SA’s Carbon Market Position at COP26

The South African delegation to COP26 has received invaluable support in the form of carbon market intelligence and expertise provided by the newly established Southern African Carbon Market Association (SACMA) – of which Ecometrix Africa is a proud founding member – to prevent a significant future slump in the local carbon tax offset (CTO) market.

The South African COP26 delegation – comprising the Department of Forestry, Fisheries and the Environment and the Department of Mineral Resources and Energy – will participate in crucial decisions during the next two weeks in Glasgow, UK. The success of COP26 hinges to a great extent on the conclusion of carbon market negotiations centred around Article 6 of the Paris Agreement.

Providing local market insights and global expertise in this regard, SACMA has proposed that the South African position during the Article 6 negotiations include the continuation of the Clean Development Mechanism (CDM) until such time that it is replaced by a system that can substitute in practical terms the supply of CTOs from the CDM.

Locally, carbon credits initiated from the CDM are responsible for approximately 65% of the CTOs listed on the Carbon Offset Administration System (COAS) in 2019 and 2020. Without these projects generating carbon credits and with no local substitute to replace the old CDM credits, the future supply of CTOs will be severely affected, leaving a significant gap in the local carbon market.

Although the Verified Carbon Standard (VCS) is gaining traction, it cannot meet the overall local CTO demand to fill the gap.

“It is therefore incumbent on the South African government to lobby at COP26 to extend the CDM until a new market mechanism is fully operational,” says Henk Sa, partner at EcoMetrix Africa and chairperson of SACMA. “It is SACMA’s aim to grow the market for CTOs under the South African Carbon Tax, as part of its main objective to promote a carbon market in South Africa and beyond. The addition of an independent local carbon standard, as well as extending the scope of eligible projects to Southern Africa, will certainly also benefit the development of the local CTO market.”

For more information please email henk.sa@ecometrix.co.za.

Image Credit: LWF/Albin Hillert via Flickr