The National Treasury yesterday released draft regulations that will allow companies to reduce their carbon tax liability by as much as 10 percent of their actual emissions.
The carbon offset scheme is part of measures South Africa is taking to reduce emissions since it voluntarily committed at the 2009 UN conference of parties on climate change in Copenhagen to reduce greenhouse gas (GHG) emissions from projected “business-as-usual scenarios” by 34 percent in 2020 and 42 percent in 2025, subject to certain conditions.
The draft regulations, which set out the procedure for the use of carbon offsets by taxpayers to reduce their carbon tax liability, follow the publication of the carbon offsets paper in 2014 and the draft Carbon Tax Bill in November last year.
“Carbon offsets can be generated through investments outside of a taxable entity’s activities that results in quantifiable and verifiable GHG emission reductions,” said the Treasury. “The carbon offset projects should generate sustainable development co-benefits and employment opportunities in South Africa by encouraging investments in energy efficiency, rural development projects, and initiatives aimed at restoring landscapes, reducing land degradation and biodiversity protection.”
The Treasury said investments in transport, agriculture, forestry and waste sectors were likely to qualify for carbon offsets.
Climate Neutral Group, which provides carbon management services, yesterday said the draft regulations were long overdue.
The company’s country director in South Africa, Franz Rentel, said: “To ensure that a credible, diverse and liquid supply of carbon offset credits is available to the entities that will have tax liabilities as of January 2017, the ground rules and infrastructure needed to support an offset program must be finalised and articulated as soon as possible so that companies can maximise their carbon tax savings.
“We hope these draft regulations will encourage companies to start securing eligible carbon offsets, as demand will far outstrip supply in phase 1 of the tax (2017 to 2020). Furthermore, companies will only have until December 31, 2017, to utilise the carbon offsets from existing offset projects (which make up the bulk of the offset supply in South Africa).”
Rentel said that including carbon offsets as an additional relief mechanism under the proposed carbon tax would allow companies to access least cost mitigation options.
This would enable companies to save up to 20 percent on carbon tax a year.
“We also agree that only South African-based project credits be eligible for use within the scheme as this will hopefully boost the development of locally based projects and contribute significantly to the country’s socioeconomic challenges. That being said, it is important that there is clarity post-2020 in order for new projects to get off the ground successfully,” Rentel said.
“We also have concerns how the future South African carbon registry would function as well as the additional administrative burden of the scheme within the Department of Energy as well as others.”
Earn valuable CPD credits
The low-cost airline Mango has joined the International Air Transportation Association (IATA) Carbon Offset Program with a new R6 “green fee” option on their flights, which aims to ‘neutralise’ their carbon offset by helping poorer communities gain access to clean energy sources.
The Mango voluntary offset program is launched on Wednesday, 17 December, with a flat-rate “Green Fee” of R6 which is payable as an extra option for any flight booked on the airline’s network.
With the contribution made, the carbon footprint of the flight journey will be ‘neutralised’ by helping various disadvantaged communities across South Africa to gain access to clean energy sources.
Whilst focusing on the production of clean energy and consequent carbon offsets on the one hand, the project also contributes to job creation and skills development in communities on the other. The project aims to plays a role in the reduction of energy costs to disadvantaged South Africans.
Nico Bezuidenhout, Mango’s Chief Executive Officer says, “The participation of Mango in the IATA carbon offset scheme demonstrates just how deeply committed the aviation industry is to sustainability“. He says, “Mango is an airline for all South Africans and we are firmly positioning ourselves as the airline that aims to positively touch the lives of everyone in our country, whether they do business with us or not. Initiatives such as joining the IATA Carbon Offset Programme and the Climatecare Low Pressure Solar Water Heating project add to our impetus.”
Tony Tyler, IATA’s Director General, also believes this plan is a “winning proposition for passengers, the environment and local communities”.
Source: Traveller 24