Reducing energy poverty through carbon tax revenues in South Africa
How much can poverty be reduced through carbon tax revenue? This study analyses specific programmes, with carbon taxes generating revenues and equivalent spending on programmes to reduce energy poverty. The twin challenges of development and climate change could be addressed in this way in South Africa. A simple spreadsheet model was used to estimate revenue available from a carbon tax, given different tax rates and emission projections. Four programmes to reduce energy poverty were quantified: electrification, extended free basic energy, scaling-up sustainable housing, and subsidising rooftop solar for poor households. Matching carbon revenue with equivalent expenditure, the study found that applying all carbon revenue to a single programme could fund the national budget for electrification. Hundreds of thousands, and up to tens of millions, of households could receive free energy in the form of 5 kg of liquefied petroleum gas every month, as well as better houses that are warmer in winter and with fewer health impacts from indoor air pollution. Carbon revenues could fund at least a few hundred thousand improved homes, or subsidies for at least 100 000 rooftop solar systems per year to poor households. Institutional and other constraints would have to be addressed. Carbon revenue could fully fund all four programmes combined into an integrated strategy, in three of the four scenarios. The results suggested that full funding could be available from 2019 or from 2025, dependent on carbon tax revenue scenario. Energy poverty can be reduced by expenditure of carbon tax revenues.
 Geden, O. 2016. An actionable climate target. Nature Geoscience, 9(5), 340-342, 10.1038/ ngeo2699.
 Rogelj, J., Schaeffer, M., Meinshausen, M., Knutti, R., Alcamo, J., Riahi, K. and Hare, W. 2015. Zero emission targets as long-term global goals for climate protection. Environmental Research Letters, 10, 105007, doi:10.1088/1748-9326/10/10/ 105007.
 UNFCCC (United Nations Framework Convention on Climate Change). 2015. Paris Agreement. Annex to decision 1/CP.21, document FCCC/CP/ 2015/10/Add.1, 29 January 2016. United Nations, Paris, France, http://unfccc.int/ resource/docs/2015/ cop21/eng/10a01.pdf - page=2.
 United Nations 2014. Outcome document - Open Working Group on Sustainable Development Goals. United Nations, New York, http://sustainabledevelopment.un.org/focussdgs.html.
 National Treasury 2006. A framework for considering market-based instruments to support environmental fiscal reform in South Africa. Draft policy paper. National Treasury Tax Policy Chief Directorate, Pretoria, http://www.treasury.gov.za/ tax/default.htm.
 National Treasury 2003. Market-based instruments to support environmental fiscal reform in South Africa: A discussion document. National Treasury, Pretoria.
 Eunomia and UP (Eunomia research and consulting, and University of Pretoria). 2004. Development of a framework for market-based instruments to support environmental fiscal reform in South Africa. A draft final report for National Treasury of South Africa. Not for citation. Treasury, Pretoria.
 NPC (National Planning Commission). 2011. National development plan: Vision for 2030. The Presidency, Republic of South Africa, Pretoria, http://www.gov.za/sites/www.gov.za/files/Executive Summary-NDP 2030 - Our future - make it work.pdf.
 National Treasury 2013. Carbon Tax Policy Paper: Reducing Greenhouse Gas Emissions and Facilitating the Transition to a Green Economy. Policy paper for public comment, May 2013. Republic of South Africa, Pretoria, http://www.info. gov.za/vie/DownloadFileAction?id=189311
 Winkler, H., Boyd, A., Torres Gunfaus, M. and Raubenheimer, S. 2015. Reconsidering development by reflecting on climate change International Environmental Agreements, 15(4), 369-385, DOI 10.1007/s10784-015-9304-7.
 Grubb, M. 2014. Planetary economics: Energy, climate change and the three domains of sustainable development. with Jean-Charles Hourcade and Karsten Neuhoff. Routledge, London and New York.
