5 June 2014

South Africa: Analysis - the Economics of Carbon Emissions


Leaders the world over are moving to ensure their countries are reducing their carbon emissions, and the latest change along these lines has come from US president Barack Obama. South Africa, like it or not, has a seat on the bus of the global economy and this bus is heading slowly but surely in the direction of taxing or pricing carbon-dioxide emissions. And no, we can't get off. By DIRK DE VOS.

In a long-anticipated move, President Obama announced a new proposed rule that will look to reduce the carbon dioxide emissions of the United States by 30% from 2005 levels. Under this proposed rule, states will have until June 2016 to make their own rules on how to reduce their average emissions per megawatt-hour of electricity on pain of having an Environmental Protection Agency plan imposed upon them.

Significantly, there is a lot of flexibility in how the objectives can be achieved, including emissions offsets. Essentially, the USA will be introducing something along the lines of a carbon 'cap and trade' system equivalent to that which has been running in Europe for some time now (with patchy results).

Obviously, this will be a hugely contested move, with critics talking...

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