Climate Neutral Group’s Expectations from the Climate Summit in Madrid

The two-week climate summit in Madrid, December 2nd -13th  (COP25) will determine whether international Carbon Trade will be properly regulated and thereby contribute to the ambitions of Paris. Hence, next year countries are expected to bring their climate plans ‘in line’ with the Paris Agreement goals. It is the only chapter in the so-called “Paris Rulebook”, about which there is still disagreement, so-called Article 6 in the Rulebook in Madrid, it is finally at the top of the Climate Summit agenda. International carbon trade can enable countries to achieve cost-effective CO2 emission reductions. Studies show that global carbon trade doubles reductions at the same cost.

For Climate Neutral Group, Managing Director René Toet and Carbon Specialist Jos Cozijnsen will attend the summit. They will speak with delegates and politicians, companies and NGOs. Rules for international carbon trade for countries will determine if carbon reductions will be reported transparently by countries. How will countries report international transfer of credits to avoid double counting? Will new credits help the Paris goals? What is the role of the voluntary carbon market? And how will this impact supply and carbon prices?

Read the full statement here.

Gazetting of the Carbon Offset Regulations

The long awaited Carbon Offset Regulations were gazetted by National Treasury on the 29th of November 2019 in terms of section 19(c) of the Carbon Tax Act (Gazette No. 42873). Carbon offsetting is one of the allowance mechanisms under the carbon tax and an effective way for companies to pay less carbon tax. The Carbon Tax Act (Act No. 15 of 2019) was signed into law in May 2019 and came into effect from June 2019.

The National Treasury also published for public comment two further sets of regulations, namely the Draft Regulations for the Trade Exposure Allowance and Draft Regulations for the GHG Intensity Benchmarks. Written comments on these two sets of draft regulations must be submitted to carbontax@treasury.gov.za by close of business on 17 January 2020.

Carbon Offset Regulations – key points

  • Inclusion of renewable energy
    • All small-scale renewable energy projects up to 15MW for both REIPPPP (from bid window 3, i.e. signed on or before 9 May 2013) and non-REIPPPP projects are eligible as carbon offsets;
    • For projects greater than 15MW, REIPPPP projects from the third bidding window and non-REIPPPP projects, except for technologies with a cost less than R1.09/kWh, will be eligible as carbon offsets.
  • Eligibility of energy efficiency projects
    • Only energy efficiency and co-generation projects which do not also generate thermal energy implemented on activities that are covered by the carbon tax resulting in reduced fuel consumption
  • Clarification of eligible projects and the use of credits generated prior to the implementation of the carbon tax
    • Projects and the resulting offsets issued up to 31 May 2019 will be eligible for offsets
    • Project activities that are covered under the carbon tax, these offsets must be used within the first phase of the carbon tax (up to Dec 2022), except for qualifying renewable energy projects
    • For project activities not covered by the carbon tax in the first phase, these offsets can be used until the end of the crediting period as stipulated under the relevant carbon standard;
  • Other Technical Amendments include the exclusion of temporary credits (tCERs), clarification that offset certificates are non-transferable, specifying the tax period for which the offset will be used, and that the offset certificate should be retained for the duration of the project or 15 years, whichever is longer

Steps carbon tax liable companies should take now

Due to the considerable tax savings to be had as well as the fact that offsets will need to be utilised by 30 June 2020 for the 2019 tax period, companies are advised to develop a carbon offset strategy that addresses the following crucial questions:

  • To purchase offsets, and save tax, or not?
  • If your company has already registered an offset project, are these offsets eligible for use?
  • Linking offsets to broader company objectives?
  • Linking offsets to CSI / social development programmes?
  • Purchasing a function of price and / or project type?
  • Who will manage this process (internally or outsourced?)
  • When to act?

You can read more about how companies can use carbon offsets to pay less carbon tax in the blog by our CNG SA Director, Franz Rentel, here and download the full offset regulations here.



