SANEDI is delighted to observe that the recent carbon tax phase 2 proposals announced in the budget are less severe than those published in the 2024 discussion paper by National Treasury. Phase 2 initially proposed a 10% reduction in the minimum allowance beginning in 2026, followed by a 2.5% annual reduction thereafter. This reduction would have had a significant impact on carbon taxpayers. Fortunately, the present proposal recommends that the minimum allowance be preserved until 2030.

The decision by the National Treasury to extend the section 12L Energy Efficiency Tax Incentive until 31 December 2030 is also welcomed by SANEDI. This extension will result in ongoing investment in energy efficiency measures. In addition, the proposed modifications to the carbon offset allowance and standards will generate additional opportunities for project development that are consistent with the Government’s objectives of reducing greenhouse gas emissions and enhancing the domestic supply of carbon offsets in the market.

In an endeavor to enhance the efficiency of the administration for the Section 12L Tax Incentive applications, SANEDI will double its efforts. The review of the implementation of the Tax Incentives from its inception in November 2013 demonstrates that the Tax Incentive has proved to be a successful tool for participating businesses to promote energy efficiency, improve energy productivity, and reduce emissions.