Eskom Advocates Cap-and-Trade System to Mitigate Emissions Costs

Eskom is advocating for a cap-and-trade system as a replacement for direct carbon taxes, which it argues would lead to increased energy costs. The proposed system would allow companies to trade carbon allowances, potentially incentivizing emissions reductions through market mechanisms.

Eskom has completed compliance processes for sulphur dioxide (SO₂) emissions at its coal-fired power stations but warns that high emissions charges could escalate energy prices significantly. The utility plans to request government approval for a phased implementation of the cap-and-trade system, starting with a pilot phase to prepare stakeholders and establish regulations.

Continued reliance on coal and low domestic carbon pricing exposes South Africa to potential trade restrictions from major economies. Legal challenges regarding exemptions from pollution laws are ongoing.