Carbon tax as a climate intervention in South Africa: A potential aid or hindrance to human rights?

Abstract

Carbon tax has attracted attention as an instrument of climate action for transiting towards the objective of stabilising global temperatures below 2 °C. Its significance as a response to climate change is, however, disputed. Also, its possible implications on key fundamental human rights of poor populations are rarely discussed. South Africa enacted a Carbon Tax Act in 2019 amid the challenge of poverty and its commitments to both climate actions and human rights. This paper interrogates the significance of the Carbon Tax Act and clarifies the potential implications that it may have on key human rights of poor populations. It recommends the need to channel the revenue generated from the implementation of the Carbon Tax Act to address its potential adverse impact on human rights of poor populations in South Africa.

Introduction

The urgency of transitioning to a low-carbon economy has featured prominently in the international efforts to achieve the objective of ‘net zero carbon dioxide (CO₂) emissions and stabilise global temperatures below 2 °C’. ¹ As a key instrument in the transition, carbon tax has been urged as a tool of climate action to address CO₂ emissions. ² The focus on CO₂ is necessary considering it is the most lethal gas resulting from fossil driven energy generation, ³ a major source of anthropogenic emissions worldwide. ⁴ However, the appropriateness of carbon tax as a response to climate change is disputed. ⁵ Aside from being criticised as a market-based solution to climate change which itself is a market problem, ⁶ carbon tax has other downsides that are problematic. It has been viewed as an indirect way of condoning reckless utilisation of natural resources in ways that may significantly harm the environment. ⁷ Nonetheless, some writings show that if well utilised it can aid environmental protection. ⁸ Whether the deployment of carbon tax can serve as an agency for enhancing realisation of rights is rarely touched by existing literature on the subject. A possible reason for this development is that the connection of climate change with human rights is recent. ⁹ The first recognition of the interface between climate change and human rights in a United Nations treaty instrument is in the Paris Agreement which entered into force in 2016. The preambular provision of the Paris Agreement urges ‘state parties to respect, promote and consider their respective obligations on human rights’ while implementing any intervention to address climate change. ¹⁰ Little is known on whether carbon tax may aid or hinder the enjoyment of rights.

South Africa passed a Carbon Tax Act in 2019, ¹¹ as an indication of its resolve to align with its commitments under the United Nations Framework Convention on Climate Change (UNFCCC), ¹² the Kyoto Protocol, ¹³ the 2015 Paris Agreement ¹⁴ and United Nations sustainable development goals (SDGs). ¹⁵ Through these international climate change instruments, states commit to reducing carbon emissions. The instruments can be applied in South Africa through section 233 of the 1996 Constitution of the Republic of South Africa which requires courts to prefer the interpretation of any legislation that agrees with international law. ¹⁶ Also, the Constitution embodies a bill of rights and human rights obligations as conferred under international instruments, in particular, the International Covenant on Civil and Political Rights (ICCPR), ¹⁷ the African Charter on Human and Peoples’ Rights (African Charter) ¹⁸ and the International Covenant on Economic, Social and Cultural Rights (ICESCR). ¹⁹ South Africa is a state party to the ICCPR, ²⁰ the ICESCR ²¹ and the African Charter. ²² Key rights embodied in the Constitution and these instruments of relevance to this paper are mainly the rights to life, ²³ access to sufficient food and water, ²⁴ access to health care services, ²⁵ property, ²⁶ adequate housing ²⁷ and healthy environment. ²⁸ These rights, as shall manifest later, are at the heart of the adverse consequence of climate change on vulnerable populations. ²⁹ Section 7(2) of the Constitution requires the State to ‘respect, protect, promote and fulfil’ the bill of rights, while section 39(1)(b) highlights the need for courts to deploy international law in the interpretation of the bill of rights in the Constitution. Section 39(1)(b) is distinguishable from section 233 of the Constitution in that the latter applies to any legislation in so far as international law is relevant and applicable. It is not limited to the bill of rights. This signifies that section 233 allows courts to consider international climate change instruments in interpreting any legislation.

The Carbon Tax Act is a recent piece of legislation in South Africa. Its potential for impacting, either negatively or positively, key human rights is rarely a subject of academic scrutiny. Yet, the need for such an engagement is necessary considering that South Africa has the biggest inequality in income distribution, making it one of the most unequal countries globally. ³⁰ A 2020 UN Human Development Index and Human Development Report, for instance, shows that the country has made little to no progress in eradicating its inequalities. ³¹ The objective of this article is to clarify the potential impact that the implementation of Carbon Tax Act may have on key human rights, in particular, the rights to life, access to sufficient food and water, health care services, property, adequate housing and healthy environment, and then proffer ways for addressing its potential negative impact on these rights in South Africa.

Following this introduction, section two of the paper interrogates carbon tax as a tool of climate action with reflection on South Africa. How the tax may affect the realisation of human rights is the focus of section three while section four deals with the potential measures to address the negative influence of carbon tax. In conclusion, section five highlights that carbon tax as a climate intervention has both positive and negative implications for human rights. To respond to the latter, revenue that accrues from the implementation of carbon tax should be invested in measures that improve the welfare of poor populations in South Africa.

The significance of carbon tax: South Africa in context

Carbon tax is essentially a means through which the government, or state entity, levies persons and corporations for the content of carbon in the fossil fuels they utilise. ³² It is imposed on persons or individuals to encourage them to make choices that are less harmful on the climate system, and on corporations, to discourage activities that result into emission of carbon. ³³ Emission of carbon dioxide is the most lethal greenhouse gas underlying climate change attributable largely to fossil fuel burning. ³⁴ Carbon emission builds in the atmosphere and worsen the climate system, hence, a carbon tax internalises the negative external impact of goods associated with carbon emission on the climate. ³⁵ Consumers pay for this external impact at the point of purchase while corporations pay as producers of goods. ³⁶ Literature has shown that carbon tax serves different purposes in addressing climate change. ³⁷ This section argues that considering its potential to restrict carbon emission, the South Africa's Carbon Tax Act serves as a tool of climate action.

The restrictive purpose of carbon tax

Carbon tax serves a restrictive purpose in the sense that it seeks to impose costs on business with the view that it may serve as a disincentive to continuing carbon emission. It resonates with the polluter pays principle, ³⁸ in terms of which costs are distributed to ensure that persons responsible for pollution pay for environmental damages arising from their activities. ³⁹ Thus, it signals that ‘carbon friendly’ ventures are valued so that investors may refrain from activities that pollute or choose to pollute and pay. The legal basis of this is principle 16 of the Rio Declaration which provides:

National authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment. ⁴⁰

A tax on emissions once implemented may serve as a deterrent to pollution as it may encourage new approaches that reduce carbon emissions and avoid the payment of the required tax. ⁴¹ To this extent, it motivates companies to investigate and invest in new modes of energy use, storage and generation. ⁴² Where the cost on emissions is raised over time, producers and consumers may reduce or alter their use of carbon emitting modes of energy production. This is confirmed in writings which find corresponding link between increases in carbon tax and increases in the use of ‘clean’ energy. ⁴³ This includes the added benefit of stimulating the creation of new industries focused on clean energy and installation of associated systems and the use of abatement technologies. ⁴⁴

With carbon tax, consumers can also actively elect to participate in reducing carbon emissions by redirecting spending towards environmentally friendly alternatives. The same can be said for companies that see green energy not only as an environmentally sound alternative, but as one that would build consumer trust in their brand and products or services. ⁴⁵ Thus, a carbon tax may create a discontinuation of environmental harmful methods and a promotion of healthy environmental choices.

South Africa's Carbon Tax Act as a climate action tool

It is evident in the textual narration of the instrument that the purpose of the Carbon Tax Act of South Africa is to curtail carbon emissions. The preamble to the Act clarifies the purpose of carbon tax. It emphasises that the cost of alleviating environmental degradation is to be carried by those responsible for the harm. ⁴⁶ Significantly, it acknowledges the scientific link between anthropogenic emission of CO₂ and global climate change. ⁴⁷ Also, it aims at stimulating steady development of South Africa's economy through interventions that respond to climate change. ⁴⁸ This is understandable as it allows for implementation of commitments to tackle CO₂ emissions without unbalancing the pursuit of economic development and undermining the livelihood of people. There are provisions of the Paris Agreement that are supportive of this viewpoint. For instance, article 4(1) recognises that peaking of greenhouse gas emission will take longer for developing countries while article 13(3) requires that the implementation of climate interventions should be respectful of ‘national sovereignty’, avoiding undue burden on parties.