 MCA4climate (Multi criteria analysis for climate change). 2011. A practical framework for planning pro-development climate policies. United Nations Environment Programme, Riso, http://www. mca4climate.info/_assets/files/MCA4climate_Summary.pdf.
 World Bank. 2010.World Development Report 2010: Development and climate change. The World Bank, Washington D.C.
 Dubash, N. 2009. Climate change and development: A bottom-up approach to mitigation for developing countries? in Climate finance: Regulatory and funding strategies for cimate change and global development (eds. Steward, R.B., Kingsbury, B. and Rudyk, B.) 172–178, New York University Press, New York.
 Bierbaum, R.M. and Zoellick, R.B. 2009. Development and climate change. Science, 326 (771 ), doi: 10.1126/science.1183876.
 Halsnæs, K. and Shukla, P. 2008. Sustainable development as a framework for developing country participation in international climate change policies. Mitigation and Adaptation Strategies for Global Change, 13, 105-130, doi: 10.1007/ s11027-006-9079-9.
 South Centre. 2007. Integrating development in climate change: A framework policy discussion paper on key elements for the development of the post-2012 global climate policy regime South Centre, Geneva. http://tinyurl.com/y7s6uyov.
 Shukla, P.R. 2006. Integrating sustainable development and climate policies: Case studies of energy sector in India in Sustainable development, energy and climate change: Methodological issues and case studies from Brazil, China, India, South Africa, Bangladesh and Senegal. ISBN 87-550-3452-6 (eds. Halsnaes, K. and Garg, A.) 27-26, UNEP Risø Centre, Roskilde.
 Munasinghe, M. and Swart, R. 2005.Primer on climate change and sustainable development: Facts, policy analysis and applications. Cambridge University Press, Cambridge.
 IPCC. 2014. Climate Change 2014: Synthesis Report. Fifth Assessment Report of the Intergov-ernmental Panel on Climate Change. Geneva.
 Sathaye, J., Najam, A., Cocklin, C., Heller, T., Lecocq, F., Llanes-Regueiro, J., Pan, J., Petschel-Held, G., Rayner, S., Robinson, J., Schaeffer, R., Sokona, Y., Swart, R. and Winkler, H. 2007. Sustainable development and mitigation. Chapter 12 in Climate Change 2007: Mitigation, Contribution of Working Group III to the IPCC Fourth Assessment Report (eds. Metz, B., Davidson, O.D., Bosch, P., Dave, R. and Meyer, L.M.) Cambridge University Press.
 Banuri, T. and Weyant, J.P. 2001. Setting the stage: Climate change and sustainable development. in Climate Change 2001: Mitigation: Contribution of WG III to the Third Assessment Report of the IPCC 74-114, Cambridge University Press, Intergovernmental Panel on Climate Change.
 IPCC (Intergovernmental Panel on Climate Change). 1996. Climate change 1995 : economic and social dimensions of climate change. Second Assessment Report of the Intergovernmental Panel on Climate Change. Working Group III. Cambridge University Press, Cambridge [England] ; New York.
 UN 2015. Resolution adopted by the General Assembly on 25 September 2015: Transforming our world: the 2030 Agenda for Sustainable Development. A/RES/70/1 (Sustainable Development Goals - SDGs). United Nations, New York, http://www.un.org/ga/search/ view_doc.asp?symbol=A/RES/70/1&Lang=E.
 Winkler, H., Spalding-Fecher, R., Mwakasonda, S. and Davidson, O. 2002. Sustainable development policies and measures: Starting from development to tackle climate change in Building on the Kyoto Protocol: Options for protecting the climate (eds. Baumert, K., Blanchard, O., Llosa, S. and Perkaus, J.F.) 61-87, World Resources Institute, Washington DC.
 Winkler, H., Höhne, N. and Den Elzen, M. 2008 Methods for quantifying the benefits of sustainable development policies and measures (SD-PAMs). Climate Policy, 8(2), 119–134.
 Winkler, H., Howells, M. and Baumert, K. 2007. Sustainable development policies and measures: institutional issues and electrical efficiency in South Africa. Climate Policy, 7 (3), 212–229.