Should you have any questions on these offset regulations, have already implemented a carbon offset project but unsure whether the offsets are eligible or you are ready to purchase carbon offsets from our diverse portfolio, please get in touch.

Secure carbon offsets NOW and pay less carbon tax in June 2020

It has already been 4 months since the South African Carbon Tax was implemented on the 1st of June 2019. This has seriously caused businesses to start exploring options to reduce the subsequent tax liability.

During the first phase (June 2019 – Dec 2022) various tax-free allowances are applicable and, depending on the nature of your business, could result in 95% deduction on tax-payable. One of the simplest means to reduce tax payable is by purchasing domestic carbon offsets. The big question is: “how significant is the impact of purchasing credits in terms of tax-savings?” As an example, a carbon footprint of 50 000t CO2e direct emissions and a 10% offset allowance can easily result in R100 000 tax savings per year (depending on the price of the offset, which is capped at the marginal tax rate of R120 per tCO2e, and not the effective tax rate).

Purchasing offsets however requires planning and thinking ahead. Here’s why:

• There is lead time for credits to be generated
• Waiting until the final hour to purchase offsets can incur risks.
• Given the current spike in demand , in anticipation for SARS-season, there may not be sufficient credits.
• Modelling carried out by various organisations shows that there will always be more demand for offsets than what the market can supply.
• We expect offset supply to be especially constrained during the first two years of phase one of the carbon tax.
• This means that the low supply will drive up costs and hence reduce savings.
By timely securing carbon offsets for your business you will be guaranteed a carbon tax saving at the best price, whilst simultaneously contributing to a more sustainable South Africa.

For more information, get in touch with us today.

Climate Neutral Group joins #GlobalClimateStrike

On Friday, 20 September, Climate Neutral Group employees were proud to unite behind the science and stand by the youth, joining the global climate strike that took place in Cape Town.

The global climate strike saw more than 4million people unite globally to stand up and demand climate justice from governments and big emitters. The Cape Town protest had over 2000 attendees who marched from Hanover street to parliament where speeches and performances took place and a memorandum of demands was handed over to government.

The Cape Town strike received both local and global coverage and can be seen heading the Vox article on strikes from around the world.

8 Good Reasons to Offset your Business Flight

Flying is sometimes unavoidable – especially when it comes to business travel. That’s why at Climate Neutral Group we have GreenSeat which assists companies in offsetting the carbon emissions of their air travel. Here are eight reasons that is a good idea:

1.It provides an alternative

Offsetting your company flights provides you with the alternative to not flying at all.

2.It reduces carbon elsewhere

In order to offset your flight carbon emissions your business can invest in emissions-reducing projects that avoid or reduce carbon elsewhere.

3.It doesn’t cost the earth

The investment associated with offsetting an air ticket is about 2-5% of the ticket price. For flights within South Africa this equates to the cost of a cup of coffee at the airport.

4.It’s only a click away

Ask your travel agent today whether they offer GreenSeat. If not, we can arrange it for them.

5.It raises staff awareness

By receiving an offset certificate every time they fly, together with the impact they made possible by supporting clean energy projects, your staff will gain a new appreciation for their climate impact and feel good about travelling on a GreenSeat.

6.It’s a good investment

Offsetting can help your business gain competitive advantage, build brand value, support your CSI policy, improve your BEE scorecard and encourage other emission reduction activities within your company.

7.It’s a powerful tool for sustainable development

By investing in clean energy projects, South African communities can be provided with affordable, reliable and low-carbon energy solutions.

8.It combats climate change

Winning the battle against climate change require the support and commitment of not only governments but also business.

More more information or to offset your business flights please contact info@climateneutralgroup.co.za

Climate Neutral Group to Offset Flights to World Economic Forum on Africa

When it comes to business travel, visiting congresses and going on holiday, flying has a climate impact. By offsetting your flight’s carbon emissions, you are able to mitigate your climate impact by promoting cleaner energy, enhancing ecosystems and improving the quality of life for vulnerable communities in developing countries.

