(Bloomberg) -- South Africa’s National Treasury has proposed changes to the tax regime to encourage companies to utilize carbon offsets and reward those that implement emissions-mitigation measures.
The continent’s most-industrialized nation burns coal to generate more than 80% its electricity and ranks among the top 20 biggest emitters of greenhouse gases. Carbon taxes were introduced in 2019 to encourage the use of cleaner sources of energy and reduce the nation’s environmental footprint.
“To facilitate a just transition to a lower-carbon economy and ensure a credible, effective carbon tax” and encourage behavioral change, it is proposed that a tax-free allowance on emissions be reduced by 10 percentage points in 2026 and 2.5 percentage points annually from 2027 to 2030, the Treasury said in a discussion paper published Wednesday.
It proposed simultaneously raising a maximum carbon offset allowance for combustion emissions by as much as 25%.
“This will provide much needed flexibility to the hard-to-abate sectors and stimulate carbon-market activities in South Africa,” the Treasury said.
The public were given until Dec. 13 to comment on the proposals.
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