Analysis of the economic implications of a carbon tax


Show simple item record Winkler, Harald Marquard, Andrew 2016-02-02T12:20:27Z 2016-02-02T12:20:27Z 2011
dc.identifier.citation Winkler, H., & Marquard, A. (2011). Analysis of the economic implications of a carbon tax. Journal of Energy in Southern Africa, 22(1), 55-68. en_ZA
dc.description.abstract A carbon tax should be considered among the range of instruments available to the South African government, economy and society, as part of a broad portfolio of mitigation actions. A carbon tax was one of the most effective wedges or mitigation options analysed for the Long-term mitigation scenarios (LTMS) for South Africa. The LTMS strategic option ‘Using the market’ reduced emissions roughly as required by Science, for several decades. The LTMS research indicated that the effectiveness increases, up to certain tax levels. South Africa might consider a tax starting around R100-200 / t CO2eq, escalating in future. Our paper presents results on research on a carbon tax in South Africa conducted in 2008 and was presented at the Climate Change Summit 2009. The efficiency with which a carbon tax achieves the goal of reducing GHG emissions depends on responsiveness and substitutability. This is shown more fully on the supply-side, while further work will be needed to fully understand the response to a carbon tax on the demand side. Careful design of a carbon tax (or other economic instruments considered) will be important to ensure that it is effective in meeting its objective – reducing GHG emissions. We propose a price discovery and adjustment mechanism that sets a band around the desired ‘peak, plateau and decline’ trajectory. Equity demands that poor households, in particular, be shielded from any burden. Off-setting incentives, such as food subsidies or reduced VAT on basic goods, should in finance measure that which will ensure that the package of tax and incentives is a net benefit to the poor – and not to treat the tax as a revenue-raising instrument. With appropriate design, a carbon tax can be a powerful instrument of mitigation in South Africa, and at the same time, contribute to socio-economic objectives. Keywords: carbon tax, South Africa, economic instruments, climate change mitigation, greenhouse gas emissions. en_ZA
dc.language eng en_ZA
dc.publisher University of Cape Town en_ZA
dc.source Journal of Energy in Southern Africa en_ZA
dc.title Analysis of the economic implications of a carbon tax en_ZA
dc.type Journal Article en_ZA 2016-02-01T09:00:59Z
uct.type.publication Research en_ZA
uct.type.resource Article en_ZA
uct.subject.keywords carbon tax en_ZA
uct.subject.keywords South Africa en_ZA
uct.subject.keywords Climate Change en_ZA
dc.publisher.institution University of Cape Town
dc.publisher.faculty Faculty of Engineering & the Built Environment en_ZA
dc.publisher.department Energy Research Centre en_ZA
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