The South African National Treasury has updated the Carbon Offset Regulations under Section 19(c) of the Carbon Tax Act, 2019, on 14 March 2025.
The amendments raise the eligibility threshold for energy projects qualifying for carbon offset allowances. This move is part of the government’s efforts to address the energy crisis and boost investment in low-carbon energy projects.
To encourage independent power generation, the threshold for electricity generation licences has been increased to 100 megawatts (MW) of installed capacity.
Additionally, a 150% production tax incentive for renewable energy sources like solar, wind, and others was introduced in March 2023 for two years.
Under the Carbon Tax Act, companies can claim a carbon offset allowance of up to 10% of their total greenhouse gas emissions to reduce their carbon tax liability. Previously, renewable energy projects with up to 15 MW installed capacity were eligible.
Earlier, South Africa’s National Treasury unveiled three discussion papers for public consultation, on 13 November 2024, focusing on carbon tax, alcohol taxation, and the tax treatment of collective investment schemes.
