Overview

Description

The South African Carbon Tax Offset system relies on existing international and independent crediting mechanisms. All projects undergo the obligatory processes required for project registration and credits issuance by each specific standard. To be eligible projects must not be activities covered by the carbon tax, projects must be located in South Africa, and projects must be registered/implemented after the commencement of the carbon tax (1 June 2019). Projects that are under taxable activities may be utilized until the first phase of the carbon tax (Regulation 2(2) of the Carbon Offset Regulations)

Recent Developments

In March 2025, Treasury amended the Carbon Offset Regulations under the Carbon Tax Act. Notably, the eligibility threshold for energy projects was raised: renewable energy generation projects up to 100 MW are now eligible for offset allowances. This change is meant to incentivize more low-carbon power generation and align offset use with the energy transition. From 1 January 2026, the offset allowance will go up further (Phase 2): • 10% for fugitive and process emissions • 15% for combustion emissions • The government extended the period during which older offset credits (from projects registered before the tax) can be used until 31 December 2028.

Relation to Compliance Carbon Pricing Instruments or other Voluntary Schemes in the country

South Africa Carbon Tax

Eligible Activities