 Höhne, N. and Moltmann, S. 2007. Linking national climate and sustainable development policies with the post-2012 climate regime: Proposals in the energy sector for Brazil, China, India, South Africa and South Korea, Ecofys, Cologne.
 RSA. 2006. Dialogue working paper 18: Submission from South Africa: Sustainable Development Policies and Measures. 3 Department of Environmental Affairs & Tourism, Pretoria.
 Baumert, K. and Winkler, H. 2005. SD-PAMs and international climate agreements. Chapter 2 in Growing in the greenhouse: Protecting the climate by putting development first (eds. Bradley, R. and Baumert, K.A.) 15-23, World Resources Institute, Washington, D.C.
 UNFCCC (United Nations Framework Convention on Climate Change). 2007. Bali Action Plan. Decision 1/CP.13. Bali, Indonesia.
 Sen, A. 1981.Poverty and famines : an essay on entitlement and deprivation Clarendon, Oxford.
 SSA (Statistics South Africa). 2014. The South African MPI: Creating a multidimensional poverty index using census data. SSA, Pretoria, http://beta2.statssa.gov.za/publications/Report-03-10-08/Report-03-10-082014.pdf.
 Merven, B., Moyo, A., Stone, A., Dane, A. and Winkler, H. 2014. The socio-economic implications of mitigation actions in the power generation sector and carbon taxes in South Africa. Working paper for CDKN project on Linking sectoral and economy-wide models, Energy Research Centre, University of Cape Town, Cape Town. http://www.erc.uct.ac.za/sites/default/files/image_tool/images/119/Papers-2014/14-Merven-etal-Socioeconomic_implications.pdf.
 Cloete, B. and Tyler, E. 2012. Carbon tax design options: A discussion document. Prepared for WWF South Africa, WWF-SA, Cape Town.
 Vorster, S., Winkler, H. and Jooste, M. 2011. Mitigating climate change through carbon pricing: An emerging policy debate in South Africa. Climate and Development, 3(3), 242-258.
 Winkler, H., Marquard, A. and Jooste, M. 2010. Putting a price on carbon: Economic instruments to mitigate climate change in South Africa and other developing countries, Proceedings of the conference held on 23-24 March 2010 in Cape Town. ISBN 978–0–7992–2357-6, Energy Research Centre, University of Cape Town.
 Devarajan, S., Go, D.S., Robinson, S. and Thierfelder, K. 2009. Tax policy to reduce carbon emissions in South Africa. in Economy-wide Analysis and Economic Policy. Symposium, 28-29 May 2009, National Treasury, Pretoria
 Winkler, H. and Marquard, A. 2011. Analysis of the economic implications of a carbon tax. Journal of Energy in Southern Africa, 22(1), 55-68.
 Alton, T., Arndt, C., Davies, R., Hartley, F., Makrelov, K., Thurlow, J. and Ubogu, D. 2014. The economic implications of introducing carbon taxes in South Africa. Working Paper No. 2012/ 046, May 2012. Applied Energy, 116, 344–354.
 Atkins, P. and Prasad, G. 2013 Leveraging carbon revenue for poverty alleviation. in Conference on Strategies to Overcome Poverty and Inequality: Towards Carnegie III. 3-7 Sept. 2012, University of Cape Town.
 Ürge-Vorsatz, D. and Herrero, S.T. 2012. Building synergies between climate change mitigation and energy poverty alleviation. Energy Policy 49, 83-90.
 IEA, UNDP and UNIDO (International Energy Agency, United Nations Development Programme and United Nations Industrial Development Organisation). 2010. Energy poverty: How to make modern energy access universal? Special early excerpt of the World Energy Outlook 2010 for the UN General Assembly on the Millennium Development Goals. Paris: Organisation for Economic Co-operation and Development/ Inter-national Energy Agency. http://www.worldenergyoutlook.org/docs/weo2010/weo2010_poverty.pdf.
