The National Treasury has published for public comment two further sets of regulations around carbon tax – the Draft Regulations for the Trade Exposure Allowance and Draft Regulations for the Greenhouse Gas Emissions Intensity Benchmarks.
The Carbon Tax Act was promulgated by President Cyril Ramaphosa in May this year, and became effective from June 1.
The Carbon Offsets Regulation was gazetted on November 29. The public can submit comments on the Treasury’s website up to January 17.
Treasury said it would ensure that the final regulations were gazetted by the first quarter of next year to align with the greenhouse-gas emissions reporting period of the Department of Environment, Forestry and Fisheries.
The carbon tax is an integral part of government’s package of policy measures to mitigate climate change as outlined in the National Climate Change Response Policy, the National Development Plan and its Nationally Determined Contribution commitments under the 2015 Paris Agreement.
Additionally, the regulation provides for the introduction of the carbon tax in a phased manner at a relatively low rate initially to allow businesses time to make the necessary structural adjustments to their production processes and practices and to ensure a just transition to a low-carbon, climate-resilient economy.
To ensure a cost effective transition, the design of the tax provides for the recycling of revenues through the electricity generation levy credit and energy efficiency savings tax incentive, and significant tax free-allowances of up to 95% of the total greenhouse-gas emissions to firms, consisting of a basic tax-free allowance of 60% for direct, Scope 1 emissions and allowances for sectors that are trade exposed up to a maximum of 10% and a performance allowance up to a maximum of 5%.
The trade exposure allowance aims to assist companies that potentially face competitiveness pressures, while the performance allowance seeks to encourage firms to reduce the carbon intensity of their production processes relative to their peers and promote the competitiveness of local products.Creamer Media Senior Deputy Editor Online