EXPLANATORY NOTE FOR THE DRAFT REGULATIONS ON THE CARBON OFFSET

The document outlines a carbon offset mechanism designed to allow South African firms to reduce their carbon tax liability by investing in external GHG mitigation projects. It establishes a framework where offsets can provide a tax-free allowance of 5% or 10%, primarily relying on international standards like the CDM, VCS, and Gold Standard. The scheme is restricted to projects located within South Africa and those outside the direct scope of the carbon tax to prevent double counting. Administration is tasked to the Designated National Authority (DNA) within the Department of Energy, supported by an Independent Expert Committee and a national registry to track the transfer and retirement of credits.

• The carbon tax design includes various tax-free allowances, with the carbon offset allowance specifically set at either 5 per cent or 10 per cent, contributing to a total potential tax-free allowance of up to 95 per cent during the first phase until 2020.
• To be eligible, carbon offset projects must be located in South Africa and must occur outside the scope of activities already subject to the carbon tax to avoid double counting of emission reduction benefits.
• The scheme initially relies on three international carbon offset standards: the Clean Development Mechanism (CDM), the Verified Carbon Standard (VCS), and the Gold Standard (GS).
• The Designated National Authority (DNA) within the Department of Energy is responsible for administering the scheme, including pre-screening project ideas, registering projects, and issuing offset certificates.
• An Independent Expert Committee (IEC), potentially chaired by the Department of Environmental Affairs (DEA), will be established to develop and assess new methodologies and manage the 'positive list' of eligible project types.
• The process for claiming an allowance requires credits to be cancelled in an international registry and transferred to a South African registry, where they are then issued as domestic carbon-offset certificates.
• Certain projects are explicitly ineligible for the offset scheme, including those benefiting from other government incentives such as the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) and the Energy Efficiency Savings Tax Incentive (section 12L).

APA

Centre for Environmental Rights (2016). EXPLANATORY NOTE FOR THE DRAFT REGULATIONS ON THE CARBON OFFSET. https://cer.org.za/wp-content/uploads/2016/06/Draft-Regulations-Explanatory-Note.pdf?x21779

Chicago

Centre for Environmental Rights. EXPLANATORY NOTE FOR THE DRAFT REGULATIONS ON THE CARBON OFFSET. 2016. https://cer.org.za/wp-content/uploads/2016/06/Draft-Regulations-Explanatory-Note.pdf?x21779.

Wikipedia

{{cite report |author=Centre for Environmental Rights |title=EXPLANATORY NOTE FOR THE DRAFT REGULATIONS ON THE CARBON OFFSET |date=20 June 2016 |url=https://cer.org.za/wp-content/uploads/2016/06/Draft-Regulations-Explanatory-Note.pdf?x21779 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{centreforenvironmentalrights2016explanatory, author = {{Centre for Environmental Rights}}, title = {{EXPLANATORY NOTE FOR THE DRAFT REGULATIONS ON THE CARBON OFFSET}}, institution = {Centre for Environmental Rights}, year = {2016}, month = jun, url = {https://cer.org.za/wp-content/uploads/2016/06/Draft-Regulations-Explanatory-Note.pdf?x21779}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }