Carbon Emissions and Agriculture: How should we be thinking about the carbon tax?

The past few years have seen a significant shift in the way that governments are responding to the climate crisis. The introduction of carbon pricing mechanisms has seen particular momentum. In essence, carbon pricing works by putting a price on carbon emissions with the aim of bringing down emissions, driving investment into clean technology and fueling low-carbon economic growth.  

Carbon pricing works on the “polluter-pays” principle, shifting the burden for the damage from carbon emissions back to those who are responsible for it. Carbon pricing provides an economic signal for polluters, allowing them to decide whether to discontinue their polluting activity, reduce emissions, or continue emitting at the same level and pay for it.

According to the World Bank, there are currently around 40 countries and more than 20 cities, states and provinces already using carbon pricing mechanisms, with more planning to implement them in the near future. Last month South Africa joined those countries already using carbon pricing with the promulgation of the long awaited Carbon Tax Act (No 15 of 2019). The first phase of this Act will run until December 2022 with the second phase running from 2023 until 2030.

Although there are still some uncertainties around how the agricultural sector will be included in this tax, an important first step in managing this tax is understanding where emissions are coming from and the relative carbon intensity of different agricultural inputs. The Confronting Climate Change (CCC) Initiative uses industry data from the South African fruit and wine sectors to determine industry-specific carbon emission benchmarks. The information sheet below provides an overview of farm level emissions determined through the CCC initiative and unpacks where these are coming from, and what this could mean from a monetary perspective.