SA’s carbon tax is set to be introduced in less than a year. It is to be welcomed but it is still too weak to push the country to a low-carbon transition. SA needs to do more given its international and domestic climate obligations. So, what is the overall and systemic purpose of the carbon tax? It is a way of pricing an environmental externality. It is intended to help achieve the following: lowering carbon intensity through improved energy efficiency or switching to alternative energy; stimulating new growth, new technologies and enterprise; encouraging the development of new product lines, which would stimulate new investments and jobs. The aim of a carbon tax is to disincentivise future carbon-intensive investments. It will also encourage investors to start pricing CO² emissions as a risk in the way they make decisions and capital allocations. Due to the Paris Agreement most countries will probably have a form of carbon pricing by the middle of the next decade. The aviation indu...

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