Tax Policy to Reduce Carbon Emissions in South Africa

Noting that South Africa may be one of the few African countries that could contribute to mitigating climate change, the authors explore the impact of a carbon tax relative to alternative energy taxes on economic welfare. Using a disaggregate general-equilibrium model of the South African economy, they capture the structural characteristics of the energy sector, linking a supply mix that is heavily skewed toward coal to energy use by different sectors and hence their carbon content. The authors consider a "pure" carbon tax as well as various proxy taxes such as those on energy or energy-intensive sectors like transport and basic metals, all of which achieve the same level of carbon reduction. In general, the more targeted the tax to carbon emissions, the better the welfare results. If a carbon tax is feasible, it will have the least marginal cost of abatement by a substantial amount when compared to alternative tax instruments. If a carbon tax is not feasible, a sales tax on energy inputs is the next best option. Moreover, labor market distortions such as labor market segmentation or unemployment will likely dominate the welfare and equity implications of a carbon tax for South Africa. This being the case, if South Africa were able to remove some of the distortions in the labor market, the cost of carbon taxation would be negligible. In short, the discussion of carbon taxation in South Africa can focus on considerations other than the economic welfare costs, which are likely to be quite low.

Bibliographic Details

Main Authors:	Devarajan, Shantayanan, Go, Delfin S., Robinson, Sherman, Thierfelder, Karen
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	2009-05-01
Subjects:	ABATEMENT, ABATEMENT COST, ADVERSE EFFECTS, AIR, AIR POLLUTION, ALTERNATIVE ENERGY, ALTERNATIVE POLICY INSTRUMENTS, APPROACH, ATMOSPHERE, AVERAGE PER CAPITA EMISSIONS, BASIC METALS, CARBON, CARBON CAPTURE, CARBON CONTENT, CARBON DIOXIDE, CARBON DIOXIDE EMISSIONS, CARBON EMISSION, CARBON EMISSIONS, CARBON TAX, CARBON TAXES, CLEAN TECHNOLOGIES, CLEANER ENERGY, CLEANER TECHNOLOGY, CLIMATE CHANGE, CLIMATE CHANGE STRATEGY, CLIMATE POLICY, COAL, COAL ENERGY, COAL MINING, CONSUMPTION OF PETROLEUM, COST OF ENERGY, CPI, CRUDE OIL, DEMAND ELASTICITIES, DEMAND ELASTICITY, DEVELOPED COUNTRIES, DISTORTIONARY TAXES, DIVIDENDS, DOUBLE DIVIDEND, ECONOMIC ANALYSIS, ECONOMIC IMPACT, ECONOMIC WELFARE, ECONOMICS, ELASTICITIES, ELASTICITY OF SUBSTITUTION, ELASTICITY VALUES, ELECTRICAL MACHINERY, ELECTRICITY, ELECTRICITY SECTOR, EMISSION DATA, EMISSION REDUCTION, EMISSION REDUCTION TARGETS, EMISSION REDUCTIONS, EMISSION TARGETS, EMISSION TRADING, EMISSIONS REDUCTION, ENERGY CONSUMPTION, ENERGY COSTS, ENERGY DEMAND, ENERGY ECONOMICS, ENERGY EXPENDITURE, ENERGY EXPENDITURES, ENERGY INPUT, ENERGY INTENSITY, ENERGY INTENSIVE, ENERGY POLICIES, ENERGY POLICY, ENERGY PRICES, ENERGY PRICING, ENERGY PRODUCTION, ENERGY RESEARCH, ENERGY SOURCE, ENERGY TAX, ENERGY TAXES, ENERGY TECHNOLOGIES, ENERGY TECHNOLOGY, ENERGY USAGE, ENERGY USE, ENVIRONMENTAL, ENVIRONMENTAL ECONOMICS, ENVIRONMENTAL LAW, ENVIRONMENTAL POLICY, ENVIRONMENTAL PROTECTION, ENVIRONMENTAL TAXATION, EQUILIBRIUM, EQUITY IMPACTS, EQUITY IMPLICATIONS, EQUIVALENT VARIATION, EXCISE TAXES, EXPENDITURE TAX, EXTERNALITIES, FERROUS METALS, FISHERIES, FISHING, FORESTRY, FOSSIL, FOSSIL FUEL, FOSSIL FUEL EMISSIONS, FOSSIL FUELS, FUEL TAXES, GAS SECTOR, GASOLINE, GENERATION, GLOBAL CLIMATE CHANGE, GLOBAL GREENHOUSE, GLOBAL GREENHOUSE GAS, GLOBAL GREENHOUSE GAS EMISSIONS, GNP, GREENHOUSE, GREENHOUSE EFFECT, GREENHOUSE GAS, GREENHOUSE GAS EMISSIONS, GREENHOUSE GASES, HEAVY RELIANCE, HIGH UNEMPLOYMENT, IMPACTS OF CLIMATE CHANGE, IMPERFECT COMPETITION, IMPORTS, INCOME, INCOME TAX, INELASTIC DEMAND, INPUT TAXES, INPUT USE, INTERMEDIATE GOODS, INTERMEDIATE INPUTS, INTERNATIONAL ENERGY AGENCY, LABOR FORCE, LABOR MARKETS, LEISURE, LEVEL OF EMISSIONS, MACROECONOMICS, MARGINAL ABATEMENT, MARGINAL COST, MARGINAL PRODUCT, MARGINAL TAX RATES, MARKET DISTORTIONS, MOBILITY, MOTOR VEHICLES, NATIONAL INCOME, NATIONAL INCOME ACCOUNTING, NATURAL GAS, NATURAL RESOURCES, OIL, OIL CONSUMPTION, OIL IMPORTS, OIL PRICE, OPTIMAL TAXATION, PER CAPITA INCOME, PETROLEUM, PETROLEUM PRODUCTS, POLLUTION, POLLUTION CONTROL, POWER, POWER SECTOR, PRICE CHANGES, PRICE OF ELECTRICITY, PRICES OF ENERGY, PRIMARY SOURCES, PRODUCERS, PRODUCTION FUNCTIONS, PRODUCTION OF ENERGY, PRODUCTION TECHNOLOGY, PRODUCTIVITY, PRODUCTIVITY GROWTH, PUBLIC EXPENDITURES, PUBLIC GOOD, QUOTAS, REAL WAGES, REBATES, RECYCLING, REDUCTION IN CARBON, REDUCTION IN EMISSIONS, REDUCTION OF EMISSIONS, REFINED PETROLEUM PRODUCTS, REVENUE RECYCLING, SALES TAX, SALES TAXES, SAVINGS, SINGLE TAX, SUBSTITUTION ELASTICITIES, SUSTAINABLE DEVELOPMENT, TAX, TAX CHANGES, TAX POLICIES, TAX POLICY, TAX RATE, TAX RATES, TAX REFORM, TAX REVENUE, TAX SUBSTITUTION, TAXATION, TRANSPORT, TRANSPORT EQUIPMENT, TRANSPORTATION, UNEMPLOYMENT, UTILITIES, VALUE ADDED TAX, VALUE ADDED TAXES, WAGE SUBSIDY, WAGES, WELFARE EFFECTS, WELFARE GAINS, WELFARE LOSS, WELFARE LOSSES, WOOD PRODUCTS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090518093557 http://hdl.handle.net/10986/4127
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