Johannesburg - The recently published draft regulations on carbon offsets would not, on their own, lead to a massive reduction in greenhouse gas emissions, according to environmental group WWF South Africa.
The National Treasury this week published regulations setting out procedure of how firms could reduce their carbon tax liability by up to 10 percent of their actual emissions.
WWF-SA said the offset regulations “in themselves” were only a component of the broader carbon tax. “As currently structured, the carbon tax provides only a very weak price signal and incentive to reduce (greenhouse gas emissions),” it said.
WWF-SA said the carbon offset component could incentivise activities that might reduce national emissions. “However, the current marginal tax rate of R120 per ton will only provide an incentive for the lowest-cost offsets, which are typically those that provide least additional benefit in terms of employment and reduced externalities.”
The organisation said carbon offsets were part of the country’s mitigation hierarchy as there were activities “that are essential to modern society” that would inevitably emit greenhouse gases. “For these activities, the existence of a funded means to reduce the total emissions is essential. Whether the current structure of the carbon tax and offsets will facilitate this is still open to interpretation.”
It said carbon offsets were a tricky concept, and while the Treasury had followed international best practices, the process for registering carbon credits were still unwieldy and expensive.
“We are glad… that credits have a specified duration, since many of the activities on the Treasury ‘white list’ have a high risk of reversibility. This means that any credit purchased will expire after a set period
,” WWF-SA said.
“This is a strong stance. It needs to be backed up by a robust record-keeping system that will ensure that… credits are replaced after the seven to 20 years of their duration has passed,” it added.
The Treasury said the carbon offsets could be generated through investments outside of an entity’s activities that resulted in “quantifiable and verifiable” greenhouse gas emissions.
WWF-SA said there was, however, a real risk that offsets would be developed by local players and then sold overseas due to better market prices.
It said, as the carbon credits were meant to be the final step in a mitigation hierarchy, “it would make sense for offsets to only be allowed for those industries that cannot avoid their emissions – and that provide a proportional benefit to South Africa’s development”.
In the current model, offsets were available to all industries, and as the tax rate increased there would be incentive for businesses to invest in cheap offsets rather than reducing their own emissions, it said.
NGO Earthlife Africa Johannesburg said yesterday that it was “totally” against carbon offsets. Energy policy officer Dominique Doyle said: “It is a false solution to climate change.”
She added that transition to renewable energy technologies was a solution to climate change.
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