Following section 2 of the Act that authorises the charge of a carbon tax as part of the National Revenue Fund (NRF), section 3 defines the range of ‘persons’ to account for carbon tax. The definition suggests that proportionality is at the core of the legislation. This signifies that the taxpayer envisaged under the law is not every carbon emitter. The person must be involved in an activity resulting in greenhouse gas emissions at a combined capacity equal to or above the threshold listed under the law. Such activities which can be found under Schedule 2 of the Act are energy and fuel combustion related, including heat and electricity recovery from waste, transportation, manufacturing and construction, industrial processes and product use, agriculture, forestry and other land use and waste. In placing accountability over activities beyond the threshold stipulated in the sectors, section 3 acknowledges that emissions below the threshold are tolerable and distinct from the commercial emission which the instrument seeks to address. Section 5 of the Act reinforces this viewpoint by indicating the tax payable per tonne of CO₂ with the caveat that the rate may increase in proportion to changes in the prices of products. Section 6 offers further information on the calculation of the tax envisioned under section 5. At the very least, the provisions show that the direct focus of the Act is not to sanction subsistence activities of poor populations that are often on the margins of carbon emission. It may be argued that these populations may still suffer from the knock-on effect of the implementation of the Act as payers push the burden of cost to the buyers of their products. The exemption is an acknowledgement that subsistence livelihood, and arguably human rights, may be negatively impacted by the imposition of tax directly on such populations.

The potential restrictive value of carbon tax is discernible from the set-out guidelines on its administration in sections 15, 16 and 17 of the Act, and the penalties for noncompliance. The tax is collected by the Commissioner for South African Revenue Services who receives it, in terms of section 15 as an environmental levy. Under section 16, it is payable by persons defined under section 3 for every tax period, commencing first from 1 June 2019 and ending on 31 December 2019, and subsequently from ‘the period commencing on 1 January of each year and ending on 31 December of that year’. In terms of section 17 of the Act, the taxpayer is required to submit annual environmental levy accounts and payments for every tax period through e-filing service or by visiting the closest SARS Offices for assistance. ⁴⁹ The failure by a taxpayer to comply with the provision of the Act may render clients liable to ‘(i)monetary penalties; ii) criminal prosecution; and / or iii) suspension / cancellation of registration / license.’ ⁵⁰

The restrictive value of the Act is, however, challenged by the set of provisions that grant emission allowances for certain activities and sectors. For instance, in terms of the Act ‘allowance’ refers to the permissible sum for determining the payable carbon tax. Six types of such allowances identified under the Act are around: ‘fossil fuel combustion, industrial process emissions, trade exposure, performance, carbon budget and offset allowance’. ⁵¹ For the six categories of emissions, the Act offers basic tax-free emission of 60 percent. Apart from resonating the idea of proportionality of payable tax, another justification for the allowances is that certain measures of emissions are necessary to aid economic development in South Africa. This thinking agrees with article 2(2) of the Paris Agreement which calls for the recognition of equity and the principle of common but differentiated responsibilities and national circumstances while implementing the agreement. The position applies especially to electricity generation in South Africa as it may help minimise the consequence of carbon tax on Eskom, the main provider of electricity. ⁵² Without allowances, electricity prices could increase due to imposition of carbon tax. ⁵³ Nonetheless, by offering some respite from carbon tax over these activities, the Act reinforces business as usual approach of carbon emissions which is incompatible with commitment to ‘net zero CO₂ emissions’ under the Paris Agreement. ⁵⁴

A major challenge to the implementation of environmental commitments and sanctions in international instruments has been the inadequacy of its compliance which is largely facilitative or consensual in nature with no adversarial or confrontational means of enforcement. ⁵⁵ The compliance concern appears clearly addressed by sections 15, 16 and 17 of the Act which respectively deal with the administration, tax period and payment of the carbon tax. In particular, the Commissioner oversees the implementation of the Act, ⁵⁶ in accordance with section 15 and can apply the provisions of the Customs and Excise Act, ⁵⁷ dealing with procedures and actions for administering carbon tax as a levy. ⁵⁸ Also, section 15 addresses loopholes that may be capitalised upon to evade the administration of the Carbon Tax Act. The accountability content of the Act is further strengthened by the provisions dealing with miscellaneous matters of reporting, regulations, amendment of Acts and commencement that are respectively covered in sections 18, 19, 20 and 21. Generally, these provisions dealing with administration and reporting show the accountability dimension to the Act, a development that can further enhance its effective implementation as a climate action tool. The ensuing section focuses on how the application of the Carbon Tax may aid or hinder key human rights in South Africa.

Carbon Tax Act and the realisation of key human rights

The implementation of carbon tax may have both undesirable and helpful implications for rights to life, access to sufficient food and water, health care services, property, adequate housing and healthy environmental rights of the South Africa Constitution. These rights matter to vulnerable groups experiencing adverse consequences of climate change. ⁵⁹ They are equally important in the context of obligations imposed on the State to ‘respect, protect, promote and fulfil human rights and apply international law to bill of rights’. ⁶⁰ As shall be manifest, the rights discussed in this section are informed by the close connection which they have with the environment.

Carbon tax as an aid to realisation of rights

Potentially, carbon tax can lower carbon emissions resulting in climate change extreme events including environmental disasters. This in turn could reduce loss of lives arising from climate change related disasters such as sea level rise and flooding. Hence, by slowing down the emission underlying these extreme events, the Carbon Tax Act can potentially impact positively on the right to life under section 11 of the Constitution, article 4 of the African Charter and article 6 of the ICCPR. ⁶¹ In its General Comment No. 6, the United Nations Human Rights Committee (UNHRC) cautions against the narrow interpretation of the right to life and suggests that factors including environmental conditions may endanger the right to life. ⁶² This is reinforced by 2016 Report of the Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment which affirms the link of climate change with human rights including the right to life. ⁶³ This is further confirmed in Resolution 47/24 of 2021, where the United Nations Human Rights Council (UNHRC) affirms that adverse effects of climate change have a range of implications, on the effective enjoyment of human rights, including, the right to life. ⁶⁴

The effective implementation of carbon tax is punitive on emissions, hence, it may discourage carbon emissions, enhance human dignity and thereby save lives over time. ⁶⁵ Also, there is a connection between carbon emissions and ailments. ⁶⁶ As literature reveal, emissions related diseases include respiratory infections which have a high rate of fatality. ⁶⁷ Where the implementation of carbon tax achieves effectively the aim of mitigation, the extreme events which stem from emissions and threaten life are likely to reduce and thereby enhance the right to life. For example, it has been shown that limiting fossil fuel use through carbon pricing may reduce adverse health outcomes and enhance quality livelihood. ⁶⁸ Carbon tax when implemented in Massachusetts is estimated to save 340 lives by 2040. ⁶⁹

Section 27(1)(b) of the Constitution and article 11 of the ICESCR respectively guarantee to everyone the right to access sufficient food. The link between climate change and the right to food is highlighted in the CESCR General Comment No 12 of 1999 which specifies that the right to food can be badly influenced by ‘climatic and ecological factors’. ⁷⁰ Consequently, the CESCR calls upon states for the adoption of suitable measures to prevent or address the adverse effects of climate change on the right to food. ⁷¹ In Dladla and Another v City of Johannesburg and Others, the Constitutional Court emphasises the need to progressively ensure the realisation of socio-economic rights including the right to food. ⁷² The Carbon Tax Act may serve as an appropriate measure to checkmate emissions at the heart of adverse impact of climate change on food supplies and thereby advance its progressive realisation in South Africa. Over time, an effective implementation of a carbon tax may decrease choices which fuel climate related extreme events that undermine ‘the availability, accessibility, acceptability, and safety of food’. ⁷³ In doing so, it may advance the realisation of the right to food.

Carbon tax can potentially enhance the realisation of section 27(1)(b) of the Constitution which safeguards the right of everyone to access sufficient water, a right that is also implicit in articles 11 and 12 of the ICESCR. The normative components of articles 11 and 12 regarding the right to water are set out by the CESCR General Comment No 15 of 2002. ⁷⁴ The CESCR calls upon States parties to implement necessary interventions to prevent climate change from hindering the realisation of the right to water. ⁷⁵ This is urgent in South Africa where the struggle to ensure access to water is a recurring reality. While emphasising the problem, in Trustees of the Groundwork Trust v Acting Director – General: Department of Water and Sanitation and Another, the Water Tribunal indicated that it is essential to consider the interest of present and future generations in water as a central component of sustainability. ⁷⁶ Also, the Constitutional Court in Mazibuko v City of Johannesburg cautioned that effective management of water is a necessity in South Africa where there is familiar trend on scarcity of water. ⁷⁷ While simulating the scenario of water and carbon tax policy for the electricity markets in United States, findings show that there would be 40% drop in water use over 10 years when coal is replaced by wind. ⁷⁸ Generally, by reducing water use in industries involved in coal-based energy production, it helps in water conservation in China. ⁷⁹ South Africa is both a water stressed, ⁸⁰ and coal energy intensive state. ⁸¹ Implementing a carbon tax is an important step to actualise the reasoning in Mazibuko decision of the Constitutional Court relating to effective water management. Over time, it may reduce reliance on coal-based energy and thereby reduce its associated water use. In doing so, it will not only save water but improve its availability and access.

