SA in the red on carbon-offset credits

'The issuance of certified emission reduction credits under the clean development mechanism is very scarce in general in Africa.' (Reuters)

'The issuance of certified emission reduction credits under the clean development mechanism is very scarce in general in Africa.' (Reuters)

By paying R186 more for a return flight between Johannesburg and Cape Town or R518 more for a return trip to London, passengers can offset the environmental damage caused by their trip.

But the money will be going to a project in Uganda, because the local carbon-trading market is too small and undeveloped.

The SAA programme is being run through the International Air Transport Association (Iata).

Michael Schneider, assistant director of Iata’s carbon-offset business development team, said the team had tried its best to find local programmes that could supply sufficient numbers and quality of carbon credits.

“Unfortunately, the issuance of certified emission reduction credits under the clean development mechanism is very scarce in general in Africa,” he said.

The global mechanism tries to facilitate carbon trading and certified emission reductions are one of the many kinds of carbon credits that are traded. But they are the chosen currency of the European Union, which has created a giant market for them.

Carbon-trading system
South Africa is struggling to provide these reductions. “It was virtually impossible to find a suitable number of suitable credits in South Africa. However, negotiations are under way to try find a local project. We are doing our utmost to find a project based in South Africa,” Schneider said.

Crispian Olver, chief executive of Linkd Environmental Services, said: “There isn’t really a local carbon-trading system because no one in South Africa is currently buying carbon credits.”

The projects that had gone ahead had to generated credits, which largely went to EU companies that were offsetting their emissions, he said.

By being slow on the uptake, South Africa had missed a big chance, Olver said. “The window of opportunity for us to exploit this market has largely shut because the EU has decided to buy carbon credits only from least-developed countries.”

This might only change if the treasury introduced a carbon tax that included a provision for offsets, Olver said, which would create a market for local trading.

In an analysis of the global carbon market, Ross Garnaut, a professor of economics at the Australian National University, said the EU’s decision was problematic for countries such as South Africa. “Developing countries, except the least developed, will be practically, if not formally, disengaged from trade in carbon offsets,” he said.

Harmke Immink, a director and carbon adviser of Promethium Carbon, said the problem for the South African market was supply and demand. “In one week you will have somebody with an innovative project trying to sell credits without a buyer. Then the next week a big company will be trying to go carbon neutral and won’t find any credits, so they buy from overseas,” she said.

This is because there is no proper local market, she said. “We need the introduction of a carbon tax, then we can put a formal market into place. This will create a constant demand, which means there will be money for the supply side of things.”

She said a carbon tax would give companies the impetus to start investing in local carbon-offset initiatives because it would lower their exposure to the new tax. That should create a formal market, which would have credits that could also be traded on overseas markets.

The treasury said at the start of this year that it was planning to implement a carbon tax by next year.

Sipho Kings

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