It will be possible to implement a carbon offset trading scheme within the same time frame as the carbon tax provided maximum use is made of existing infrastructure.

Promethium Carbon has released report on the potential structuring of a carbon offset trading program in South Africa. The overall conclusion of the report is that the necessary infrastructure as well as potential supply and demand exists to create a carbon offset trading scheme within the same timeframes as the proposed South African carbon tax.

The project covered a high level analysis of the potential market supply and demand and found that there is sufficient potential volume at a marginal cost of R120 per ton CO₂e to create a viable market.

Titled Carbon trading in South Africa: Trading offsets against the proposed carbon tax, the report states that existing infrastructure is required to ensure both the environmental integrity and the economic integrity of the system.

It says that the environmental integrity of the system can be assured through the utilisation of existing offset standards like the CDM, VCS or Gold Standard. Economic integrity can be assured by using the JSE as trading platform and combining it with either a local registry such as Strate or ESC or an international registry such as Markit or APX. Over time elements such as additional standard, new national offset standards or derivative trading could be added to the proposed basic offset trading framework.

The research found that the introduction of credits into a South African system should be done in a process that checks the appropriateness of the project to be traded into the South African system. It proposes a set of National Appropriateness Tagging Rules which should specify the eligibility criteria of projects that can be traded within the system. The tagging rules should be placed under the custodianship of a committee consisting of both government and the private sector.

 

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