# Summary

- Link: https://dearsouthafrica.co.za/draft-carbon-tax-regulations/summary-2/
- Published: 2019-12-11T11:59:39+02:00
- Author: dearSA

[ PROVIDE YOUR INPUT ON THE CARBON TAX BILL](https://dearsouthafrica.co.za/draft-carbon-tax-regulations/)

 * The National Treasury has published for public comment two further sets of regulations,
   namely Draft Regulations for the Trade Exposure Allowance for purposes of section
   10 and Draft Regulations for the Greenhouse Gas (GHG) Emissions Intensity Benchmarks
   for purposes of section 11 in terms of section 19(b) and (a) of the Act, respectively,
 * The Draft Regulations for the Trade Exposure Allowance gives effect to the sector
   based allowance and provides a list of sectors and subsectors and their respective
   trade exposure allowances. The regulations also outline an alternative approach
   to calculate the trade exposure allowance for companies.
 * In addition, the Trade Exposure Allowance, aims to assist companies that potentially
   face competitiveness pressures whilst 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.
 * This follows on an extensive stakeholder consultation process on the design of
   the carbon tax and tax free-allowances since the publication of the Carbon Tax
   Policy Paper in 2013 and the 2015 version of the Carbon Tax bill.
 * Earlier this year, President Cyril Ramaphosa signed into law the Carbon Tax Act
   in May 2019. The Act came into effect from 1 June 2019.
 * The Carbon Offsets Regulations—which were developed jointly by the National Treasury,
   the Department of Minerals Resources and Energy and the Department of Environment,
   Forestry and Fisheries, were gazetted on Friday.
 * The regulations outline the eligibility criteria for offset projects and sets
   out the procedure for claiming the offset allowance.
 * Companies are allowed to use carbon offsets of either 5 or 10% of their total
   GHG emissions to reduce their tax liability.

On Monday, Treasury said it will ensure that the final regulations are gazetted 
by the first quarter of 2020. This is to align the regulations with the greenhouse
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,
National Development Plan and its Nationally Determined Contribution commitments
under the 2015 Paris Agreement.”

These said Treasury, provide for the introduction of the carbon tax in a phased 
manner at a relatively low rate initially. This will 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%.”