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National Treasury Carbon Tax Workshop 1 November 2013

National Treasury Carbon Tax Workshop 1 November 2013. Sasol is committed to engaging in climate change policy development for a transition to a lower carbon economy. To this end, an effective policy should:

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National Treasury Carbon Tax Workshop 1 November 2013

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  1. National Treasury Carbon Tax Workshop 1 November 2013

  2. Sasol is committed to engaging in climate change policy development for a transition to a lower carbon economy • To this end, an effective policy should: • sufficiently take account of South Africa’s mitigation and socio-economic challenges • reflect the constraints of a transition to a lower carbon and climate resilient South African economy • be based on analysis that uses clear and accurate information • effectively contribute to the reduction of GHG emissions • consider South Africa’s international competitiveness • achieve alignment between different policy instruments

  3. Sasol has substantially reduced its carbon footprint in South Africa

  4. carbon tax needs to be seen in the broader policy context instrument Environmental policy National Climate Change Response White Paper Carbon tax Fiscal policy IRP 2010 & IEP Energy policy Durban Platform International negotiations

  5. the current tax proposals are running ahead of the broader climate change policy formulation draft policy document Draft carbon tax policy document Design appropriate policy mix White Paper Gazetted Mitigation Potential analysis Sector / company Carbon budget WHITE PAPER IMPLEMENTATION COP21 Durban Platform finalised COP17 Durban Platform agreed 2011 2012 2013 2014 2015 INTERNATIONAL NEGOTIATIONS * Page 54 par 187

  6. fiscal instruments need to be specifically designed to achieve the required mitigation outcomes current proposal requirements to align with budgets Tax on all emissions with discounts Targeted measures aimed to ensure meeting of DEROs Taxes, incentives & investments aimed at marginal tons of GHG Recycling options not linked to mitigation outcomes Z factor incentivising low carbon production – even at cost of higher emissions Measures to support meeting of absolute emission targets

  7. this lack of alignment has consequences for Sasol and industry • conflicting policy outcomes create uncertainty and impact negatively upon investment • paying a carbon tax on emissions that cannot be mitigated reduces capital availability for emissions reduction we can achieve • multiple carbon prices are being created in the economy – IRP, DEROs and carbon tax • increased administrative and regulatory complexity for both companies and government

  8. we remain with a number of specific concerns regarding the carbon tax policy • further careful analysis required • micro-economic impacts • impact upon competitiveness • impact upon households and labour market Analysis • energy sector regulated • no clarity on price pass-through • tax effectiveness doubtful Regulated sectors • electricity pricing • industrial competitiveness • households Energy price impacts • guiding principles for mitigation policy required • price certainty only provided to 2019 • future thresholds unclear Policy certainty

  9. thank –youNorbert.Behrens@sasol.com

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