GHG Reporting and Carbon Tax: A 2020 Review

In 2020, for the first time in history, local greenhouse gas (GHG) emitters had to pay their dues under the new carbon tax that came into effect on 1 June 2019.

The submission process was not without problems, including the COVID-related postponement of the June 2020 carbon tax deadline to October 2020, and an internal delay that postponed the launch of the Carbon Offset Administration System (COAS), which enables the reduction of tax liability by purchasing eligible carbon tax offsets (CTOs).

Nevertheless, there was a substantial uptake among first time carbon taxpayers acquiring CTOs on the open market to reduce their carbon tax liability. This revealed a massive gap between local CTO demand (an estimated 7 to 10 million CTOs per year) and supply (just over 3 million CTOs in the first year), creating great opportunities for developing the local CTO market.

Globally, the supply of CTOs could also be disrupted, following the postponement of the COP26 UN negotiations regarding the continuation of Clean Development Mechanism (CDM) projects which has caused uncertainty among emissions reduction project developers and investors.

This year promises tighter assurance requirements for consumption and emissions data, following the publication of the Technical Guidelines for Validation and Verification of Greenhouse Gas Emissions, which includes a “monitoring plan” to be submitted with GHG Reports on 31 March 2021. As this may become mandatory in phase 2 of the verification programme, entities liable for carbon tax are well-advised to investigate solutions such as EcoMetrix’ carbon monitoring portal EPCAM to assist in verifying data completeness and accuracy. This will assist in being ‘audit-ready’ when SARS determines that an independent verification is required.

Key Dates in 2021

• Wednesday 31 March 2021 : DEFF Reporting Deadline: Submission of GHG Emissions

• Thursday 01 July 2021 – Submissions for Carbon Tax opens

• Thursday 29 July 2021 – SARS Carbon Tax payment due for the 2020 calendar year

• Monday 01 – Friday 12 November 2021 – COP26 – UN Climate Change Conference