In Lead Up To Carbon Price, South Africa Preps Carbon Offset Program


Cutting greenhouse gas emissions will not be easy for South Africa. It has a large and intensive coal mining industry that it uses to meet growing energy demand and it also consumes the second-most amount of petroleum in Africa behind Egypt. South Africa’s greenhouse gas emissions actually rose 25 percent between 2000 and 2010, with many of the emissions coming from coal-fired power stations and vehicle tailpipes. Energy-related emissions make up about 85 percent of the country’s overall emissions, with farming, forestry, and manufacturing accounting for most of the rest.

In an effort to curtail this rapid increase as part of the global effort to reduce GHGs and mitigate climate change, South Africa is planning to impose a carbon tax in 2016. Having been delayed a year to allow for more planning, the government recently said that emitters will be allowed to use carbon offsets to help meet the tax requirements. A form of trade, the offsets can be used to help spur investment in projects that reduce emissions at a lower cost than the carbon tax. It will also pave the way for other co-benefits that come along with the sustainable development in a country that is short on infrastructure and is still classified as a developing country by the IPCC.

Currently there are 111 carbon offset programs in South Africa as part of other international programs. The types of projects can include solar and wind energy, transportation like rail and buses, solar water heating, and carbon sequestration via reforestation or other land-based projects.

Last week the British High Commission announced it would expand funding for the pilot emissions trading program to help companies prepare. The grant was awarded for a second time go to Johannesburg-based Promethium Carbon. Promethium already carried out a study to determine if a carbon offset market could help ease industry costs in meeting the carbon price. Having found that a market could work, this second phase will focus on how to start trading and on launching a pilot market on the Johannesburg Stock Exchange in 2015.

The agriculture, forestry, and waste sectors will be excluded for the first five years of the program, but with the energy sector accounting for the bulk of the emissions, this will have minimal impact on the country’s GHG profile. Only South African-based credits will be eligible for use under the offsets scheme to encourage locally based projects and proposed projects must also have sustainable developmental benefits that contribute to developmental priorities, according to the South African National Treasury.

On top of venting large amounts of GHGs, South Africa’s coal-fired power plants are also responsible for other local environmental problems.

The South African Democratic Alliance, a political party, recently asked an energy company called Eskom to explain a report detailing the number of deaths attributable to coal-fired power stations. A report found that Eskom power stations are responsible for 17 non-accidental deaths per year and 661 respiratory hospital admissions.

“South Africa’s greenhouse gas emissions are on par with that of highly developed economies and our per capita emissions are among the highest in the world,” said DA spokeswoman on public enterprises Natasha Michael. “In addition, our current over-reliance on coal has led to a number of local environmental problems such as acid mine drainage and local air and water pollution.”

South Africa is aiming to achieve an emissions profile that peaks at 34 percent below business-as-usual in 2020 and then continues to taper after about a decade of stability. While renewable energy accounted for less than one percent of South Africa’s energy mix in 2012, it is expected to rise to 12 percent by 2020.

In a highly visible display of this effort, South Africa inaugurated one of Africa’s largest wind farms last week. The 138-megawatt Jeffrey’s Bay wind farm will be made up of sixty turbines and will provide enough power for more than 100,000 homes. The project is part of the government’s broader renewable energy program for independent power producers. It aims to add 3,725 megawatts of wind and solar to the energy mix.