Silver linings to the global disruption caused by the COVID-19 pandemic have been hard to find. However, there are a few and Carbon Tax relief is one of them. 

By Francois du Plessis, Operations Director at EDS Systems

A three-month extension of the carbon tax filing and first payment deadline was announced, providing businesses with crucial time to improve cash flow.

However, now is the time for companies to take advantage of the extension and gear themselves for not only meeting the new filing deadline of 31 October, but also harness the power of technology to simplify the process and add value to the business.  

The nationwide lockdown has resulted in many industries having to shut shop which has lessened impact on the environment with visible reductions in air pollution. This has given us a glimpse of the lower carbon future that we’re working towards, yet these relief measures are only temporary. Businesses need to get a handle on tracking, quantifying and reducing their emissions sooner rather than later.

Paying attention to pollution

With all non-essential manufacturing halted and road, rail and air travel severely restricted, we have been given a unique opportunity for corporations to visualise the effect of their operations on our environment, and ultimately our climate. The deadline extension is giving businesses that fall within phase one a further three months to gain an understanding of their contribution to greenhouse gas emissions. This also allows businesses to visualise carbon footprint, calculate their carbon tax liability and examine their business processes, logistics operations and supply chains for carbon reduction opportunities.

But how do we clean up our skies and make it safe for humans to breathe again? Reducing global heat-trapping emissions is a good start.

South Africa’s heavy carbon footprint

Our most recent official greenhouse gas inventory examined 2000 to 2015 and showed a net national emission of 512.3 million metric tonnes of carbon dioxide equivalent. When expressed as gross emissions per person, in 2015 alone our country was responsible for the emission of 9.8 tonnes of carbon dioxide equivalent per person.

Levels have fluctuated –   in 2000 the per capita emission was 9.93 tonnes of carbon dioxide equivalent and in 2010, it was 10.82 tonnes per person – which further highlights the need for industries to gain control over their emissions.

Choosing the right tech to simplify carbon tax and add value Carbon tax is a means for the state to put a price on carbon emissions in order to shift the cost from society back to the corporations responsible for the emissions. The more action a company takes to reduce or offset its emissions, the lower the tax.  Fortunately, technology has reduced the administrative burden of quantifying and visualising their carbon equivalent contributions.

There are several useful tools that allow for the input of emissions and process this data in order to generate a report that breaks tax liability down into the relevant emissions sources.  These tools can assist in providing visibility of their financial obligation from a carbon tax perspective across the entire organisation. Once tax liability status has been determined, these tools calculate the carbon tax liability amount, taking into consideration any offset reductions.

However, when assessing these carbon tax tools, it is prudent to consider one that is developed in South Africa so that it is geared towards South African carbon tax laws. Furthermore, the tool should also be able to calculate the carbon footprint of the company and benchmark company emissions through analytics and reporting.

The first phase will see a carbon tax rate of R120 per ton of carbon dioxide equivalent emissions levied, which will increase annually by inflation plus 2% until 2022, and annually by inflation thereafter.

The rising cost of carbon tax coupled with numerous economic studies have demonstrated that the cost of early action can reduce the causes of climate change considerably. Rather than viewing this as an onerous legislative requirement, companies can simplify the process, reduce their carbon tax obligations and create additional value, for both the business and the environment.