That’s why, as carbon specialists who provide carbon offsetting services, we are very excited to be teaming up with the World Economic Forum on Africa taking place in early September in Cape Town.

We will be assisting the World Economic Forum by offsetting the flights of all of their employees to the event. We will also be offering the option to all delegates attending the conference to calculate the carbon impact of their air travel and offset it accordingly.

We have created a landing page and carbon calculator in order to enable this.

If you are interested in offsetting the carbon from your personal flights you can do so here. If you are interested in taking responsibility for the carbon impact of your work travels please contact us on info@climateneutralgroup.co.za.

‘Weak’ carbon tax to be significantly strengthened from 2023 – Treasury official

Article originally published on Mining News Weekly on 9 July.

A leading National Treasury official has warned industry to prepare for a significant strengthening of South Africa’s carbon tax during the second phase of implementation, which will begin in January 2023, describing the first phase, which came into force on June 1, as “weak”.

South Africa’s headline carbon tax rate has been set at R120/t of carbon dioxide-equivalent (CO2e) emissions. During the first phase, however, several tax-free allowances and offsets have been included, which will result in a materially lower effective tax rate of between R6/t and R48/t.

South Africa’s largest emitter, Eskom, is exempt form paying carbon taxes in the first phase. Had it been included its yearly tax liability would have been R11.5-billion and would have placed further upward pressure on tariffs.

Speaking at a seminar in Johannesburg on Tuesday, deputy director-general Ismail Momoniat dismissed the persistent argument that the tax had been introduced to raise revenue, insisting instead that it had been designed primarily to change behaviour.

“The carbon tax is pretty weak . . . but very important symbolically,” he argued, indicating that it was likely to raise less than R3-billion a year during the first phase.

“But we have also made no secret of the fact that this tax will increase in future.”

Many in business remain sceptical, however, with some mining and industrial executives warning that the carbon tax will result in the loss of production and employment.

Business Unity South Africa’s (Busa’s) Jarredine Morris reiterated organised business’ opposition to the tax during her presentation to the seminar, hosted by Webber Wentzel and the Mail & Guardian.

Morris said that, although Busa recognised the potential benefit of sending an appropriate carbon-pricing signal, it remained concerned that the tax could deter both domestic and foreign investment.

Busa also questioned whether the tax would be an effective instrument for changing behaviour in the South African context, owing to the fact that many of the processes that underpinned mining and manufacturing activities could not be changed.

Morris was also concerned that several subordinate regulations had not yet been published, which made it difficult for companies to calculate their tax liabilities.

Busa would also continue to call on government to transition to a solution that integrated the carbon tax with the proposed carbon budget system whereby the tax was applied as a penalty in those instances where emissions exceeded the carbon budget.

However, Climate Neutral Group senior carbon adviser Silvana Claassen concurred with Momoniat’s view that the first phase had been crafted to “cushion” industry.

She said that, at R120/t, the rate was low when measured against global benchmarks that set the carbon price at between $40/t and $80/t.

“My advice to South African companies is to use the first phase to reduce your emissions so that you can reduce your tax liability come phase two,” Claassen said, arguing that the tax rate was likely to increase and the allowances decrease from 2023 onwards.

Momoniat rejected the notion that the introduction of tax ran counter to government’s ambitions to attract investment and reignite growth.

“If we are not going to deal with climate change and we are not going to make the necessary adjustments, then we are actually going to be left behind.”

He also reiterated the National Treasury’s rejection of calls for the revenue raised from the tax to be earmarked specifically for programmes that would support climate resilience, adaptation and mitigation.

“It is best for revenue to be centralised, otherwise you might find that we direct too little money towards the objective we want to meet.”

In response, Organisation Undoing Tax Abuse executive head Dr Heinrich Volmink called on the National Treasury to provide yearly reports on how much revenue was being raised from government’s various environmental levies and to juxtapose these against the allocations made for environmental programmes.

