State of South African Carbon Market

South Africa, as a signatory to the UNFCCC, has implemented a Carbon Tax covering 90% of the nation’s greenhouse gas emissions, with rates increasing from R120/tCO2e in 2019 to R462/tCO2e by 2030. Entities can offset 5% or 10% of taxable emissions using Carbon Tax Offsets (CTOs) administered by the Carbon Offset Administration System (COAS). In 2023, CTO listings decreased by 29%, while stockpiles in COAS increased by 127%, possibly due to anticipated higher future CTO prices aligned with tax rate increases.

The decrease in listings may be attributed to the diminishing supply of pre-2019 CTOs compared to newer projects. Phase II-eligible CTOs dominate the stockpile, likely capitalizing on the substantial tax rate increase in 2026. Annual supply projections range from 17.9 to 22.3 million CTOs, with demand peaking at 28.45 million CTOs during Phase III (2030-2035). The projected supply-demand gap is 143.53 million CTOs, reflecting a decrease from the 2022 projection due to increased issuance volumes from nature-based solution projects.

Download PDF or view below.