Comparison of the prescribed emission quantification methods and potential carbon tax liability in the South African FeCr industry

Abstract

Ferrochrome (FeCr) industries are significant CO2 emitters and will become liable for carbon tax (CT) - officially implemented in June 2019. To estimate the CT liability of an entity, the CO2 emissions must be determined as accurately as possible. The prescribed technique to quantify these emissions, however, is overly generic and its implementation uncertain. The article evaluates the application and understanding of different approaches used for estimating GHG (CO2) emissions by assessing the three prescribed calculation methods (tiers) in terms of the practical applicability. These default tiers for calculating the CO2 emissions have not been practically applied to any “real-world” case studies and have also not been compared to each other in a practical industrial scenario. Despite the relative simplicity of the formulas, the practical application has inherent risks and is sensitive to errors in data and the general understanding of the system. The three prescribed methods deliver varying results, together with possible constraints that may cause the results to vary to an even larger degree. A significant contribution of the approach is realized by improved CT liability estimation. The monetary value for the entire FeCr industry in SA decreased throughout the course of this study: from an initial estimation of R562 million (USD 38 million) per annum with a 50% uncertainty (purely based on literature assumptions) to a value of R497 million (USD 34 million) with a 5% uncertainty (based on the use of prescribed methods). This study was conducted to critically assess the CO2 emission quantification methods available to the FeCr industry. Although this study is based on the South African FeCr industry, it can be applied to international FeCr furnaces as well.