In terms of section 27(1)(a) of the Constitution, everyone is guaranteed the right to health in South Africa. Article 16 of the African Charter provides a similar provision as does article 12 of the ICESCR. Determinants of health as explained in the CESCR General Comment No 14 include the prevention of harmful environmental occurrences that may undermine the health of populations. ⁸² While commenting on the protection of the right to health, in Minister of Health and Others v Treatment Action Campaign and Others, the Constitutional Court urges the removal of all restraints to the realisation of the right to health. ⁸³ Studies in Chile, ⁸⁴ India, ⁸⁵ and the USA, ⁸⁶ have profiled the potential health benefits from reduced pollution when a tax is imposed on activities associated with carbon emission. Improvement in air quality can shape positively the health of all populations, particularly vulnerable populations including the elderly, children, pregnant women and people with comorbidities. ⁸⁷ Carbon tax when implemented in Massachusetts is calculated to return health benefits valued at $2.9 billion USD by 2040. ⁸⁸ Considering its potential to reduce pollution related to carbon emission, the implementation of the Carbon Tax Act may improve healthy living and thereby contribute to the enjoyment of the right to health in South Africa.

No one can be arbitrarily deprived of property as guaranteed under section 25(5) of the Constitution. Further, section 26 guarantees access to adequate housing. These rights are respectively provided under article 14 of the African Charter and article 11 of the ICESCR. The CESCR in General Comment No 4 construes broadly the meaning of the right to adequate housing which it affirms could take the form of ‘accommodation, cooperative housing, lease, owner-occupation, emergency housing and informal settlements, including occupation of land or property’. ⁸⁹ It further explains that climate change can adversely impact on the security of land tenure. ⁹⁰ The contested nature of land security cannot be overstated in South Africa. In Land Access Movement of South Africa and Others v Chairperson of the National Council of Provinces and Others, the Constitutional Court reiterated that it is a ‘painful, emotive subject’ in South Africa. ⁹¹ In relation to the right to housing, in Rahube v Rahube and others, the Court held that it is inappropriate for the State to enact or allow a piece of legislation that weakens the right to housing. ⁹² The imposition of a carbon tax is preferred to other climate mitigation measures which sometimes negatively affect the land security of vulnerable populations. For instance, in terms of climate mitigation, Bioenergy and Carbon Capture with Storage (BECCS) involves the growing or collection and the processing of biomass for conversion to heat, electricity or liquid or gas fuels, capturing the resulting carbon and storing it underground or in long-lasting products. ⁹³ However, it requires conversion of substantial area of land which encourages the expropriation of land that is wrongly classified as abandoned, ⁹⁴ and displacement which undermines the land security and right to housing of affected populations. ⁹⁵ Indirectly, Carbon Tax Act may positively impact the rights to property and housing in the sense that, unlike other mitigation measures, it is an option which has little or no negative implications on land tenure system of local and vulnerable populations in South Africa.

Finally, the right to healthy environment as guaranteed under section 24 of the Constitution and article 24 of the African Charter is susceptible to adverse consequences of climate change extreme events such as flooding and erosion, which may devastate the environment and undermine environmental sustainability. For instance, carbon tax may propel alternative initiatives to coal energy and thereby prevents its harmful environmental consequences. A development that will advance the realisation of section 24 of the Constitution. This is even more pertinent in South Africa where increasing emission of carbon is a concern. Acknowledging this trend, in Earthlife Africa Johannesburg v Minister of Environmental Affairs and others, the Court endorsed the need for a climate impact assessment for a proposed coal project. It further warned against the continuous dependence on coal energy system which may further impact the climate system and socio-economic interests of populations adversely. ⁹⁶ Carbon tax may serve as a disincentive to coal-intensive energy system and enhance alternative energy source. In doing so, it may enhance healthy environment.

Despite the foregoing potential in the implementation of carbon tax to aid human rights, as demonstrated in the next section, it may also hinder the realisation of these key rights.

Carbon Tax Act as a hindrance to realisation of rights

Implementing carbon tax may undermine human rights in South Africa. In the discussion leading to the enactment of the Act, the efficacy of the tax was widely criticised. ⁹⁷ The main critique is that there is no certainty that its enactment will cause carbon emissions to reduce. Another point against the measure is that carbon tax is likely to impact on production costs of business entities and increase product prices, a burden that will still be carried by consumers in the end. ⁹⁸ This connotes that implementing carbon tax may increase cost of living for poor peoples and thereby worsen their living condition. As demonstrated below, the possible increase in products price may have adverse consequences on the enjoyment of key rights in South Africa.

The UNHRC General Comment No 6 affirms that suitable measures are required to respond to conditions which can threaten the right to life with dignity. Suggested measures for states include improvement of access to electricity and sanitation to enhance adequate general humane conditions. ⁹⁹ Generally, the activities sanctioned under the Carbon Tax Act are such that are necessary for sustaining a quality lifestyle and one of dignity. The taxable activities listed under Schedule 2 of the Act touch on transport, energy and food production. This connotes that the increase in costs of certain goods will undermine the quality of living conditions of the poor.

