This summary is based on the Draft South African Carbon Tax Regulations published by National Treasury on 30 November 2015.
A benchmark is defined as a ‘standard or point of reference against which things may be compared’. Hence benchmarking is checking your own performance against a set benchmark. It is widely accepted that climate change is caused by the emission of man-made Greenhouse Gases (GHGs) into the atmosphere. For this reason more and more companies, either voluntarily and/or obligatory monitor and report their Greenhouse Gas (GHG) emissions.
The proposed South African Carbon tax includes a component under which an taxable entity car reduce its taxable GHG volume if it can demonstrate its operations are less carbon intensive then is the case for the sector of sub-sector. This sector carbon intensity (also referred to as the Carbon Tax benchmark or Z-factor) is expressed in tCO2e/unit of product and requires approval of the minister of the department of Environmental affairs. At this moment in time the CBA on behalf its members is in the process of determining the process according to which the sector could determine the carbon intensity benchmark with government.