National Treasury on developing the South African carbon credit market

National Treasury has published the consultation paper: Developing the South African Carbon Credit Market. The paper proposes reforms to modernise carbon credit infrastructure, clarify legal and financial regulations, and stimulate investment in South Africa’s low-carbon economy. The recommendations aim to reduce administrative barriers and enhance the role of financial institutions and regulators in developing a resilient, high-integrity secondary carbon credit market.

Key recommendations:

1. Defining the legal nature of carbon credits

• Legislative clarity on the intangible status of carbon credits to support ownership and transferability
• Enable their recognition as financial instruments to ease regulatory capital requirements

2. Reforming the registry architecture

• Improve the Carbon Offset Administration System (COAS) by enhancing functionality, reducing delays, and increasing automation
• Enable tracking of Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6.2 of the Paris Agreement
• Ensure interoperability with international registries and crediting systems

3. Introducing appropriate standards and local capacity

• Develop local certification methodologies adapted to South African conditions
• Empower SANAS to accredit local validators and verifiers, reducing project development costs and delays

4. Adjusting financial market regulation

• Strengthen oversight by the Financial Sector Conduct Authority
• Engage with global financial bodies to adjust risk weightings and encourage bank participation
• Classify carbon credits as “unlisted securities” to enable both off-exchange and listed trading

5. Developing an exchange control framework

• Clarify cross-border trading of voluntary carbon credits
• Ensure harmonisation of exchange control rules for carbon-related derivatives

6. Ensuring market integrity and efficiency

• Align carbon market structures with established financial market principles, including fair access and robust settlement
• Promote participation from both local and global stakeholders

7. Linking to broader climate policy objectives

• Coordinate with the carbon tax policy and offset rules
• Support South Africa’s Nationally Determined Contribution (NDC) under the Paris Agreement

Stakeholder engagement:
Stakeholders are encouraged to submit feedback via the online questionnaire by 1 December 2025:
https://forms.office.com/r/dfUdeeu5Ee

Additional queries can be directed to:
E-mail: Financial.Policy@treasury.gov.za

Note to editors:
South Africa’s carbon tax, introduced in 2019, forms the backbone of a market-based approach to reduce greenhouse gas emissions. Carbon offsets play a critical role in helping companies lower emissions while contributing to sustainable development. The consultation paper supports this framework by addressing key challenges affecting the carbon credit market and outlining pathways to build a credible and investment-ready ecosystem.

Enquiries:
E-mail: media@treasury.gov.za

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