of the proposed carbon tax would be and, more interestingly, how much the exemptions decrease the effectiveness of the tax; second, to look at the social implication of introducing a carbon tax and how the use of different recycling mechanisms affects these implications