Development of a framework for carbon budgets in South Africa

With the implementation of the Climate Change Act, carbon budget reporting will become mandatory in South Africa, and a proposed higher tax liability of R640 per tCO2e will be imposed on emissions exceeding allocated carbon budgets. In addition to the financial impact of exceeding allocated carbon budgets, there is also a risk of legal action for non-compliance with national and international climate change objectives and targets. To ensure that companies are within their allocated carbon budget, a carbon budget framework is required. However, since South Africa’s carbon budget legislation is still relatively new, various uncertainties still need to be addressed to ensure carbon budgets are reported accurately and thus ensure compliance. Consequently, a critical assessment of available carbon budget mechanisms is required. In this study, a critical assessment of available carbon budget mechanisms was undertaken by evaluating existing national and international standards as well as existing methodologies associated with carbon budgets. A carbon budget framework was then constructed consisting of the following steps: 1) Determine the modelling approach based on the mandatory emissions and associated activity data, 2) report and track the emissions using available reporting regulations and guidelines, 3) determine the risk and consequences if the carbon budget is exceeded, 4) validate the framework ensuring all risks and uncertainties are addressed. Furthermore, a risk management assessment is proposed to identify activities that pose the biggest risk of exceeding the carbon budget. The sensitivity of carbon budgets concerning specific site parameters is also assessed using available strategic assessment methods and identified focus areas. A retrospective assessment is used to run potential scenarios on a facility model, thus allowing industries to develop assessments for future risk planning with a focus on specific sites. The developed carbon budget framework was then tested and validated using facilities in South Africa’s industrial sector as a case study. The carbon budget framework has also been reviewed and implemented successfully on a South African facility contributing approximately 18% of the country’s emissions. Ultimately, the carbon budget framework will assist facilities in reaching their carbon budget and thus reduce the risks associated with the higher tax liability for exceeding the budget. For eight South African facilities with a combined total of 271.2 MtCO2e emissions, a 1% exceedance of the carbon budget can result in an additional R1.7 billion rate in carbon tax liability. Furthermore, by achieving the allocated carbon budgets, facilities will ensure that national and international emission targets are met, which will reduce the risk of legal action due to non-compliance, reflect positively towards potential investors, and reduce the environmental impacts of climate change.

Grantor dc:publisher

Stellenbosch : Stellenbosch University

Year dc:date.issued

2026

Author dc:creator

• Viljoen, Simone

Advisors dc:contributor.advisor

• Gous, Andries Gustav Stephanus
• Schutte, Cornelius Stephanus Lodewyk
• Van Laar, Jean Herman

Language dc:language.iso

en

Repository record dc:identifier.uri

https://scholar.sun.ac.za/handle/10019.1/135618

OAI identifier oai:identifier

oai:scholar.sun.ac.za:10019.1/135618