Sustainability has become an emphasised universal topic in recent years, especially just after the turn of the second millennium. Leaders from a wide range of disciplines and geographic locations have congregated to discuss their very real energy concerns and the potential solutions available to address them. Various notable conferences have been held from the World Summit on Sustainable Development in Johannesburg, South Africa in August 2002 to the more recent annual World Future Energy Summit held in Abu Dhabi, United Arab Emirates in January 2013.
South Africa and Brazil form part of the BRICS group of nations which is characterised by emerging and rapidly-growing economies. South Africa and Brazil both are favoured by sustainable energy environments with an abundance of sustainable energy resources. Both countries also have various tax incentives that are aimed at encouraging the production and use of sustainable energy. Despite these facts, a large disparity still exists between South Africa and Brazil pertaining to their sustainable energy usage as a percentage of their total primary energy usage. South Africa’s sustainable energy usage is extremely small compared to that of Brazil, and therefore this study aims to determine improvements for South Africa. Brazil’s tax related policies and legislation are instructive in this regard.
The benefits of sustainable energy as opposed to energy generated from fossil fuels are evident from an analysis of their economic, environmental and social impacts. Tax incentives can take on various forms and although not the only factor, they would appear to be an important consideration in encouraging investments in sustainable energy.
Numerous barriers are identified that directly affect both the ability and desirability of the production and use of sustainable energy. Some of the more significant barriers include high initial capital costs, regulatory frameworks and intellectual rights, the long term nature and payback period of sustainable energy projects and the availability of alternative fossil fuels. Tax incentives are one of the measures that, if appropriately used, could significantly reduce many sustainable energy related barriers.
The study concludes that South Africa can learn from Brazil and implement improvements to its tax incentives and related policies and legislation. This would assist in addressing some of its key sustainable energy related barriers. Possible improvements noted include regulatory policies in which South Africa could consider implementing a sustainable energy obligation and mandate; improved certainty regarding South Africa’s research and development incentives; and improved benefits resulting from the research and development incentives.
Dissertation (MCom)--University of Pretoria, 2014.