Regulations governing carbon offsets were signed into law by the Finance Minister on the 29th of November 2019. A high-level summary of the major changes from the draft regulations is given below –
1. An offset that is in existence prior to 1 June 2019 can be used as an offset, even if it falls within activities subject to the carbon tax. However, it can only be used if it would have been able to be used as an offset by the end of May 2019 had these Regulations been in operation by that date. The offset must also be used by 31 December 2022. 2. An offset that is in existence prior to 1 June 2019 and that does not fall within activities subject to the carbon tax, does not have a limitation in terms of the date of use. 3. Clarity was also provided on the renewable energy project types that are excluded in the carbon offsetting scheme –
- Renewable energy projects under the Independent Power Producer (IPP) Bid Programme that had Power Purchase Agreements (PPAs) that were signed on or before 9 May 2013, that have a contracted capacity exceeding 15 MW and that have a cost equal to or lower than R1.09/kWh.
- Renewable energy projects with a capacity exceeding 15MW that have a cost equal to or lower than R1.09/kWh.
There are some other changes relating to afforestation and reforestation projects and the administrative process associated with listing offsets on the local registry.
Feel free to contact us should you require further clarity.
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