South Africa

Country Context & Primary Activities for PMR Support

Policy context

South Africa seeks to reduce its reliance on fossil fuels and to reduce the carbon intensity of its growing economy. The country has a dual objective to make these reductions while ensuring economic growth, increased employment, and reduced poverty and inequality. South Africa pledges to reduce domestic emissions by 34% by 2020 and 42% by 2025 from business as usual, subject to the availability of adequate financial and technological support.

Pricing carbon through a tax

South Africa will introduce its first carbon tax in January 2015. The tax will be equal to R120/tCO2e (approximately US$13.6/tCO2e). A tax-free exemption threshold of 60% will be set, with additional allowances for emissions intensive and trade-exposed industries. An offset program will be included to allow these industries to invest in projects outside their normal operations to help reduce their carbon tax liabilities.

The PMR will support South Africa to...

• Assess the impact and refine the design features of a proposed carbon tax and complementary offset mechanism; and
• Design an MRV framework for GHG emissions at the facility level.

Sources: PMR Organizing Framework for Scoping of PMR activities, submitted by National Treasury, May 2012 and 2013 Budget Speech, Ministry of Finance, February 27,2013.