 Bazilian, M., Sagar, A.D., Detchon, R. and Yumkella, K. 2010. More heat and light. Viewpoint. Energy Policy, 38(10), 5409-5412.
 CURES (Citizens United for Renewable Energy and Sustainability). 2009. Exploring energy poverty in South Africa. Midrand.
 Sagar, A.D. 2005. Alleviating energy poverty for the world ’s poor. Energy Policy, 33, 1367 –1372.
 WEC (World Energy Council). 1999. The challenge of rural energy poverty in developing countries. World Energy Council and Food and Agriculture Organisation, London.
 Boardman, B. 2012. Fuel poverty synthesis: Lessons learnt, actions needed. Energy Policy 49, 143-148.
 National Treasury 2015. Draft carbon tax bill. Minister of Finance, Pretoria, http://www.treasury. gov.za/public comments/CarbonTaxBill2015/ Carbon Tax Bill final for release for comment.pdf.
 National Treasury 2015. Market Readiness Proposal, to World Bank Partnership for Market Readiness Republic of South Africa, Pretoria, https://www.thepmr.org/system/files/documents/South Africa Final MRP_16 Feb 2015.pdf
 DEA (Department of Environmental Affairs). 2014. Greenhouse gas inventory for South Africa, 2000-2010. DEA, Pretoria, https://www.environment. gov.za/sites/default/files/reports/2000_2010_nationalghginventoryreport.pdf.
 National Treasury 2017. Budget review. Pretoria, http://www.treasury.gov.za/documents/national budget/2017/review/FullBR.pdf.
 Alcamo, J. and Henrichs, T. 2008. Towards guidelines for environmental scenario analysis in Environmental futures: the practice of environmental scenario analysis (ed. Alcamo, J.) 13-35, Elsevier, Amsterdam.
 Brummel, A. and MacGillivray, G. undated. Introduction to scenarios, Scenarios to Strategy Inc. http://www.scenarios2strategy.com/pdf/Introduction to Scenarios and Scenario Planning.pdf.
 DEA (Department of Environment Affairs). 2014. South Africa’s greenhouse gas mitigation potential analysis. Technical summary. DEA Pretoria, https://www.environment.gov.za/sites/default/files/docs/technicalsummary.pdf
 WRI and WBCSD 2007. The Greenhouse Gas Protocol: A corporate accounting and reporting standard. Revised edition. World Business Council for Sustainable Development & World Resources Institute, Washington, http://www.ghgprotocol.org/.
 IPCC (Intergovernmental Panel on Climate Change). 2006. IPCC guidelines for national greenhouse gas inventories. Prepared by the National Greenhouse Gas Inventories Programme. Eggleston H.S., Buendia L., Miwa K., Ngara T. and Tanabe K. (eds). Institute for Global Environmental Strategies, Kanagawa, Japan, http://www.ipcc-nggip.iges.or.jp/public/2006gl/index.htm.
 Trading Economics. 2017. South Africa inflation rate forecast 2016-2020. online resource accessed http://www.tradingeconomics.com/south-africa/inflation-cpi/forecast.
 Joubert, A., Palmer, I., Forster, D., Mullins, D. and Curren, J. 2013. South Africa’s greenhouse gas mitigation potential analysis, Department of Environment Affairs, Pretoria.
 DEA (Department of Environmental Affairs). 2016. South Africa’s 2nd biennial update report DEA, Pretoria, https://www.environment.gov.za/sites/ default/files/reports/2ndBUR2000_2012_draftforpubliccomments.pdf
 Winkler, H., Hughes, A., Marquard, A., Haw, M. and Merven, B. 2011. South Africa’s greenhouse gas emissions under Business-as-Usual: The technical basis of ‘Growth without Constraints’ in the Long-Term Mitigation Scenarios. Energy Policy 39(10), 5818–5828.
