The National Treasury has published a Carbon Offsets Paper for public comment. The paper outlines proposals for a carbon offset scheme that will enable businesses to lower their carbon tax liability and make investments that will reduce greenhouse gas (GHG) emissions.
This document needs to be read in conjunction with the “Carbon Tax Policy Paper: Reducing greenhouse gas emissions and facilitating the transition to a green economy” which was released for comment in May 2013. The Finance Minster announced during his recent Budget Speech that the plans to introduce a carbon tax in South Africa would be delayed until 2016.
Carbon Offsets[1] will enable firms to cost-effectively lower their carbon tax liability. They will also incentivise investment in least-cost mitigation options in the country, driving investment in GHG mitigation projects that deliver carbon emissions reduction at a lower cost than the carbon tax.
In order to be awarded a tradable emissions reduction credit under one of the four different carbon offset standards (Clean Development Mechanism (CDM), Verified Carbon Standard (VCS), Gold Standard (GS) and Climate, Community and Biodiversity Standard (CCBS)), the principles of “additionality”, “permanence”, and “real” are critical in being included and thus to ensure the credibility of the carbon offset projects.
Treasury’s initial analysis suggests that the development and adoption of an eligible project methodology could focus on the following areas:-
- Energy and Energy Efficiency
- Transport
- Agriculture, forestry and other land uses, and
- Waste
The Paper is available on the Treasury website and written comments should be submitted to Peter Janoska, email:- peter.janoska@treasury.gov.za, by the close of business on 30 June 2014.
[1] A Carbon Offset is a measurable avoidance, reduction, or sequestration of carbon dioxide (CO2) or other GHG emissions. Carbon Offsets are sometimes described as project-based because they typically involve specific projects or activities that reduce, avoid or sequester emissions.