ENGLISH ABSTRACT: This research report aims to determine whether an emissions trading scheme or carbon tax is the
most suitable market-based emissions reduction mechanism for South Africa, given its multiple
environmental, social and economic objectives. Key factors considered in this comparison include:
environmental effectiveness; economic efficiency; social welfare impacts; public finance
considerations; administrative complexity and costs; and, finally, the relationship to global
greenhouse gas reduction mechanisms. These factors are compared in the short and long term to
determine which mechanism is most likely to deliver South Africa’s emissions reduction targets
within the given time frames. The comparison of these factors involves a non-empirical literature
review, followed by a rating of the mechanisms in order to distil a best fit in terms of the various
aspects of an effective emissions reduction mechanism, taking into account the specific needs and
conditions of South Africa.
The research found that, in the short term, a carbon tax was best suited to the South African
context. This is because of the fiscal certainty inherent in this mechanism, which provides clear
price signals and a stable public income. However, the reasons for these comparative advantages
over an emissions trading scheme relate to the long lead times and structure of the latter
mechanism, which requires years of implementation and favours environmental effectiveness over
economic efficiency. Further reasons include a lack of understanding and buy-in in terms of
market-based mechanisms, a situation that favours familiarity over effectiveness in some
instances. Taking these issues into account, the research shows that an emissions trading scheme
is better suited to the South African context in the long term. Once properly implemented, this
mechanism provides superior results in terms of the above-mentioned factors, and specifically in
terms of environmental effectiveness and the potential for benefit through international integration.
This research report concludes that the South African government has failed to take a long-term
view of the mechanisms available for emissions reduction, choosing instead to implement a carbon
tax, which favours economic growth at the expense of the environment and future generations. A
general lack of understanding of the structures and opportunity costs of the two mechanisms
necessitates an investigation by government of the applicability and structure of an emissions
trading scheme in the South African context before market-based mechanisms can play an
effective part in the future development of the country’s environmental regulatory regime.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/79330 |
| Date | 03 1900 |
| Creators | Jooste, Dustin |
| Contributors | Volschenk, J., Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Rights | Stellenbosch University |
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