A similar consequence is likely on the realisation of the right to health in that financial status of patients is often a determinant of access to health. In its General Comment No. 14, the CESCR recalls that enjoying the right to health is increasingly difficult for those who are already living in poverty. ¹⁰⁰ The health sector is not mentioned in the Schedule 2 as a sector that falls directly within the scope of carbon tax, however, sectors such as transportation, non-metallic minerals, construction, machinery, chemicals that are listed fall within carbon tax coverage. The associated increase in the cost of products in those sectors may negatively impact on the access to healthcare of patients who do not have adequate financial status to access health care services.

Schedule 2 of the Carbon Tax Act covers activities around food processing, beverages and tobacco, road transportation and agriculture, forestry and fishing. Taxes imposed on these areas may be counterproductive for food security. The introduction of a carbon tax may be a gain for the environment, but in pushing the cost of production to food services, it may have adverse effects on food prices and thereby undermine the right to food. In its General Comment No. 12, the CESCR affirms that the right to adequate food is indivisibly linked to poverty and identifies poverty as closely linked to hunger and malnutrition. ¹⁰¹ A potential increase in food prices resulting from the implementation of a carbon tax may limit food affordability of the poor and in that way, undermines their right to poor.

A comparable effect may arise in the context of access to water. Whereas water storage and waste management sectors feature visibly in the Schedule 2 of the Act, there is no express reference to the water sector. A reason may be that the issue of water cost is polemic. As Jegede and Shikwambane explain, this is already problematic in South Africa leading almost to a phenomenon of water apartheid. ¹⁰² Also, as shown in another writing, profit based approaches may undermine the socio-cultural values of water to local communities. ¹⁰³ Activities and sectors such as construction and machinery sanctioned under carbon tax may affect cost of water production. When transmitted to poor end users, it could undermine affordability and worsen their access to adequate water.

The reference made under Schedule 2 to the construction, machinery, brick manufacturing, commercial, institutional and residential sectors shows that cost of products in those areas may also increase because of the implementation of the Carbon Tax Act. In a study conducted on Sweden, findings show that higher taxation rates on carbon emissions and fossil fuel use seem to increase the economic competitiveness of building material and construction. ¹⁰⁴ This shows that carbon tax may worsen affordability of houses by poor people or those whose sources of income are particularly low in South Africa. Such development will constitute a challenge to the right to housing. On the need for affordability of houses, the UN General Comment No 4 generally advises that efforts should be made to ensure that financial costs do not hamper the access of populations to housing. ¹⁰⁵ Arguably, this may not be achieved where the costs of products are adversely impacted by the Carbon Tax Act.

Carbon tax may negatively affect the realisation of the right to healthy environment because the Carbon Tax Act does not outrightly forbid activities which have the most direct impact on the environment. Rather, in principle, it tolerates them by subjecting such activities to differential and proportionate level of taxes. For instance, it tolerates some measures of degradation of the environment by retaining coal mining and gas flaring activities under Schedule 2 of the Act. Although these activities and sectors are sources of emission that affect the climate system, ¹⁰⁶ they are allowed as tax is being paid over them. Findings affirm that a safe climate requires a two-thirds reduction in coal power generation in 2030 and its near total elimination by 2050. ¹⁰⁷ This is unlikely to be achieved where carbon tax only reinforces business as usual approach that may considerably delay the global pursuit of viable alternative energy sources in lieu of coal and fossil driven energy systems. This development may further worsen the climate system and therefore undermine the right to healthy environment.

Overall, the Carbon Tax Act may have both negative and positive implications on the realisation of rights. Some definitive measures are, therefore, required to minimise the negative effects of Carbon Tax Act on key human rights.

Addressing the negative implications of carbon tax on human rights

The State may target and utilise the revenue generated from the implementation of the Carbon Tax Act to address its negative consequences on key human rights. While revenues from taxation can serve a hypothecation purpose – deployment for a specific public policy goal or programmes, ¹⁰⁸ there is no provision in the Carbon Tax Act that suggests specifically that the revenues generated from it can be so deployed. However, in terms of the preambular provision of the Act, one of the underlying reasons for imposing the tax is to ensure that polluters pay for the costs of remedying pollution, environmental degradation and resultant adverse health effects of emission of carbon. As demonstrated in this section, the revenue generated from the Carbon Tax can be channelled by the State to achieve two principal ends: ensuring just transition to alternative energy; and facilitating social assistance, in particular, to poor communities and low-income earners.

