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The tax to come into effect in January 2015 will be levied at 120 rand ($14) per tonne of carbon dioxide and will be subject to a 10 percent increase every year for the first five years.
“To soften the impact, a tax-free exemption threshold of 60 percent will be set with additional allowances for emissions-intensive and trade-exposed industries,” he proposed in his 2013 budget speech.
The new carbon tax will see the phasing out of the existing electricity levy, a tax on non-renewable and nuclear energy.
He said government will also back incentives to upgrade fuel refineries and the production of bio-fuel in a bid to boost output of cleaner fuel in the country.
“We are also encouraging the private sector and smaller public entities to be creative and develop low-carbon projects,” he said.
The government has pledged to reduce domestic greenhouse gas emissions by 34 percent by 2020 and by 42 percent by 2025.
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