Draft carbon offset regulations have been released by the National Treasury for public comment, with a submission deadline of July 29.
Under the proposed rules, firms can reduce their carbon tax liability by between 5% and 10% of their total greenhouse gas (GHG) emissions, by investing in “quantifiable and verifiable” GHG emission reduction projects.
Qualifying projects must be located in South Africa and occur outside the scope of activities that are subject to the carbon tax, including activities such as energy efficiency and fuel switching in public transport, grassland restoration or small-scale afforestation in agriculture and forestry and municipal waste projects.
Renewable-energy projects have been excluded from the scheme to avoid the possibility of “double counting benefits where such projects have already been incentivised”, such as through the Renewable Energy Independent Power Producer Procurement Programme. However this blanket exclusion could be reconsidered, probably for small and medium-sized renewable energy projects.
The proposed carbon offset system, which has been developed together with Department of Energy (DoE) and the Department of Environmental Affairs, will rely primarily on existing international carbon offset standards, such as the clean development mechanism (CDM), verified carbon standard and the gold standard.
The DoE’s Designated National Authority, set up to support the implementation of CDM projects, will be responsible for administering the carbon offset scheme and approve the issuance of offset certificates.