'Carbon tax will raise costs, reduce efficiencies'

The contentious carbon tax will, in all probability, raise costs and reduce efficiencies in the country – but the sectors with the highest carbon footprint say they will be unable to foot the bills. Any carbon tax levied against Eskom will be passed on to the consumer as the power utility does not have the capability to absorb any costs at present, one of parastatal’s managers said recently, while fuel companies have unequivocally stated they alone are not willing to fork out the R40 billion needed to upgrade refineries to produce cleaner fuel. Edward Funyufunyu, a senior manager at Eskom, said while discussions around the carbon tax and various government stakeholders continued at a high level the general consensus was that it would be passed on to the consumer. Eskom, by far the greatest carbon emitter in the country, would face a carbon tax of around R1 billion per year. An increase in the price of electricity will impact negatively on business while the refineries’ inability to deliver cleaner fuel will mean that it will not be feasible to buy the latest trucks, which could reduce consumption and improve efficiencies. “There is not much the transporter can do in these circumstances,” said economist Mike Schüssler. “One can maybe try to be more fuelefficient by driving more slowly or taking the shortest route, but many of these tactics are already in place. At this stage it seems almost certain that the primary emitters will pass the tax on and so year on year – depending on how this system is put together – they will pay an increase initially forecast to start at around 47 cents per litre.”