Carbon tax and carbon offsets are fast becoming a reality but for carbon offsets to be functional, a carbon offset trading system is required. Promethium Carbon has released a report addressing the potential structuring of the market for a carbon offset trading system in South Africa. The purpose of the report is to identify the requirements for such a trading system. The work was funded by the British High Commission’s Prosperity Fund.

http://www.promethium.co.za/wp-content/uploads/2014/02/2014-02-26-Tax-and-Trade-Final-Report-submitted.pdf

The South African Government’s climate change strategy allows for the potential use of carbon offsets in two applications. The first is to allow companies to mitigate their financial liability in terms of the proposed carbon tax. The second is to allow companies to use offsets against a potential carbon budgeting system. This report focuses mainly on the first application.

The report investigates whether it will be possible to implement a carbon offset trading scheme within the same time frame as the announced schedule for the implementation of the South African carbon tax. It concludes that this will be possible provided maximum use is made of existing infrastructure. This infrastructure is required to warrant both the environmental and economic integrity of the system.