EXPLANATORY NOTE FOR THE DRAFT REGULATIONS ON THE CARBON OFFSET

This explanatory note details the proposed regulations for a carbon offset scheme under South Africa's Draft Carbon Tax Bill, 2015. It outlines the policy rationale, eligibility criteria for projects, the administrative framework led by the Department of Energy, and the procedures for taxpayers to use offsets to reduce their carbon tax liability.

• The carbon tax design includes various tax-free allowances to protect competitiveness and vulnerable households, with a specific carbon offset allowance of either 5 per cent or 10 per cent. During the first phase ending in 2020, total tax-free allowances can reach as high as 95 per cent.
• The carbon offset scheme aims to provide a flexibility mechanism for least-cost mitigation and to incentivise emissions reductions in sectors not directly covered by the tax, specifically transport, waste, and Agriculture, Forestry and Other Land Use (AFOLU).
• Initially, the scheme will rely on three international carbon offset standards: the Clean Development Mechanism (CDM), the Verified Carbon Standard (VCS), and the Gold Standard (GS). To be eligible, projects must be located in South Africa and occur outside the scope of activities already subject to the carbon tax to prevent double counting.
• 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 of the Income Tax Act, 1962).
• The Designated National Authority (DNA) within the Department of Energy (DoE) is responsible for administering the scheme. Its duties include pre-screening project ideas, registering projects, and issuing, cancelling, and retiring carbon credits.
• 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.
• To use offsets for tax liability, credits must be cancelled in an international registry and transferred to a South African registry. Taxpayers must surrender these credits to the South African Revenue Service (SARS) and retain offset certificates for at least 15 years for auditing purposes.

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} }