FINANCIAL FITNESS BY CHARNDRÉ EMMA KIPPIE
3 Things You Need To Know About
Carbon Finance W
ith the introduction of the Carbon Tax Act, in June 2019, South Africa has witnessed a revived interest in its slow offset market. This was a great step towards reducing emissions. However, we need to make sure that the best projects are invested in, and are delivered at scale.
and renewable energy projects, while securing financial benefits and successfully responding to climate change.
The Carbon Tax Act (CTA) is administered and collected by SARS. The CBT is assessed, collected and enforced as an environmental levy in terms of the Customs and Excise Act, 1964, read with the relevant provisions of the Carbon Tax Act, 2019.
The African continent finds itself in a favourable position to benefit from investment opportunities linked to carbon finance. It possesses abundant natural resources suitable for sustainable energy production. The lack of existing energy infrastructure, particularly in Sub-Saharan Africa, makes it possible to leapfrog the emission-intensive stage of economic development to clean technologies.
Here’s what you need to know about carbon tax in South Africa, and how it affects your business. Carbon Finance in Africa Matters Carbon finance could potentially be the ‘golden ticket’ for South Africa, Africa at large, and its investors. This financial stream presents a way to stimulate new development initiatives
An estimated R2. 5-billion was raised in the 2020/21 tax year.
The Carbon Tax Act has made sure that the “polluterpays” principle comes into effect for large emitters. This assists in ensuring that firms and consumers are held accountable for the adverse
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costs (externalities) that will come into play in future production, consumption and investment decisions. Firms are now being incentivised towards adopting cleaner technologies over the next decade and beyond. Carbon tax, at this early stage, will only apply to scope 1 emitters in the first phase. The first phase began on 1 June 2019, and will continue until 31 December 2022. The second phase will be from 2023 to 2030. Calculating Carbon Tax Liability As legislated, those emissions that are subject to being taxed are carefully determined in accordance with either an approved reporting methodology of the Department of Environment, Forestry and Fisheries (DEFF), or the designated formulas in terms of the Carbon Tax Act 2019. The first phase, that we currently find ourselves in, has a carbon tax rate of R120 per ton of carbon dioxide equivalent emissions.
