Modeling the Impact on South Africa’s Economy of Introducing a Carbon Tax

This paper reviews the key findings of a modeling analysis exploring the implications of the South African carbon tax. The modeling work reported in this paper differs from earlier analyses of the possible impact of a carbon tax in South Africa by more closely reflecting the actual design features of the tax proposed by the National Treasury of South Africa. A carbon tax, in conjunction with the recycling of revenues, has been designed by the National Treasury as one of the key mitigation instruments in helping South Africa meet its international commitments to reduce its greenhouse gas (GHG) emissions.