“You can still recycle the revenue into the central fiscus, but at least if we see these two figures side-by-side we will be able to see if there is some approximation  . . . I would argue that it is our fiscal right to be able to see the correlation between what’s been collected and what’s been spent in terms of carbon mitigation.”

How Climate Neutral Group can Help

We are a leading carbon specialists providing carbon management and offsetting services, as well as being an established carbon tax consultant in South Africa.

Contact us to find out how we can assist to become a low carbon and climate neutral business.

Discerning Offsetting: The Right Projects Can Take You from Carbon-Neutral to Climate+

Article by Sarah Leugers, originally published on Sustainable Brands on 21 June.

By making informed decisions on carbon credit selection, sustainability-minded companies can go beyond simply being carbon neutral — to inspire customers and employees alike with life-changing impacts.

What difference can carbon offsetting make for the planet, its people and your organization’s sustainability objectives? The answer is — a lot. But choice matters: Depending on which carbon credits you select, you may simply be compensating for your carbon footprint or — on the other end of the spectrum — helping drive development in vulnerable communities around the world.

For companies that are new to carbon offsetting, the range of carbon credits available for purchase can seem challenging to navigate. To ensure that the credits you purchase are from highest-quality projects, here are some practical questions to consider:

  • Is the project’s technology compatible with a decarbonized world — for example, not simply switching from one fossil fuel to another?
  • Did the project follow safeguards to mitigate any unintended negative consequences?
  • Have the developers engaged local stakeholders, and reflected their concerns and objectives in the project design?
  • Are the project’s claims around sustainable development or the Sustainable Development Goals (SDGs) measured, monitored and independently verified?
  • What is the economic value created by the specific project?

When projects follow these sorts of best practices, their impact can go beyond cutting carbon to delivering meaningful benefits for communities and ecosystems. This is we at what Gold Standard call Climate+ projects: those that make a positive impact for the climate, plus the broader SDGs.

But just how much impact? To respond to an increasing need to quantify the impact of investments made in sustainability efforts, Gold Standard commissioned an independent research study several years back to calculate the economic value of Gold Standard carbon credits issued from a variety of project types. A more recent study by Vivid Economics revisits these calculations with the latest data available and better geographic specificity, in a new report — Valuating the benefits of improved cooking solutions: Impact data in high resolution — released this month. The study concludes that for every carbon credit from a clean cookstove project, for example, $267 in shared value is created. For biogas, the average value created is $464 per credit. The report breaks down the details of contributions for healthecosystem conservationpoverty reduction and of course, climate protection.

These figures help organizations better understand the full impact of their carbon credit purchases. More than this, by delving into the benefit profiles of different project types, companies can choose projects that are not only high-impact, but align with their own sustainability objectives — from gender equality and clean water access to biodiversity conservation — as well as help meet net-positive goals.

By making an informed decision on carbon credit selection to support more ambitious projects, sustainability-minded companies can go beyond simply being carbon neutral. They can inspire customers and employees alike with life-changing impact — backed with quantified, verified data.

Gold Standard Offsetting Projects at Climate Neutral Group

At Climate Neutral Group, carbon offsetting services through a wide range of carbon offset projects with profound socio-economic impacts. The following projects are verified by Gold Standard:

 

IETA welcomes SA Carbon Tax

Last month IETA welcomed the formal launch of South Africa’s carbon tax and offset law, the first such measure in Africa.

See below the press release, released:

The tax of R120 (US$8) per tonne of CO2 equivalent will be assessed on greenhouse gas emissions from industrial plants in the country. This obligation can be met partially by surrendering certified carbon credits from approved standards.

“We welcome the climate leadership shown by the government of South Africa, for what is a first of its kind on the continent,” said Dirk Forrister, CEO of IETA. “The flexibility will help to ensure rapid reductions in emissions in a cost-effective manner.”

