Pretoria: The National Treasury has published a consultation paper titled “Developing the South African Carbon Credit Market,” which outlines proposed reforms to modernize carbon credit infrastructure, clarify legal and financial regulations, and stimulate investment in South Africa’s low-carbon economy.
According to South African Government News Agency, 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. The National Treasury, in a statement, highlighted key recommendations, including defining the legal nature of carbon credits. Legislative clarity on the intangible status of carbon credits is proposed to support ownership and transferability, enabling their recognition as financial instruments to ease regulatory capital requirements.
Another significant proposal involves reforming the registry architecture by improving the Carbon Offset Administration System (COAS). This improvement would enhance functionality, reduce delays, and increase automation. Moreover, it aims to enable the tracking of Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6.2 of the Paris Agreement and ensure interoperability with international registries and crediting systems.
The consultation paper also recommends introducing appropriate standards and local capacity. This involves developing local certification methodologies adapted to South African conditions and empowering SANAS to accredit local validators and verifiers. This move is expected to reduce project development costs and delays.
Further adjustments to financial market regulation are suggested, such as strengthening oversight by the Financial Sector Conduct Authority and engaging with global financial bodies to adjust risk weightings. Classifying carbon credits as ‘unlisted securities’ is proposed to enable both off-exchange and listed trading.
Developing an exchange control framework is another critical recommendation. This would clarify cross-border trading of voluntary carbon credits and ensure harmonization of exchange control rules for carbon-related derivatives. Ensuring market integrity and efficiency by aligning carbon market structures with established financial market principles is also proposed to promote participation from both local and global stakeholders.
Lastly, the paper emphasizes linking these efforts to broader climate policy objectives. It suggests coordinating with carbon tax policy and offset rules to support South Africa’s Nationally Determined Contribution (NDC) under the Paris Agreement. Stakeholders are invited to submit feedback via an online questionnaire by 1 December 2025, at https://forms.office.com/r/dfUdeeu5Ee.