South Africa plans jail time and tax hikes under new emissions rules

South Africa will seek jail time, fines and higher taxes for breaches of proposed rules to govern carbon emissions that will apply to almost all sectors of the economy.

The proposed regulations, due to take effect at the beginning of next year, will see the setting of so-called carbon budgets for emitters of climate-warming greenhouse gases.

A failure to meet reporting requirements could see executives imprisoned, while exceeding emission limits may trigger a higher carbon-tax rate.

“We are the only ones that have this price across our whole economy” with the exception of waste and agriculture, said Jarredine Morris, co-head of the Africa Office of Carbon Trust, a carbon emissions consultancy.

It will mean “we really have a way to have industry to start to do things rather than kick the can down the road,” she said. 

South Africa, the most carbon-intensive economy among the Group of 20 nations, is intensifying efforts to cut its dependence on coal for power generation.

It’s also seeking to reduce its overall emissions, which rank 15th globally, exceeding those of much larger economies, including France and the UK. 

The steps come as South Africa faces the prospect of having taxes levied on exports that rely on carbon-heavy industrial processes.

Major markets such as the European Union and the UK are implementing so-called carbon border adjustment mechanisms. 

While the proposals, which the environment department has opened for public comment, are broader than those of other nations that mainly target fossil fuels, their carbon price is much lower. Morris expects the initial carbon budgets to be “realistic” and similar to current emission levels.

The average price levied globally on emissions of carbon dioxide or its equivalent has almost doubled over the last decade to $19 a ton, according to the World Bank.

South Africa’s current carbon tax is R236 a ton, with companies allowed to use offsets to avoid as much as 95% of the tax burden. Globally, carbon taxes earned more than $100 billion last year.  

Two companies, petrochemicals maker Sasol and state power utility Eskom, account for about 60% of the country’s emissions.

Sasol produces more than 60 million tons of greenhouse gases annually, and Eskom around 200 million tons. Both companies have won exemptions from complying with current emission limits, complaining about the cost and economic impact of doing so.

Under the proposed legislation, all companies that emit more than 30,000 tons of greenhouse gases must submit to annual targets and report on compliance and future plans to reduce emissions.

Executives can face fines of between R5 million and R10 million, and imprisonment of as long as 10 years for first and second offenses.