Carbon Finance: Have you considered leveraging carbon offsets?

With the carbon price in South Africa set to double by 2030, more and more companies are looking at ways to reduce their carbon tax liability. The demand for carbon offsets is increasing, supporting government’s intention to encourage the development of a South African carbon market.

Companies can develop carbon offsets based on projects in their portfolio, or buy offsets from other companies or organisations. A dynamic market is currently taking shape, with opportunities for companies to monetize their decarbonisation efforts.  

How carbon offsets are used to reduce a carbon tax liability

Section 13 of the Carbon Tax Act, 2019 allows taxpayers to reduce their carbon tax by utilising carbon offsets. These offsets must be derived from projects compliant with approved standards by the South African Minister of Finance, such as:

• Clean Development Mechanism
• Verified Carbon Standard
• Gold Standard

Carbon offsets are a key instrument for reducing a company’s carbon tax liability.  Now is the time to develop a carbon offsets strategy for maximising your allowance—whether through in-house projects or by sourcing credits externally. And if you can generate offsets without being subject to carbon tax, you can sell them for additional revenue!