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Regulations on carbon tax offsets give some clarity

Wednesday, 29 June 2016   (0 Comments)
Posted by: Author: Amanda Visser
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Author: Amanda Visser (Moneyweb)

Questions remain about positive impact on economy.

The newly published draft regulations on carbon offsets sets out the procedure for the use of certain projects that will enable taxpayers to reduce their carbon tax liability.

However, industry players say these the development of these projects will be complex, costly and time consuming.

National Treasury said the draft Carbon Tax Bill provides for firms to reduce their carbon tax liability by using offset credits of up to 10% of their total greenhouse gas emissions.

It said in a statement following the publication of the regulations these carbon offset projects should generate sustainable development” benefits and employment opportunities in South Africa.

The idea is to invest in energy efficiency, rural development projects, and initiatives aimed at restoring landscapes, reducing land degradation and biodiversity protection.

Duane Newman, joint managing director of Cova Advisory & Associates, explains that a carbon offset represents a measureable reduction in greenhouse gas emissions of an approved project to compensate for the same amount of a company’s own emissions.

"One carbon credit is representative of 1 ton carbon dioxide equivalent reduced in a carbon project. If a manufacturing project emits 1 ton of carbon, it will try and find a another project which is reducing its footprint by 1 ton of carbon. In effect the carbon emitted is offset.”

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