This project analyses the implications of the Phase Two design of the carbon tax for the electricity sector contained in the draft Taxation Laws Amendment Bill (TLAB) of 2025. Briefing Note 1 provides an analysis of the Phase Two tax in the electricity sector and finds that the tax does not incentivise mitigation in the sector beyond that of the Environmental Levy already in place since 2009, despite the introduction of the South African Wholesale Electricity Market. This first briefing note informed Meridian’s comments on the TLAB, arguing that decarbonisation has been traded off against electricity price neutrality and recommending that Treasury explore alternative design options. Briefing Note 2 builds on this submission by presenting three alternative carbon tax design options that could better align the tax with national mitigation objectives.
Resources
Briefing Note 1: Exploring the impact of Phase Two of the carbon tax in a transforming power sector
Meridian’s Comments on the Taxation Laws Amendment Bill 2025
Briefing Note 2: Improving the effectiveness of South Africa’s carbon tax in the electricity sector