The National Treasury has published the consultation paper titled Developing the South African Carbon Credit Market, outlining proposed 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,” National Treasury said in statement.
Among the key recommendations include:
• 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.
• 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; and ensure interoperability with international registries and crediting systems.
• Introducing appropriate standards and local capacity: Develop local certification methodologies adapted to South African conditions; and empower SANAS to accredit local validators and verifiers, reducing project development costs and delays.
• 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; and classify carbon credits as “unlisted securities” to enable both off-exchange and listed trading.
• Developing an exchange control framework: Clarify cross-border trading of voluntary carbon credits; and ensure harmonisation of exchange control rules for carbon-related derivatives.
• Ensuring market integrity and efficiency: Align carbon market structures with established financial market principles, including fair access and robust settlement; and promote participation from both local and global stakeholders.
• Linking to broader climate policy objectives: Coordinate with the carbon tax policy and offset rules; and support South Africa’s Nationally Determined Contribution (NDC) under the Paris Agreement.
The National Treasury has invited stakeholders to submit feedback via an online questionnaire by 1 December 2025, at https://forms.office.com/r/dfUdeeu5Ee.
Additional queries can be directed to Financial.Policy@treasury.gov.za - SAnews.gov.za
