Exploring the dynamics of carbon markets in South Africa

This briefing analyzes the South African carbon and Renewable Energy Certificate (REC) markets, highlighting a significant supply deficit in the compliance market and the structural differences between tax-offsetting credits and voluntary offsets. It details the regulatory framework of the 2019 Carbon Tax, the upcoming mandatory carbon budgets starting January 1, 2026, and the risks posed to South African exports by the EU's Carbon Border Adjustment Mechanism (CBAM).

• South Africa's compliance carbon market faces a significant annual supply deficit of approximately 8 MtCO2e, with only 4 MtCO2e supplied against a demand of 12 MtCO2e. This shortage is driven by high project development and verification costs, slow certification processes, and restrictive eligibility criteria, such as the exclusion of grid-tied renewable energy projects.
• The South African carbon market is split into a compliance market and a Voluntary Carbon Market (VCM). The compliance market is linked to the Carbon Tax Act of 2019, where eligible credits must be listed on the Carbon Offset Administration System (COAS) to reduce tax liability. The VCM is used by actors to meet net-zero or ESG targets outside of regulatory requirements.

APA

GreenCape (n.d.). Exploring the dynamics of carbon markets in South Africa. https://greencape.co.za/wp-content/uploads/2026/03/greencape-information-brief-carbon-markets-digital.pdf

Chicago

GreenCape. Exploring the dynamics of carbon markets in South Africa. n.d. https://greencape.co.za/wp-content/uploads/2026/03/greencape-information-brief-carbon-markets-digital.pdf.

Wikipedia

{{cite report |author=GreenCape |title=Exploring the dynamics of carbon markets in South Africa |url=https://greencape.co.za/wp-content/uploads/2026/03/greencape-information-brief-carbon-markets-digital.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{greencapendexploring, author = {{GreenCape}}, title = {{Exploring the dynamics of carbon markets in South Africa}}, institution = {GreenCape}, url = {https://greencape.co.za/wp-content/uploads/2026/03/greencape-information-brief-carbon-markets-digital.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }