South Africa has revealed that total emissions will evidently begin to decline in 2025 with the recent Cabinet adoption of lowered greenhouse gas emission’s target.
The target is an indication of the country’s commitment to decarbonising the economy and is the National Determined Contribution (NDC) to total emissions. The recent announcement of proposed new legislation to introduce a higher carbon tax rate for businesses that fail to reduce emissions will further accelerate efforts. The target is aimed at equalising annual emissions of between 350 and 420 megatons of carbon dioxide. Additionally it looks to explore greener technology, and reducing energy consumption by encouraging organisations to reduce and offset their carbon output to minimise their carbon tax liability. Carbon Tax Act According to the Paris Accord on climate change, South Africa is expected to meet specific emission reduction targets such as the adopted target between 350 and 420 megatons of carbon dioxide equivalence by 2030 which is aimed at cutting emissions by 28% in comparison to its 2015 pledge which capped annual emissions at 614 MtCO2 and hinges heavily on an aggressive power sector investment plan along with a cleaner transport strategy, energy efficiency programmes and a carbon tax to meet this target. The gradual implementation of the Carbon Tax Act has seen the first phase run from 1 June 2019 to 31 December 2022 and the second phase will be from 2023 to 2030. Section 19 (c) of the Carbon Tax Act has enabled the Minister to issue regulations for the carbon offset tax-free allowance in terms of section 13. This carbon offset tax-free allowance is meant to give enterprises relief in efforts to pursue cost effective measures. This will help to reduce their emissions and their resultant carbon tax liability by up to 10% of their total greenhouse gas (GHG) emissions by investing in lower carbon mitigation projects that reduce emissions outside their taxable activities.Through recent regulation amendments, the government has agreed to a registry of a national offset programme, and the Carbon Offset Administration System now facilitates the listing, transfer and retirement of carbon credits to offset carbon tax liabilities. Beginning with the approval of a specific project by the relevant project standard, all offsetting projects must go through the necessary processes required for project registration and credit issuance, measured in accordance with each specific agreed applicable standard.
Decarbonising South Africa South Africa currently relies on coal for nearly all of its power generation and is in the process of securing finance to help its national power utility Eskom to transition to the use of more renewable energy. Sasol, the country’s second largest emitter of the greenhouse gases linked to climate change, and the corporation is also under pressure from investors to transition from coal- use to decarbonising the economy. Sasol has committed to a 2050 target of net zero emissions target, while tripling its aim for a 30% reduction by 2030 of GHG off a 2017 baseline. Measuring and management For effective utilisation allowances and offset programmes, companies have to be able to measure and manage all activities, to be able to track and reduce their tax liability and ultimately their carbon output. Technology has enabled businesses to gain full visibility across their entire value chain, allowing them to easily and accurately calculate tax liability. Carbon tax calculators have revolutionised previously manual processes, making it easier to report accurately on every facet of the corporation’s carbon footprint. In addition to handling the reporting obligations involved in carbon tax compliance, technology has provided an effective starting point for decarbonisation efforts, making it easier to identify the benefits and highlight issues that need to be resolved, giving businesses a clear road map to follow while working toward net zero emissions.