OUTA PRESENTATION on carbon TAX 08 MARCH 2019

TABLE OF CONTENTS Introduction Contextual Background Our Concerns Case Studies – Carbon Tax Recommendations

INTRODUCTION OUTA is a proudly South African non-profit civil action organisation, supported and funded by the public who are passionate about improving the prosperity of our nation. OUTA was established to hold to account, those in authority who abuse their power w.r.t. Tax Payers money.

CONTEXTUAL BACKGROUND As a civil society organization, OUTA understands and appreciates the need to reduce the carbon emissions and to reduce the energy intensity of our economy. South Africa is an emerging economy. Historically, evidence dictates that industrialisation was propelled by extensive use of fossil fuels in the majority of the developed countries. Timing of the imposition of carbon is imperative. Implementation readiness. Shortcomings of introducing carbon tax.

CONTEXTUAL BACKGROUND (Cont…) Global emissions of carbon dioxide were recorded to be at 32.1 billion tonnes in 2015, having remained essentially flat since 2013. The IEA reported that electricity generation data by renewables played a critical role, having accounted for around 90% of new electricity generation in 2015; wind alone produced more than half of new electricity generation. In parallel, the global economy continued to grow by more than 3%, offering further evidence that the link between economic growth and emissions growth is weakening.

CONTEXTUAL BACKGROUND It is environmentally responsible to ensure that we reduce our carbon footprint due to climate change -   South Africa contributes only 1% to global emissions Biggest emitter in Africa.  OUTA supports environmentally sound development, and supports the principle behind the need for the carbon tax.  OUTA is concern about the impact of high air pollution levels posing as a health risk upon the citizens of Mpumalanga – therefore, advocates for stringent measures to force Eskom and Sasol to comply set standards.  It is not that we don’t want people/industry to change their behaviour but we believe that this carbon tax in its format is not geared to achieve that.

GLOBAL CO2 FROM FUEL COMBUSTION

South Africa’s GHG Emissions per Sector remains dominated by electricity generation sector Source: National Treasury Carbon Policy Paper, 2013

World Primary Energy Supply & CO2 Emissions – 2015 Source: IEA Statistics 2017 - CO2 emissions from fuel combustion – Highlights

OUR CONCERNS Emissions Baseline data has not been collected and normalised (standardised) per industry. No substantive assurance that this will promote behavioural change by polluters. Quantification and costing of the administrative burden of this tax has not been unpacked (complexities not clarified). Diverse economic scenarios and implications have not been thoroughly modelled only a few implications were analysed.

OUR CONCERNS (Cont…) Research data/input parameters remains incomplete Davis Tax Commission was not provided with comprehensive data to make proper/draw proper conclusions and recommendations The impact of high electricity prices since 2010 has not been factored into the carbon content equation of our sectors. OUTA Research Findings: Policy Intent Accrued Benefits Economic Imperatives

RECOMMENDATIONS OUTA recommends that: the proposed Carbon Tax MUST NOT be implemented in the current economic conditions and not in its current format South Africa must first be on course to sustainable economic recovery (@ least achieve economic growth of 3%-4% consecutively for 3 years) prior to the introduction of the carbon tax. Furthermore, energy sector reforms must be introduced to unbundle Eskom before a carbon tax takes effect. the carbon tax is at this point in time contrary to the socio-economic objectives of SA and will unfortunately suffer a state of increased cost of doing business should it be imposed. State of readiness (due diligence) must be ascertained prior to implementation

RECOMMENDATIONS (Cont…) OUTA recommends that: National Treasury delay the June implementation date of the carbon tax on petrol would be 9c per litre and 10c per litre for diesel. Government take cognizance of the fact that introducing a new carbon tax on fuel, describing it grossly UNFAIR to motorists and consumers. Due to the reality that South Africans are now expected to pay an emissions tax on inferior quality fuel - despite not having access to higher quality fuels, which are available in many other markets in the world, as asserted by the Automobile Association (AA).

OUTA Energy Portfolio Manager THANK YOU!!! Ronald Chauke OUTA Energy Portfolio Manager ronald.chauke@outa.co.za 0826669704