Carbon tax is imminent in South Africa and it is slated to affect all industries. It is apparent that phase 1 of the carbon tax will penalise companies whose primary source of emission is energy generation. The obvious conclusion is then that using less energy will be essential to reducing the greenhouse gas emissions and the consequent steep tax for heavy emitters.
However, to the stick of carbon tax, there is the carrot of the section 12L tax incentive for energy efficiency. Section 12L benefits companies that implement energy efficiency interventions to decrease their energy intensity and employ Measurement and Verification (M&V) to quantify the energy savings for the purpose of a tax allowance. The section 12L tax incentive is currently at 95 c/kWh for energy savings.
Carbon tax and section 12L, with M&V as a core service that provides risk assurance offer opportunities for companies, engineers and consultants in the heavy industrial sectors. As an active chapter of the Association of Energy Engineers, the Southern African Energy Efficiency Confederation (SAEEC) took the initiative in hosting a workshop for its members exploring these opportunities.
The workshop, held in April was attended by representatives from the various industries and consultants active in the energy and emissions field. The main points of the presentations were that the phased implementation of the carbon tax will delay the expected significant impact until 2022, however the assumption that the carbon tax cost will ultimately be moved onto the product price seems to remain universal.
The section 12L tax incentive for energy efficiency has also been extended for another term to coincide with the carbon tax phase 1 ending in 2022. Of significance is that the first reporting period for carbon tax is from 1 June to end December 2019, which is just around the corner.
SAEEC members have the benefit to access the presentations by the experts that presented at the SAEEC Workshop which provides some insights into calculations, what is excluded and included, carbon budget requirements, phases and their respective requirements, and more.