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 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.