 Winkler, H., Simões, A.F., La Rovere, E.L., Alam, M., Rahman, A. and Mwakasonda, S. 2011. Access and affordability of electricity in developing countries, doi:10.1016/j.worlddev.2010.02.021. World Development 39(6), 1037–1050.
 DME (Department of Minerals and Energy). 1998. White Paper on Energy Policy for South Africa. DME, Pretoria, http://www.dme.gov.za/pdfs/energy/planning/wp_energy_policy_1998.pdf
 Borchers, M., Qase, N., Gaunt, T., Mavhungu, J., Winkler, H., Afrane-Okese, Y. and Thom, C. 2001. National Electrification Programme evaluation: Summary report. Evaluation commissioned by the Department of Minerals & Energy and the Development Bank of Southern Africa, Energy & Development Research Centre, University of Cape Town, Cape Town.
 NECC (National Electrification Coordinating Committee). 2000. Electrification funding: Report from Fund & Levy Task Team of NECC.
 Eberhard, R. 1999. Economic costs and benefits of electrification: A brief review of South African experience with a view to determining the implications for the electrification planning model, Cape Associates, Cape Town.
 DoE (Department of Energy). 2016. Budget review and recommendations report to the Portfolio Committee on Energy. Cape Town.
 DoE (Department of Energy). 2016. Suite of supply policy guidelines for the Integrated National Electrification Programme (INEP) 2016/17. DoE, Pretoria, http://www.energy.gov.za/files/policies/electrification/Suite-of-Supply-Policy-Guidelines-for-the-Integrated-National-2016-17.pdf.
 Spalding-Fecher, R. 2011. What is the carbon em-ission factor for the South African electricity grid? Journal of Energy in Southern Africa, 22(4), 8-12.
 Sparks, D., Madhlopa, A., Samantha Keen, Moorlach, M., Dane, A., Krog, P. and Dlamini, T. 2014. Renewable energy choices and their water requirements in South Africa. Journal of Energy in Southern Africa, 25(4), 80-92.
 Votteler, R.G. and Brent, A.C. 2016. A literature review on the potential of renewable electricity sources for mining operations in South Africa. Journal of Energy in Southern Africa, 26(2), 1-21.
 Wlokas, H., Boyd, A. and Andolfi, M. 2012. Challenges for local community development in private sector-led renewable energy projects in South Africa: an evolving approach. Journal of Energy in Southern Africa, 23(4), 46-51.
 DoE (Department of Energy). 2011. Integrated resource plan for electricity, 2010-2030. Govern-ment Gazette No. 34263 6 May 2011. Pretoria.
 DME (Department of Minerals and Energy). 2003. Electricity basic services support tariff (free basic electricity) policy for the Republic of South Africa. Government Gazette Vol. 457, No. 25088. Pretoria, http://www.energy.gov.za/files/policies/Free Basic Electricity Policy 2003.pdf.
 DoE (Department of Energy,). 2013. Free Basic Alternative Energy/Free Basic Electricity. Pretoria.
 DoE (Department of Energy). 2016. Schedule: Maximum retail price of liquefied petroleum gas. Government Gazette No 39965. DoE, Pretoria, http://www.gov.za/sites/www.gov.za/files/39965_rg10594_gon497.pdf.
 Holm, D. 2000. Performance assessment of baseline energy-efficiency interventions and improved designs in Environmentally sound energy efficient low-cost housing for healthier, brighter and wealthier households, municipalities and nation. Final report (ed. Irurah, D.K.) A-1-1 to A-2-27, Environmentally Sound Low-cost Housing Task Team and USAID, Pretoria.
 Spalding-Fecher, R., Mqadi, L. and Oganne, G. 2003. Carbon financing for energy efficient low-cost housing. Journal of Energy in Southern Africa, 14(4), 128-134.
 SSN (SouthSouthNorth). 2004. Project design document for the Kuyasa project. Submitted to the Executive Board of the Clean Development Mechanism. SouthSouthNorth Project, Cape Town, https://cdm.unfccc.int/filestorage/F/S/_/FS_292989657/Kuyasa PDD Final-2005.pdf?t=eHR8b3RlaHlyf DDt7T1TU7rjTHYxWNoW3KT3.
