Carbon offset mechanism can be aligned with carbon budgeting approach

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According to a report by carbon and climate change advisory firm, Promethium Carbon, the carbon offset mechanism, as part of the bigger carbon tax design, can easily be aligned with the carbon budgeting approach.

The report further found that most of the elements required for the practical implementation of a fully-aligned carbon budgeting system and mix of measures (including the carbon tax and carbon offset scheme) are already in place. This includes the country's technical infrastructure and the legislative framework on which the current set of climate change draft regulations are based.

Dependent on foundation

"The report highlights that there is potential for alignment between the proposed carbon offset trading scheme and the carbon budgeting approach," says Promethium Carbon director, Robbie Louw. "Most of the elements required for the practical implementation of a fully aligned carbon budgeting system and mix of measures (including the carbon tax and carbon offset scheme) are already in place, but the successful alignment of these systems is dependent on the foundation that is currently under development."

However, the report found that there are potential alignment problems and issues with respect to certain aspects of the structures that are currently under development. These issues relate mostly to the lack of common use of terminology and a disconnection between the current debate and the adopted standards for greenhouse gas accounting and reporting.

A key requirement to the development of a coherent climate change system in South Africa is a common understanding of the terminology used. This includes a unified understanding of the term carbon budget; understanding the differences between GHG accounting and reporting, and the boundaries encompassed by various standards.

Condition of alignment

The alignment is on condition that the carbon budgeting system, being developed by Department of Environmental Affairs, returns to the principles already embedded in South Africa's technical infrastructure, such as the adopted ISO standards and the NCCRP. "It is necessary that both the carbon tax design (including the design of the offset system) and the carbon budgeting system be aligned with the existing infrastructure. This will ensure full alignment of the whole system," the report says.

"Practical constraints in the developing South African regulatory system will in the short term dictate that there will be a distinction between the boundaries of the GHG inventory of an entity and that of the mandatory reporting requirements," he says.

This difference should be recognised and accommodated in the system. The confusion in the current debate with respect to the consolidation of corporate GHG accounts should be clarified with reference to the already adopted SANS/ISO standard.