South Africa’s Carbon-Tax Debate Disappoints

To be sure, it’s a difficult period for imposing new environmental taxes, given ongoing financial sector power over public policy. With the entry of European Union airlines into the region’s fast-collapsing Emissions Trading Scheme (http://www.businessday.co.za/articles/Content.aspx?id=163164), a group of non-European countries led by the Chinese (http://www.skynews.com.au/eco/article.aspx?id=725292&vId=) is revolting against paying higher air fares to and from Europe.

There are bad and good arguments about carbon taxation here. According to a China Daily report, “Europe’s compulsory charges are set to have great impact on China’s aviation industry, and more profound influences may be found in the export sector. China therefore strongly opposes the EU’s unilateral action, viewing the EU’s move as violating the United Nations Climate Change Framework Convention and related regulations of the International Air Transport Association.”

The North’s opportunities for creeping carbon taxes will rise or fall in this battle, since finding agreement on the UN’s ‘common but differentiated responsibility’ (a good argument against imposing the tax on poorer countries) will be near impossible.

Would a carbon tax help slow climate change? It depends on how high it must be in order to generate conservation incentives. As HSBC bank economists argued in a report released on March 8, the recent Brent crude oil price rise to 96 euros/barrel had the equivalent disincentive to emit CO2 as would a carbon price of 153 euros/tonne (ten times higher than most current proposals). The European Union’s Emissions Trading Scheme now sells carbon at just 8 euros/tonne. As HSBC put it, “Even pricing carbon at its total estimated damage costs of 64 euros/tonne has equivalent economic impacts to an oil price rise of only $24/bbl.”

South Africa, an inbetween country that hosted the UN’s climate summit (COP17) last December, should reasonably be expected to also hold a rigorous, far-ranging debate on transitioning to a low-carbon economy through strategic state investments and by imposing taxes on egregious polluters. East of Johannesburg, for instance, Sasol’s coal/gas-to-liquid petroleum refinery at Secunda is still the world’s worst CO2 emissions site, while the Eskom parastatal electricity supplier is building the world’s third and fourth largest coal-fired power plants at Medupi and Kusile, north and west of Joburg, also despoiling the region’s fragile water supplies.

Sadly though, we have not raised climate consciousness to the point even a rudimentary conversation has begun on either command-and-control regulatory reductions or neoliberal ‘get the prices right’ strategies to internalize pollution externalities. We still have no clue as to how quickly carbon taxes would be passed to consumers, and whether price elasticities generate genuine behavioural change – or simply more class apartheid.

Worst of all, the state regulatory option appears off the table. Last month, President Jacob Zuma’s State of the Nation address (http://www.pambazuka.org/en/category/features/80007) and Finance Minister Pravin Gordhan’s Budget Speech (http://www.counterpunch.org/2012/02/29/market-climate-failure/) set the tone for renewed pro-corporate, high-carbon underdevelopment, announcing more than $100 billion worth of new infrastructure for minerals export, smelting and port expansion. Fracking shale-gas extraction also appears imminent, with Shell proposing to drill SA’s most water-sensitive area, the Karoo.

Evidently, SA civil society’s watchdogging of the triple-crisis nexus of finance, development and environment is not working. Moreover, last week, Parliament (http://www.pmg.org.za/report/20120229-national-planning-commission-all-issues-relating-pursuance-low-carbon?utm_source=Drupal&utm_medium=email&utm_campaign=Free%20Alerts) gave constituents a lesson on how not to discuss low-carbon development. Environment Committee chairperson Johnny de Lange is best known for two interventions in parliament, namely physically fighting an opposition party member and then admitting his ministry was losing SA’s infamous fight against crime (http://www.iol.co.za/news/politics/wind-knocked-out-of-the-fight-against-crime-1.412602?ot=inmsa.ArticlePrintPageLayout.ot) He proved unresilient when facing up to the world’s greatest challenge, throwing another blind punch at the environment and, according to Parliamentary Monitoring Group minutes, ignoring carbon taxation entirely: “De Lange commented that a large part of the population were poor and struggled to survive every day, and the last thing they would want to think about would be the future.”

In reality, grassroots movements – such as the South Durban Community Environmental Alliance (disclosure: I’m a member) – make regular appeals to bring down Eskom’s extreme electricity prices as an urgent matter of daily life, for they have soared 150 percent since 2008 to pay for Medupi and Kusile (not to mention another $45 billion we expect to be billed for nuclear power plant construction in the coming 15 years). The way to do so is to halt new coal-fired powerplant construction and simultaneously, so as to avoid demand pressure, cut off the supply of the world’s cheapest electricity to BHP Billiton and Anglo American Corporation (http://eepublishers.co.za/article/eskom-bhp-billiton-and-the-secret-electricity-pricing-deals.html). The former guzzles more than 10 percent of SA electricity, providing just 1500 jobs in its main aluminum smelters.

Any such attack on these mega-corporations requires much more social and labour pressure, as well as a Just Transition alternative such as that recently developed by the ‘Million Climate Jobs’ campaign (http://www.climatejobs.org.za/documents/campaign-booklet/180-climatejobsbooklet2011.html). It’s still very early in the process, and we can expect interminable delays from a Treasury reluctant to harm mining houses which are already lobbying vigorously against a tax (http://www.miningweekly.com/article/mining-heavy-sa-industry-group-issues-carbon-tax-warning-2012-01-23). 

In its most detailed document (http://www.treasury.gov.za/public%20comments/Discussion%20Paper%20Carbon%20Taxes%2081210.pdf), Pretoria’s neoliberal Treasury officials claim, “a tax of $10/t CO2e, increasing to around $25/t CO2e would be both feasible and appropriate to achieve the desired behaviourial changes and emissions reduction targets.” Those emissions cut ambitions (34 percent by 2020 from a very high 2009 ‘Growth Without Constraints’ scenario) are rather low, given our vast historical responsibility for greenhouse gas emissions: third highest per capita rate amongst the 20 major emitters.

If we want a genuine transformation of coal-addicted SA capitalism and for Climate Justice to prevail, it looks like we should put much more pressure on the state to rethink its absurd investment plans, to cut power to smelters while ensuring metal workers have jobs in renewables, and to roll out more Free Basic Electricity (beyond current token supplies of 50 kWh/household/month to ‘indigent’ families).

The only good news from South Africa is that with the world’s carbon markets in crisis, virtually no one is talking about emissions trading (http://www.storyofcapandtrade.org), unlike misguided politicians and policy wonks in Sacramento and Beijing. 

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