The National Treasury published Amendments to the Carbon Offset Regulations on 31 March 2021. Comments on the Amendments are due on 30 April 2021.
The changes are mainly technical in nature to ensure the regulations are aligned with international carbon credit terminology and practices.
Here's a summary of the proposed amendments:
- The proposed amendment refers to “certificate of cancellation” for all projects, which is inclusive of cancellation documents from any of the Clean Development Mechanism, Gold Standard, Voluntary Carbon Standard, and national registries.
- The amendments refer to the organisation VERRA and the VERRA registry has been defined where all information on VCS projects now resides.
- There is an inclusion of the definition of a national registry, as well as indicating that certificates derived from cancellation of credits from such registries will be acceptable for listing requirements under the Carbon Offset Administration System (COAS).
This is expected to provide some alleviation for other market participants who can only transfer or cancel credits from other Kyoto national registries, as only project developers are allowed to cancel credits in the CDM registry.
The proposed amendment includes a definition for the cancellation of a carbon credit to allow cancellations and provide transfer from other registries as credits issued exist in either CDM, VERRA or other National Registries.
The amendments include the crediting period of either ten years fixed or seven years, twice renewable for a total of 21 years for non-Agriculture, Forestry and Land Use (AFOLU) projects, in line with the most recent VCS Standard document.
The proposed amendments have still not clarified the double dipping limitation for companies who wish to purchase carbon offsets to benefit from the carbon offset allowance as well as benefiting from the Section 12L energy efficiency tax incentive.
Cova Advisory