Channelling the revenue to the process and activities around just transition to alternative energy is necessary to demonstrate that climate mitigation is the long-term focus of the Carbon Tax Act and discredit the notion that it is just another tool of generating revenue for the government. This is important as South Africa is committed to 42% emission reduction by the end of 2025. ¹⁰⁹ It aims at decommissioning about 24 100 MW of coal power plants in the period beyond 2030 to 2050. ¹¹⁰ The revenue generated from the implementation of the Carbon Tax Act can be used in developing the alternative energy industry. Also, the commitment to close coal power plants will not happen without associated problems including the loss of jobs to workers in that sector. As Kings observes, while three-quarters of existing coal jobs are threatened by transition, no institutional agenda focuses on the situations of workers in the coal sector. ¹¹¹ Yet, the labour and environmental rights movements have called for a transition that does not only address environmental protection but also the rights of workers in the context of climate change policy. ¹¹² The call is in line with the principles and imperatives of a just transition enunciated in the ILO Guidelines for a Just Transition Towards Environmentally Sustainable Economies and Societies for All (ILO Guidelines). ¹¹³

The purchasing power of workers relieved of their jobs in the coal sector will further be undermined by implementing a carbon tax considering its likely impact on operational costs and product prices. Hence, the revenue from the implementation of the Carbon Tax Act can be used to support the critical measures projected in the ILO Guidelines such as the promotion of social dialogue, recognition of different possibilities relating to transition. ¹¹⁴ In terms of further possibilities, the guidelines affirm that a transition can include the promotion of green jobs, ¹¹⁵ the creation of additional jobs and improvement of incomes in existing jobs. ¹¹⁶ An example of how a dedicated fund can be used for specific climate related action can be seen in India where also pollution and general carbon emissions have been a persistent problem. ¹¹⁷ Carbon tax in India is anticipated to be a revenue generated measure for financing clean energy drive in India. ¹¹⁸ Following a similar route, revenue generated from carbon tax can be channelled towards the pursuit of alternative energy sources, a step that will advance ecological sustainability and safeguard the right to healthy environment under section 24 of the Constitution.

Transitioning to alternative energy can be achieved by investing the funds accruing from the implementation of carbon tax in the production of electric cars, public transport, support for micro generation and community initiatives for electricity in South Africa. It has been argued that the main reasons for low patronage of electric vehicle in South Africa are costs and socio-economic conditions. ¹¹⁹ Utilising the revenue to subsidise production will make electric vehicle more market friendly and affordable to the populace. Also, investment in public transport is crucial to addressing climate change as the fewer the cars on the road the better for the climate system. Hence, revenue generated from carbon tax can be invested in providing free and heavily subsidised public transport for the populace including workers. For instance, Rwanda has introduced more public bus services through three companies that are under contract with the Rwanda Utilities Regulatory Authority to reduce number of cars on the road and boost clean environment. ¹²⁰ There is existing evidence in South Africa that the introduction of the Bus Rapid Transit in Cape Town along with integrated minibus systems may reduce transport emission and enhance the quality of environment. ¹²¹ Programmes in China and Chile have also shown that governments can support the procurement of electric public buses where operators may not have previously been able to fully cover them. ¹²² It has been found that France and South Korea have increased their public transport system. ¹²³ These examples offer the basis for profitable use of carbon tax funds to aid public transport system in South Africa.

A similar approach should be adopted towards microgeneration technologies such as solar, micro-wind, micro-hydro, heat pumps, biomass, micro-combined heat and power (micro-CHP) and small-scale fuel cells productions in South Africa. Evidence shows that these technologies are useful alternatives in the United Kingdom. ¹²⁴ Also, Denmark and China have emphasised investment in microgeneration technologies and their commitment to phase out the use of fossil-based heat and electricity generation systems. ¹²⁵ South Africa has set national targets of upscaling the use of such technologies to 26% of its total energy mix by 2030. ¹²⁶ Funds from carbon tax can be invested for the purpose of realising the ambition.

The improvement of community energy initiative is also an area which may benefit from the revenues derived from carbon tax. A community energy initiative encourages the ‘the economic and operational participation and/or ownership by citizens or member of a defined community in a renewable energy project’. ¹²⁷ In Scotland, the government has made available three main streams of funding for community energy projects including solar and wind. ¹²⁸ China has been successful in the development of renewable energy projects by improving participation by people in decision making on energy in rural areas. ¹²⁹ Also, the construction of mini-power plants in Zambia has improved livelihood of local people, ¹³⁰ as their homes are powered with solar systems. Through the measure, the residents benefit in different ways such as relieving women and children of the time spent in completing household activities manually without the aid of electricity. ¹³¹ Solar powering the health centres especially the maternity rooms and laboratories has improved health services in rural areas by ensuring effective and safe healthcare in Zambia. ¹³² There have been community initiatives on wind farm to generate energy in South Africa. ¹³³ To enhance these initiatives in South Africa, the State can support with funds from carbon tax.

