Carbon Tax: Moving from Road to Rail

[John Ashworth]

MOVING FROM ROAD TO RAIL

Railways Africa on July 14, 2011 in South Africa

The proposed carbon tax would have a significant impact on South Africa’s transport industry and could potentially lead to a “rail renaissance”, University of Stellenbosch researcher Peter Fourie told a Transport Forum meeting in Johannesburg. Switching “suitable” freight on “suitable” routes from road to rail, provided it was palletised cargo and that the country had the rail infrastructure to accommodate such a shift, would enable industry to save on costs, he suggests.

Imperial Logistics marketing director Abrie de Swardt noted the uncertainty about how to move forward with green supply-chain initiatives. He too feels a shift to rail is needed.

The National Treasury, Fourie pointed out, is proposing a carbon emission tax of R75/t of carbon dioxide equivalents (CO2e), increasing to around R200/t CO2e over time. This is based on 2005 prices, while in 2009 terms, the equivalent is R270/t. The logistics cost for the road industry would amount to R2 billion at R75/t CO2e and R5 billion at R270/t CO2e, while the rail industry’s costs would come to R0.4 billion at R75/t CO2e and R1 billion at R270/t CO2e.

A 25% intermodal shift, Fourie said, where 4.2 million tons of freight could be moved from road to rail, would save the industry R25 million, assuming the proposed carbon tax was at R100/t of CO2e. At R270/t of CO2e, some R67 million could be saved.