On November 13th, South Africa's National Treasury released a discussion paper detailing proposals for the second phase of its carbon tax regime, covering 2026 to 2035. The document invites public feedback and reflects the government’s commitment to meeting its Nationally Determined Contribution (NDC) targets under the Paris Agreement.

The proposed measures include revisions to the basic tax-free allowance, adjustments to carbon offset mechanisms, and updates to the electricity levy, renewable energy premiums, and energy efficiency tax incentives. These changes aim to align South Africa’s fiscal policies with its ambitious climate goals, which target a reduction of emissions to 398–510 million tonnes of CO2 equivalent (CO2e) by 2025 and further cuts to 350–420 million tonnes by 2030, ultimately reaching net-zero emissions by 2050.

National Treasury views carbon taxation as a cornerstone of South Africa’s climate policy framework, as outlined in the 2011 National Climate Change Response Policy and the 2012 National Development Plan. The government regards the tax as essential to promoting a low-carbon, climate-resilient economy while generating revenue for green initiatives.

Stakeholders are encouraged to submit comments via email to carbontax@treasury.gov.za by December 13th. Feedback will inform the refinement of the proposals, with further announcements expected in the 2025 Budget.

This consultation underscores South Africa's efforts to balance economic and environmental priorities as it transitions towards sustainable growth.

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