budget takes first green steps

Submitted by turbosprout on Thu, 2008-02-21 11:40


Trevor Manuel detailed a number of fiscal measures to help Eskom out of it's crisis as well as support renewable energy and sustainable development in his 2008 Budget speech yesterday.

In a nutshell:
- No subsidies or tax incentives will be given to personal tax payers to make energy efficiency improvements or use renewable energy yet, but there may be assistance in the future
- Eskom requires R343 Billion for capital expansion projects over the next 5 years, 73% of this will be for power generation projects
- The Govt will help them to the tune of R60 Billion in loans
- Later this year a levy of 2c per kWh will be charged on production of non-renewable energy this is expected to raise R2 Billion
- If consumers reduce their consumption by 10% or more, effectively they will avoid paying this increase
- R2 billion will be spent over 3 years supporting energy efficiency, renewable energy, electricity saving and co-generation projects
- Climate change will inform fiscal policy in future
- They are considering emission charges and tradable permits, tax incentives for clearer production technologies, and taxing vehicles according to fuel efficiency
- Income tax deductions for landowners who preserve habitats and biodiversity

It was also interesting to read that the National Treasury is taking its carbon footprint into account for the first time. They calculated that since the beginning of 2008 their activities to prepare the Budget caused 38 000 kg of carbon dioxide emission through aeroplane flights and motor vehicle transport. Also an incredible 37 tons of paper was used, the equivalent of 726 trees. The director of the Treasury pledged to continue to measure their environmetal footprint and called on other government departments to do the same. [engineering news]

Some snippets from what Mr Manuel had to say on
Personal energy incentives:

"Let me express a word of thanks to 244 South Africans who have sent me advice on options for encouraging energy efficiency on building standards, subsidising solar powered geysers, supporting the replacement of incandescent light-bulbs or reducing unnecessary energy use, in government offices, in mines and factories, in ordinary homes. These are issues to which we will return once there has been time to absorb and assess reform options more fully. There are some competing perspectives to consider. There have been some appeals for financial assistance in purchasing electricity generators, for reasons we all understand. But several correspondents have also pointed out that subsidising fossil-fuel burning generators would send the wrong signal in the light of environmental considerations."

"I mention this to illustrate, Madam Speaker, that careful thought needs to be given to the fiscal measures we adopt in response to short-term challenges. We have an opportunity over the decade ahead to shift the structure of our economy towards greater energy efficiency, and more responsible use of our natural resources and relevant resource-based knowledge and expertise. Our economic growth over the next decade and beyond cannot be built on the same principles and technologies, the same energy systems and the same transport modes, that we are familiar with today."

Eskom
"Over the next five years Eskom’s capital expansion plans will amount to R343 billion, with about 73 per cent earmarked for power generation projects. The return-to-service of previously mothballed power-stations, Camden, Grootvlei and Komati, will add a combined 3 677MW of generating capacity by 2011 and other smaller projects will produce about 2 000 MW. Two major new coal-fired plants, Medupi in Lephalale and Bravo near Witbank, will each cost in excess of R80 billion and produce about 4 500 MW each."

"...while new power stations are being built and tariffs are steadily increased and revised to encourage efficient electricity use, Eskom’s balance sheet will be under some stress. It is therefore proposed that up to R60 billion should be provided to support the financing of Eskom’s investment programme, on terms structured to assist in meeting cashflow requirements. Madam Speaker, the House should record and the nation needs to know that this is not a grant."

On measures to combat climate change
"there are steps we have to take to change the legacy we will leave our children: adjustments to our growth path we have to make as a global community, as nations working together, as citizens of a shared humanity, in response to the challenge of climate change and environmental responsibility."

"The Treasury circulated a draft policy paper on environmental fiscal reform to key stakeholders in 2004, and then published it as a revised discussion paper in April 2006. Since then, the United Nations International Panel on Climate Change, in which a South African team led by the Department of Environmental Affairs and Tourism played an active role, has added impetus to the need for policy change. Options that will now come under scrutiny for implementation include the use of emission charges and tradable permits, tax incentives for cleaner production technologies and reform of the existing vehicle taxes to encourage fuel efficiency. A proposal to encourage biodiversity conservation by private landowners through an income tax deduction is under consideration. There is much to be done to develop specific and practical measures to support sustainable development, both on the tax and the spending side of the budget. I hope that this House will encourage an energetic debate – if that is the right word – and we have to work hard at developing an understanding between very diverse groups of people: scientists, environmental activists, engineers, businessmen, workers, policy advisors, regulators, and every one of us who enjoy the ordinary privilege of having access to light, heat, cooling, television, transport, communications and so much else, at the flick of a switch or the press of a button."

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