An electricity tax imposed at the point of production in South Africa would reduce carbon dioxide emissions, albeit at the expense of a slight pullback in overall economic output, consumption and investment.
According to researchers R. Seymore, P.D. Adams, M. Mabugu, J.H. van Heerden and J. Blignaut, an electricity tax pegged at 2c/kWh the tax would shave a marginal 0,28% off South Africa’s GDP. The good news is that the abatement in carbon dioxide emissions in the electricity sector, as well as in the economy in general, would translate into a broader financial benefit of nearly R2bn.