Just transition: A critique of South Africa’s 2022/23 budget speech!

On Wednesday 23rd February, South Africa’s Minister of Finance, Mr Enoch Godongwana delivered the 2022 budget speech to outline government’s plans aimed at improving public service delivery and the economy. A further breakdown of how the government will finance commitments made by the president in the State of National Address was given. In general the budget was well received, as there no major tax increases, and the government’s fiscal position improved significantly due to effective tax collection.

However, we note with concern the inadequate allocation towards addressing South Africa’s transition to an inclusive and green economy. At the State of National Address, President Cyril Ramaphosa reemphasized South Africa’s commitment in addressing climate change including  its recent climate targets  submitted at COP26 geared towards limiting warming to 1.5°C as required by the Paris Climate Agreement. We believe it’s time to match these verbal commitments with real action against climate change.

While the 2022 budget has rolled out the use of carbon tax as a means of combating carbon emissions especially from high carbon polluting businesses, the increased new carbon tax is still low compared to the global urgency required to avert the climate crisis.  According to the minister,  the carbon tax rate will increase from R134 to R144 and the carbon fuel levy will increase by 1c to 9c per litre for petrol, and 10c per litre for diesel. Despite the fact that South Africa’s commitment at COP26 indicated a yearly increase of carbon tax , the current increase is not fit enough to completely restrain high carbon producing entities from operating especially in a country which is more vulnerable to climate change. With more cases of extreme weather conditions that disproportionately affect marginalized communities, it is disappointing that South Africa’s big carbon emitters will only have to pay an increase of just R10 per tonne of carbon in the face of climate change that continues to bite.

We welcome the government’s intention in addressing Eskom’s debt as this would ensure efficient service delivery to businesses hence positively impacting on the economy. We also welcome the proposal to restructure Eskom energy mix to include the use of renewable energy is a sustainable solution that will reduce the strain on electricity generation. As the president emphasized in the State of Nation Address, renewable energy will make electricity affordable to the masses, more dependable, will enable industries to compete globally and also support the country’s efforts in meeting the global clean energy future.

Therefore, putting specific emphasis on the carbon tax mechanism as a strategy in aiding  South Africa’s fight against climate change  and limiting greenhouse emissions will be an efficient strategy if only it is coupled with more and aggressive decarbonization pathways like the just transition.