 AGAMA. 2003. City of Cape Town low-cost urban housing upgrade: Kuyasa, Khayelitsha. Thermal modelling, final report, Cape Town.
 SSN (SouthSouthNorth). 2011. Sustainable settlements facility. Online resource. SSN, Cape Town, http://southsouthnorth.org/sustainable-settlements-facility-ssf/.
 DBSA. 2011. Meeting the financing challenge in low income housing for a low carbon and climate resilient future: Sustainable Settlements Facility. Briefing paper, Development Bank of Southern Africa, Johannesburg. http://www.dbsa.org/EN/ About-Us/Publications/Documents/Briefing Note COP17 Side Event 5 Dec-10-13.pdf.
 G:enesis (G:enesis Analytics ). 2008. The National Sustainable Housing Facility business and investment plan. Genesis Analytics Cape Town.
 Dobson, B. 2015. Energy & thermal efficiency in government subsidised housing in South Africa. MAPS Research Paper - implementation case study, Mitigation Action Plans and Scenarios (MAPS), Cape Town. http://mapsprogramme.org/ wp-content/uploads/Case-Study_Energy-and-thermal-efficiency-in-low-income-housing.pdf.
 Africa Check. 2017. The housing situation in South Africa. Factsheet, online resource. online resource accessed 20 July 2017, https://africacheck.org/factsheets/factsheet-the-housing-situation-in-south-africa/.
 Parkinson, G. 2013. Rooftop solar PV reaches 3GW in Australia. in People power: Vol. 4.
 Mapako, M., Ranninger, H. and Matinga, M. 2004. Solar electrification by the concession approach in rural Limpopo province, Energy Research Centre, Cape Town.
 Wentzel, M. and Pickering, M. 2004. The potential impact of an electricity basic services tariff on non-grid electricity. Journal of Energy in Southern Africa, 15(1), 4-9.
 Borchers, M. 2017. Costs of rooftop solar systems in March 2017.
 Joemat-Pettersson, T. 2016. Energy Department budget speech vote 2016/17, by Energy Minister, Cape Town. http://www.gov.za/speeches/minister-tina-joemat-pettersson-energy-dept-budget-speech-vote-201617-11-may-2016-0000.
 Cousins, T. and Mahote, F. 2003. Assessment of the impact of energy efficiency interventions in a low-income housing settlement, Kuyasa, Khayelitsha. Social Research for Kuyasa Pilot CDM Project Activity, SouthSouthNorth, Cape Town.
 SSA (Statistics South Africa). 2016. General household survey. Statistical release P0318. SSA, Pretoria, http://www.statssa.gov.za/publications/ P0318/P03182016.pdf.
 ERC (Energy Research Centre, Systems Analysis & Planning Group). 2013. Assumptions and methodologies in the South African TIMES (SATIM) energy model. Version 2.1, 2013/04/08. University of Cape Town.
 Merven, B., Arndt, C. and Winkler, H. 2017. The development of a linked modelling framework for analysing socio-economic impacts of energy and climate policies in South Africa. UNU WIDER working paper 2017/40, United Nations University World Institute for Development Economics Research (UNU-WIDER), Cape Town and Washington. https://www.wider.unu.edu/sites/ default/files/wp2017-40.pdf.
 Annecke, W. 2002. The rich get richer and the poor get renewables: the WSSD, energy and women, a malevolent perspective. Agenda, 52, 8-16.
 Pindyck, R.S. 2017. The use and misuse of models for climate policy. Review of Environmental Economics and Policy, 11(1), 100-114 DOI: doi.org/10.1093/reep/rew012.
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Copyright remains with the author/s of the article/s.
All articles published in JESA can be re-used under the following CC license: CC BY-SA Creative Commons Attribution-ShareAlike 4.0 International License.