On 13 November 2024, the National Treasury advised that South Africa had made commitments under the Paris Agreement to reduce emissions in the range of 398 to 510 million tonnes of carbon dioxide equivalent (tCO2e) by 2025 and 350 to 420 million tCO2e by 2030, and to reach net-zero emissions by 2050. The Nationally Determined Contributions (NDCs) set out policies and measures to achieve these mitigation goals and adapt to climate change, as well as the finance requirements to support the transition to a lower carbon climate-resilient economy.
Carbon tax is an integral part of the package of policy measures to address climate change as recommended in the 2011 National Climate Change Response Policy and the 2012 National Development Plan.
In the 2024 Budget, the government announced its intention to publish a carbon tax discussion paper for public comment. This paper proposes proposals for consultation on phase two of the carbon tax design from 2026 to 2035, considering South Africa’s NDC commitments. The discussion document includes proposed adjustments to the basic tax-free allowance, carbon offsets, the electricity levy, the renewable energy premium and the energy efficiency savings tax incentive.
Stakeholders are invited to submit written comments on the draft proposals contained in this paper to carbontax@treasury.gov.za. After the public consultation process, the draft proposals will be revised to consider public comments, and announcements will be made in the 2025 Budget.
The closing date for comments is the close of business on 13 December 2024.