Analysis of the economic implications of a carbon tax

Abstract

The aim of this paper is to provide an overview of the implications and impact of a carbon tax in the South African context – it aims to serve as an introduction rather than an exhaustive analysis, and therefore does not draw any comparative conclusions on the suitability of a carbon tax by comparison with alternative instruments such as cap and trade systems. Before turning to the specific topic of this paper, a carbon tax, some background is given to broadly on economic instruments and carbon markets. Following this, existing attempts to model the impact of a carbon tax on the South African economy are discussed, followed by a discussion on policy challenges and some existing proposals.