South Africa’s tax forms part of its Nationally Determined Contribution to achieving the goals of the Paris Agreement, which under which nations have agreed to reach net zero emissions in the second half of the century.

South Africa’s tax will allow emitters to use carbon credits to meet between 5-10% of their obligations under the tax.

In the first phase of the tax, only South African-based credits developed under the UN’s Clean Development Mechanism, Verra’s Verified Carbon Standard or the Gold Standard will be eligible for compliance. A future national carbon standard will also be considered. Carbon credits from projects registered and / or implemented before the introduction of the carbon tax regime will be accepted subject to certain conditions.

The official Act is available here in the government gazette of South Africa.

IETA organised a webinar on this topic in April, with participation from the National Treasury of South Africa. You can access the recording and presentations here on the IETA website.

 

About IETA

For the past 20 years, IETA has been the leading voice of business on market-based ambitious solutions to climate change. Our objective is to build international policy and market frameworks to reduce greenhouse gases at lowest cost, delivering real and verifiable emission reductions with environmental integrity. To produce meaningful prices that drive change, we support market-based policies with effective emissions targets, clear rules and flexible compliance choices. See www.ieta.org for more information.

Carbon Tax Bill Signed Into Law By Ramaphosa

This article was written by Climate Neutral Group on May 24 2019.

After nearly a decade of negotiations, the Carbon Tax Act and the Customs and Excise Amendment Act were both officially gazetted on Thursday (23 May) and will come into effect from 1 June 2019. Where the Customs and Excise Amendment Act will be dealing with the administrative issues, the Carbon Tax Act sets out the technical and financial aspects, including emissions sources, the tax rate, tax-free allowances, and so forth.

The carbon tax is aligned to the polluter-pays principle, which means that carbon emissions caused by certain activities will be taxed at a rate defined in the Act. The carbon tax is one of a mix of measures to aid South Africa’s contribution to the global effort to stabilise the currently increasing amount of greenhouse gases in the atmosphere contributing to the climate crisis. The carbon tax is a price signal, which together with other measures including the tax incentives for efficient use of energy, aims to accelerate South Africa’s transition to a low carbon economy.

What does this mean for companies with a large carbon footprint?

South Africa’s economy is carbon intensive as a result of the historic abundance of coal. South Africa ranks number 14 on the list of the world’s biggest carbon emitters.

The SA carbon tax stipulates that carbon emissions from industrial processes, such as cement production and from various industrial activities including mining, will also attract carbon tax.

Therefore, the carbon tax will be implemented in a phased approach to cushion the impact. In the first phase, all carbon tax liable entities will receive a basic tax-free allowance of 60%. This means that 60% of the total taxable emissions will not be taxed. There are more allowances in place, such as a trade allowance, performance allowance and carbon offset allowance, all of which can bring the amount of taxable emissions down further.

Because companies with a large footprint cannot instantly reduce their tax liability, as a result of lack of technology or implications of large upfront investments, the Carbon Tax Act also allows for companies to offset a defined percentage of their taxable emissions. This means that companies can choose to buy carbon emissions reductions that are generated elsewhere, within SA borders, and reduce that amount from their taxable emissions. Eligible carbon offset projects are renewable energy-projects, landfill gas recovery or other social impact projects such as the manufacturing of an energy-efficient cooking device (“Wonderbag”) which uplifts local communities.

Franz Rentel, the South African director of Climate Neutral Group, which works with organisations to help calculate and manage their carbon footprints, said companies should determine which of their activities are generating tax liable greenhouse gas emissions. They should also develop a carbon offset strategy that addresses crucial questions, such as how and when to purchase carbon tax offsets.

See also: 3 Steps to A Climate Neutral Business (Read more>)

“The majority of SA corporates are not ready for the carbon tax but purchasing carbon tax offsets can reduce carbon tax payable by up to 20%. There is no longer any time to wait,” he said.

The first phase will run until December 2022 and the initial tax rate will be R120 per ton of carbon dioxide equivalent.

Carbon Tax by on Scribd