South African environmental taxes and investment incentives in practice

Harris, Peter-Dirk (2012-12)


The South African economy is faced with a number of challenges as an upper-middle income country that is highly resource-intensive, with an open economy. It has a number of developmental goals that must be achieved in order to maintain environmentally conscious sustainable development. The country will have to find pioneering ways to address the poverty problems faced by a large proportion of its people, while still ensuring economic growth at a reduced cost to the environment. In an effort to promote the shift to a “green” economy, the South African state and its related entities have developed a number of incentive programmes aimed at easing the transition. These incentives primarily support businesses in their efforts to become more energy-efficient, or to convert to renewable energy sources. The objective of this study is to critically evaluate what the South African government is doing with regard to environmental instruments aimed at assisting the country to reduce carbon emissions. This case study follows a quantitative approach, considering the financial effects that the different environmental instruments could have on South African manufacturers. Through the study the researcher will be able to make certain recommendations to businesses in the manufacturing industry who are interested in investing in renewable energy and energy efficiency. The results of the study will also give the researcher insight into the South African environmental incentives, which will allow him to make informed comments on the proposals that government has tabled regarding future environmental taxes and incentives. The research questions that the researcher tried to answer were based on the current and future policy measures that the South African government has implemented, or will implement, in order to move the country to a low-emissions trajectory. These policies were then also compared to international measures in order to determine if the policies chosen by the South African government are appropriate for the this country’s economy. This study has led the researcher to discover a number of issues relating to the status of environmental policy in South Africa. These discoveries have allowed him to make certain recommendations to businesses investing in this realm, as well as to government which develops these policy measures. The main findings of the study are that with the assistance of the South African government and related entities, investments in renewable energy have become viable. When considering the current status of South African environmental policy, the researcher has also come to realise that the country is lagging behind the rest of the world with regard to policy development. The South African economy is unique, thus policies have to be structured in a way that will not be detrimental to the country.

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