Evaluating the impacts of energy and environmental policy on South African households

Abstract

This thesis investigates how different policies and measures designed to reduce CO2 emissions – i.e. carbon tax and energy efficiency policies – in South Africa will affect South African households. The contribution of this study lies with evaluating South African households at a disaggregated income level from low to high-income appreciating the fact that households at different levels are impacted differently by the implementation of policies at national level. In order to evaluate such impacts, the study started with profiling the households’ electricity consumption patterns in South Africa through the years and comparing them with the rest of the world. The next objective was to comprehend – implementing an Auto Regressive Distributed Lag (ARDL) econometric model – the determinants of electricity consumption of the residential sector in the country. Finally, by using a Computable General Equilibrium (CGE), the study examined various policy scenarios designed to reduce emissions and its effects on different households, particularly the low-income ones that do not have the capital to absorb the impacts. The results showed that low-income households are affected differently than the rest of South African households by the national policies implemented to reduce CO2 emissions and combat climate change. However, given the way the carbon tax and energy efficiency policies are designed, low-income households should be affected minimally.