Durban - The government has announced new policy plans to soften the financial impact on business and industry when South Africa introduces the first tax on carbon in January 2016.
A paper published by the National Treasury this week suggests that the new “carbon offsets” scheme could allow big companies to reduce the total volume of climate-altering greenhouse gases more cheaply and also reduce their carbon tax liability by up to 10 percent.
The proposed scheme could also lead to a new domestic trading market where companies could buy and sell carbon credits as part of the government’s voluntary pledge to reduce South Africa’s projected greenhouse gas emissions by 34 percent by 2020 and up to 42 percent by 2025. The scheme is based on the theory that overall emissions to the atmosphere can be reduced substantially, even if certain individual companies do not reduce their total emissions.
For example, a large cement company could reduce total gas emissions to the atmosphere by helping to finance projects for lower emissions from public transport vehicles or investing in energy efficient buildings.
However, some offset schemes in other parts of the world have been criticised as fraudulent following evidence that projected gas emission levels were either grossly inflated, imaginary, temporary or impossible to measure accurately.
Although the Treasury offsets paper does not refer specifically to carbon sequestration projects, a separate research project financed by the government and industry also aims to reduce the volume of greenhouse gases escaping into the atmosphere by pumping and storing them deep underground, either on land or beneath the sea.
Nevertheless, the paper defines carbon offsets as “a measurable avoidance, reduction or sequestration of carbon dioxide or other greenhouse gas emissions”. Sequestration usually refers to the trapping, diversion or absorption of greenhouse gases before they escape into the air.
In response to concerns over the potential for fraudulent or inflated emission calculations under the carbon offsets scheme, the Treasury said that offset reductions would have to be real, measurable, additional and permanent.
It would also be necessary to set up a system of checks and balances that could include an independent expert committee and independent third-party verifiers who could be disqualified from their work if they contravened a proposed code of conduct. The scheme would also require a carbon registry system to keep track of offsets and to minimise the risk of “double-counting” of emissions.
The Treasury said it believed that offsets were one way of ensuring a smoother transition to a low-carbon economy by allowing companies to reduce overall climate gas emissions in ways that were cheaper than reducing their individual emissions.
It said there were already 111 registered carbon offset projects in South Africa, developed either under the Kyoto Protocol or other voluntary market standards.
The policy paper suggests that offsets have the potential to reduce domestic emissions by 15 million to 41 million tons of greenhouse gases every year. The deadline for public comment is June 30 and comments can be sent to [email protected].
The Mercury