April carbon newsflash from Cova
Two important updates to note:

Draft amendments to the Carbon Offsets Regulations for public comment

The National Treasury published Amendments to the Carbon Offset Regulations on 31 March 2021. Comments on the Amendments are due on 30 April 2021.

The changes are mainly technical in nature to ensure the regulations are aligned with international carbon credit terminology and practices.

Here's a summary of the proposed amendments:
  • The proposed amendment refers to “certificate of cancellation” for all projects, which is inclusive of cancellation documents from any of the Clean Development Mechanism, Gold Standard, Voluntary Carbon Standard, and national registries.
  • The amendments refer to the organisation VERRA and the VERRA registry has been defined where all information on VCS projects now resides.
  • There is an inclusion of the definition of a national registry, as well as indicating that certificates derived from cancellation of credits from such registries will be acceptable for listing requirements under the Carbon Offset Administration System (COAS).
This is expected to provide some alleviation for other market participants who can only transfer or cancel credits from other Kyoto national registries, as only project developers are allowed to cancel credits in the CDM registry.
  • The proposed amendment includes a definition for the cancellation of a carbon credit to allow cancellations and provide transfer from other registries as credits issued exist in either CDM, VERRA or other National Registries.
  • The amendments include the crediting period of either ten years fixed or seven years, twice renewable for a total of 21 years for non-Agriculture, Forestry and Land Use (AFOLU) projects, in line with the most recent VCS Standard document.
The proposed amendments have still not clarified the double dipping limitation for companies who wish to purchase carbon offsets to benefit from the carbon offset allowance as well as benefiting from the Section 12L energy efficiency tax incentive.

Should you require any assistance in drafting a submission to Treasury on the proposed amendments, please feel free to contact us.

SA's updated Nationally Determined Contribution under the Paris Agreement published for comment

The Department of Environment, Forestry and Fisheries (DEFF) has published South Africa’s updated Nationally Determined Contribution (NDC) under the Paris Agreement for comment.

The updated NDC will be presented at the next United Nations Conference Of Parties (COP) meeting in Glasgow late in 2021.

Comments are due on 30 April 2021.

The key elements of the NDC and progress made to date include:

- The proposed mitigation target ranges include 398 – 510 Mt CO2e in 2025 and 398 – 440 Mt CO2e in 2030. The range for 2030 is lower than the previous NDC, which stated between 398 – 614 Mt CO2e.

The 2025 target will allow time to fully implement the national mitigation system (current policies and carbon tax).

The 2030 target range will further require implementation of the IRP, the Green Transport Strategy, Energy efficiency programmes and the continued implementation of the carbon tax.

No specific reference is made to the Section 12L Energy Efficiency Tax incentive.

- The Draft Climate Change Bill has undergone consultation and is currently with state law advisors. It will be submitted to Cabinet immediately after pre-certification.

Upon Cabinet approval, the Draft Bill will be published in Gazette. Once certified and translated, the Bill will be tabled in Parliament.

The main purpose of the Climate Change Bill will be to serve as South Africa’s overarching climate change legislation, which will drive other policy instruments.

- A Low Emissions Development Strategy (LEDS) has been developed for SA, which has been approved by Cabinet.

This will play a vital role in the implementation of Sectoral Emissions Targets (SETS) and Carbon Budgets (CB) for high emitting sectors.

The Department is working on the SETS framework and CB allocation process to inform the second phase of the Carbon Tax which starts in January 2023.

- Cabinet has approved a National Climate Change Adaptation Strategy, which is currently being implemented and has been developed for the following sectors:

o Water, agriculture, forestry and fisheries, health; biodiversity and rural human settlements, a climate change policy was developed for state owned companies.
o All nine provinces have developed climate change response plans and 44 district municipalities and metros have been capacitated to mainstream climate change into Integrated Development Plans.

- Cabinet approved the establishment of the Presidential Climate Change Coordinating Commission (PCCCC).

The proposed finance measures include financing of renewable energy projects from the Climate Investment Fund, the African Development Bank and World Bank. Multilateral Development Banks co-financed an additional $35million of which Eskom received support for large-scale distributed battery storage programme linked to the REIPP programme. The UK partnering on Accelerated Climate Transition (PACT) has a programme to improve flow of climate finance to SA.

- It is expected that the COP26 will go ahead in Glasgow. A preparatory meeting will take place in June in a virtual format.

The UNFCCC has published a Road Map to Glasgow Consultations and other Activities – a series of focused technical discussions to advance work between March and June 2021.

Access the documents here.

Written comments must be submitted by 30 April whereafter the NDC will be finalised for submission before COP26. Should you require any assistance, please don’t hesitate to contact us.
Kind regards,
Zelda Burchell, Carbon and Energy Manager
+27 11 568 3341