New Carbon Tax and Reporting Regulations

On 3 April 2017, the Minister of Environmental Affairs issued a notice under the National Environmental Management: Air Quality Act implementing the National Greenhouse Gas (GHG) Emission Reporting Regulations (GHG Reporting Regulations).
Share on facebook
Share on twitter
Share on linkedin
Share on email

The GHG Reporting Regulations, after being in draft format for two years, aim to introduce a single national reporting system for the transparent reporting of GHG emissions, which will be used predominantly to update and maintain a National Greenhouse Gas Inventory and will assist South Africa in meeting its international obligations in relation to climate change mitigation. SA is currently going through the necessary consultation processes to ratify the Paris Agreement, which the country signed in April 2016.

An integrated GHG reporting system

The rationale for an integrated GHG reporting system is based on the long-mooted implementation of carbon tax for identified sectors in South Africa. These sectors will be identified based on their GHG emission profiles. The GHG Reporting Regulations are one of the implementation tools which will be used to regulate the reporting of data and information of atmospheric emissions to the National Air Emission Inventory System (NAEIS) in anticipation to compiling atmospheric emission inventories to inform the proposed carbon tax.

The declaration of GHGs as priority air pollutants (which will require persons conducting an activity within a designated GHG emission threshold to prepare a pollution prevention plan in accordance with the proposed National Pollution Prevention Plans Regulations) when combined with the GHG Reporting Regulations, complete the regulatory regime for the mandatory reporting of air emissions to the NAEIS housed on the South African Air Quality Information System.  Clearly, the building blocks are lining up for a thorough carbon tax regime to follow.

How will the GHG Reporting Regulations work in practice?

The GHG Regulations differentiate between Category A data providers (which include persons controlling or conducting activities which emit GHGs) and Category B data providers (which include public bodies and academic/research institutions which hold GHG emission data for the purposes of calculating GHG emissions). These data providers are required to report on GHG emissions activities at their facilities in line with the identified categories of emissions sources set out in Annexure 1 to the GHG Reporting Regulations.

The reporting obligations imposed on Category A data providers are more stringent and comprehensive, as they are based on operational control and must cover all process, fugitive and combustion emissions from all GHG emission sources and source streams belonging to listed activities. The methods for reporting GHG emissions data are set out in the “Technical Guidelines for Monitoring, Reporting and Verification of Greenhouse Gas Emissions by Industry” for each tier specifying the relevant emission sources.

Category A data providers must submit the GHG emissions and activity data for all of their facilities and in accordance with the data and format requirements specified in Annexure 3 for each preceding calendar year, to the competent authority by 31 March annually. The competent authority has 60 days following a submission to approve a Category A data provider’s data or to request that such data be validated and verified. Category B data providers, on the other hand, must submit emissions and activity data collected only when requested to do so by the competent authority.

Important considerations

  • Reporting boundaries: Companies must define their reporting boundaries based on operational control, defined by the regulations as “the full authority to introduce and implement its operating policies at the company”.
  • Inclusion / exclusion of certain emissions: The regulations require companies to exclude emissions from mobile combustion (essentially emissions from vehicles) as well as emissions from purchased electricity and refrigerants. Emissions from waste and waste-water treatment are included (provided you exceed the threshold – see the point below on thresholds). If your current GHG emissions inventory is not set up to include or exclude these sources, you may well end up over or under-reporting your emissions.
  • Emission factors and methodology: The regulations refer to the “Intergovernmental Panel on Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventories (2006)” as the basis for calculating emissions. These guidelines have been translated for South African companies into a slightly easier format by the Technical Guidelines for Monitoring, Reporting, Verification and Validation of Greenhouse Gas Emissions by Industry (hereafter referred to as the Technical Guidelines). To understand the reporting requirements properly, the regulations and the Technical Guidelines must be read together.
  • Thresholds per source category: The regulations provide thresholds per emission source, above which companies are required to report. In the energy sector, this is typically 10MW for the energy sources and varies for other categories (e.g. five tonnes of waste per day for waste disposal sites and 4-million bricks per month in the brick manufacturing sector). For most companies, the most important part of this is that the 10MW refers to the design capacity and not how much fuel you consumed. In addition, it is not linked to one piece of equipment larger than 10MW. The regulations provide an example of six 2MW boilers, equating to 12MW, that would then exceed the threshold. Interestingly, this approach may require a company with a number of sites with backup generators to trigger the 10MW threshold, even if no diesel was consumed for that year in those generators.
  • Calendar year: Reporting needs to be done on a calendar year basis. For companies whose financial year does not end in December, this will require a good system to cater for this requirement.
Share on facebook
Share on twitter
Share on linkedin
Share on email

Search by tags



Enter your info below and we’ll contact you: