South Africa will introduce a tax on carbon emissions in 2015 amid concerns of global warming, Finance Minister Pravin Gordhan announced on Wednesday.

The tax to come into effect in January 2015 will be levied at 120 rand ($14) per tonne of carbon dioxide and will be subject to a 10 percent increase every year for the first five years.

"To soften the impact, a tax-free exemption threshold of 60 percent will be set with additional allowances for emissions-intensive and trade-exposed industries," he proposed in his 2013 budget speech.

The new carbon tax will see the phasing out of the existing electricity levy, a tax on non-renewable and nuclear energy.

He said government will also back incentives to upgrade fuel refineries and the production of bio-fuel in a bid to boost output of cleaner fuel in the country.

"We are also encouraging the private sector and smaller public entities to be creative and develop low-carbon projects," he said.

The government has pledged to reduce domestic greenhouse gas emissions by 34 percent by 2020 and by 42 percent by 2025.