The National Treasury on Monday published the draft Carbon Tax Bill – which could result in a basic 60% tax-free threshold during the first phase of the carbon tax, from implementation date to 2020 – for public comment.
The South African Government proposes a unique carbon tax and offset scheme. This tax
includes a mechanism whereby tax payers can reduce their tax obligation by using carbon offsets.
The tax is introduced at a time that the country faces an energy crisis in the form a severely
constrained electricity generation network. Within the context of both the proposed carbon tax
as well as the energy security crisis there is potential to maximise existing mechanisms to alleviate
the energy crisis and reduce emissions as per the objectives of the carbon tax.
This can be done in line with the growing need for localized, small-scale energy solutions which
is supported by South Africa’s Renewable Energy Certificate (REC) platform. RECs is an ideal
tool to significantly support and diversify the South African green economy. The same is true for
The context of this report relates to the documentation that is in the public domain mid-2015,
especially the National Treasury Carbon Offsets Paper April 2014 which specifically mentions a
“The development of a South African‐specific carbon offsets standard could be considered in the
medium term to facilitate cost‐effective development of domestic carbon offsets. “
Both the South African REC market and the potential carbon offset market face unique
challenges. The challenge in the REC market is the lack of demand that leads to low volume and
low prices. The challenge in the carbon offset market is the high transaction cost that makes it
impossible for small projects to access the market.
This report analyses the possibility of converting RECs to carbon offsets in a system that
maintains the integrity of the carbon offsets.
The proposed tax offset design already includes CDM, VCS and Gold Standards credits and
adding converted RECs would add value and strengthen the proposed system. The RECs is a
scheme that incentivises renewable energy installers. If RECs can be converted into a credible
carbon offset credit the current REC initiative can be scaled up, thereby supporting green
By selecting small scale renewable energy projects types with no project emissions or leakage
calculations (automatic additionality under the CDM) these RECs could be converted through
the application of the standardised grid emission factor (UNFCCC approved standardised grid
emissions factors) into a credible carbon offset credit.
In theory it is possible and a pilot would demonstrate the practicality thereof. Stakeholders for
such a pilot have already been identified.
This report was made possible with the financial support of the British High Commission in South Africa Contributors to this report were Robbie Louw; Harmke Immink and Karien Erasmus from Promethium Carbon, Jason Schäffler from Nano Technology and Daniel Arnesson a PhD student from the Scandinavian Institute of maritime Law.
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The National Treasury on Tuesday published the ‘Carbon Offsets Paper’ for public comment, outlining proposals for a carbon offset scheme that would enable businesses to lower their carbon tax liability and make investments that would reduce greenhouse-gas (GHG) emissions.
The carbon offsets scheme was meant to complement the carbon tax that South Africa planned to introduce from 2016 onwards and formed part of the measures the country planned to implement to address climate change.
South African banking group Nedbank, in partnership with the Sustainability Institute (Stellenbosch University) has launched a practical book aimed at advancing the control, minimisation and measurement of carbon footprints in the country. With the South African National Treasury proposing the phasing-in of a domestic carbon tax from in early 2015, this book explores how South African companies can monitor their tax compliance by calculating their own carbon footprint ahead of the introduction of this new tax legislation.
The book “Carbon footprinting: A practical calculation guide focusing on measuring, monitoring, reporting and verification” will provide a guide for companies and other organisations to better understand their carbon impact and then implement effective carbon reduction programmes throughout their operations and activities.
The book will assist readers to be:
Despite numerous reputable sources of information freely available on internet relating to climate change and carbon footprinting, Nedbank and the Sustainability Institute firmly believe there is a need for such content. “The sources that currently exist are geared towards people who are already experts of carbon. This book is not. It takes the reader by the hand and explains in a step-by-step manner the nuances of carbon calculations by using day-to-day examples and investigates the challenges faced in the South African GHG reporting context in a conversational style,” says Dr Marco Lotz, co-author of the book and Nedbank sustainability carbon specialist.
The first section of the book consists of the conversational theory by example “how to” that explains international conventions and local applications of carbon footprinting. The second section consists of a selection of case studies. The reader is exposed to real carbon footprint case studies and Green House Gas (GHG) information of predominantly South African companies. Nedbank’s intention is that the book be distributed free of charge, in both hard copy and as a downloadable file.
Promethium Carbon developed a framework for the trading of offsets against the proposed South African Carbon Tax. The project evaluated the existing infrastructure and how the offset system could be operational by 2015. The supply and demand volumes indicated that a viable market of around 20 million ton of CO2 can be created. A range of supply options were modelled based on the project types that might be allowed. This work was funded by the Prosperity Fund of the British High Commission.
The report named “Carbon Trading In South Africa” can be downloaded from Promethium’s website by clicking here
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