The adverse impact will be felt more by poor communities and low-income earners, hence, there is a need to use the revenue derived from the implementation of Carbon Tax Act for strengthening the social safety net of those populations. It is the right step in assisting these communities to benefit from the aspirations on social security in terms of section 27(1)(c) of the Constitution, the Social Assistance Act, ¹³⁴ and the UN General Comment No. 19 which offers a wide-ranging outline on the meaning and significance of social security. ¹³⁵ The foregoing instruments are useful to inform the response to the negative consequences of Carbon Tax Act on human rights by providing social assistance. Social assistance allows individuals or groups receive ‘need-based assistance from public funds’ without themselves ever having contributed directly to the scheme. ¹³⁶ Social assistance should cover the need of those whose rights may be negatively impacted by Carbon Tax Act. Social relief for distress in their context includes efforts by the State to help meet their most basic needs. Using the revenue generated from carbon tax in such a manner aligns with the UN General Comment No. 19 which calls for commitment of the State towards vulnerable populations in difficult circumstances. ¹³⁷ Arguably, populations whose rights have been negatively impacted by Carbon Tax Act will be exposed to different vulnerability. As poor populations, the unemployed and low-income earners may be adversely and disproportionately affected by the implementation of Carbon Tax Act, making such an assistance an imperative.

Vulnerability statuses include old age, children and women. For instance, older peoples are more likely to be unemployed. ¹³⁸ In South Africa, youth unemployment rate grew to 64.40% in the second quarter of 2021 from 63.30% in the first quarter of 2021. ¹³⁹ According to the Quarterly Labour Force Survey of the 2nd quarter of 2021, the working space in South Africa is more benign to men than women, while unemployment rate of 41.0% among black African women compared poorly with 8,2% among white women, 22,4% among Indian/Asian women and 29,9% among coloured women. ¹⁴⁰ The situations of these populations are more likely to be disproportionately worsened by Carbon Tax Act. Hence, their protection is no less important in the context of adverse consequence of Carbon Tax Act on their rights.

Social assistance is capital intensive, hence, the revenue generated from the implementation of the Carbon Tax Act should be devoted for that purpose. Following such an approach aligns with the aspiration that comprehensive actions are necessary to address vulnerability of populations by boosting their recovery from climate crisis and minimising their further exposure to it. ¹⁴¹ The fact that the implementation of Carbon Tax Act has significant impact on groups who typically do not have the means, has influenced some countries to advance social assistance as a response strategy. For instance, Brazil mixes social security in its response measures to the challenge of climate change. The Bolsa Verde in Brazil is a conditional cash transfer scheme that aspires to reduce extreme poverty, encourage conservation of ecosystems and improve the livelihood of those affected by adverse consequences of climate change. ¹⁴² The initiative is being successfully implemented in Brazil. ¹⁴³ This development shows that the revenue generated from the implementation of Carbon Tax Act can be utilised to support social assistance of those groups who are likely to be adversely and disproportionately affected by carbon tax.

Conclusion

The implementation of carbon tax has featured prominently in climate change agenda but its suitability as a response to climate change is controversial. Additionally, there is scant consideration of its implications for fundamental human rights in literature. South Africa passed a Carbon Tax Act in 2019 as a marker of its commitment to climate actions, but it has other obligations to tackle poverty and enhance human rights. Literature has shown that carbon tax may be used for different purposes in addressing climate change. The paper, however, examined whether the implementation of the Carbon Tax Act may have implication on key human rights and how the negative aspect of the impact can be addressed. As has been shown, in imposing costs on carbon emissions with the view that it may serve as a disincentive to continue its underlying activities, the Carbon Tax Act has the potential to lower carbon emissions, and in the long run, lessen the likelihood of extreme events and environmental disasters. This development has both positive and negative impact on human rights. As has been shown in the paper, it can both aid and have undesirable implications for rights to life, access to sufficient food and water, health care services, property, adequate housing and healthy environment guaranteed in the South Africa Constitution. To address the negative effect of the Carbon Tax Act on human rights, the paper noted that the instrument does not have any provision on a hypothecation purpose – deployment for a specific public policy goal or programmes. Hence, the paper argued that the revenues generated from the implementation of the Carbon Tax Act may be specifically channelled to achieve just transition to alternative energy. As being done elsewhere, it can be invested in microgeneration technologies, community-based energy initiative and in facilitating social assistance of poor communities and low-income earners in South Africa.