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Carbon emissions reporting

A guide to carbon emission reporting and tax in South Africa

This is a guest blog, written by Jeremy Gist and Silvana Claasen from Herbert & Liebisch Incorporated Registered Auditors

Background to Carbon Emission Reporting

The Paris Agreement was adopted by consensus on 12 December 2015 by 196 countries among which South Africa. The ultimate objective of this international treaty is to coordinate worldwide efforts aimed at keeping a global temperature rise well below 2°C above pre-industrial levels. South Africa ratified the Agreement in November 2016. As a consequence, South Africa is now bound to reduce its national greenhouse gas emissions. South Africa’s target is outlined in its Nationally Determined Contribution and consists of a trajectory range where emissions will range between 398 and 614 MtCO2e between 2025 and 2030, after which emissions will continue to decline. To place this into perspective: in 2016, South Africa’s national greenhouse gas emissions amounted 468 MtCO2e, ranking the country number 13 of the world’s largest greenhouse gas emitters[1].

In achieving this commitment, South Africa has started to develop a legal framework with the purpose to aid South Africa’s transition towards a low carbon economy. The foundation of this legal framework is established by the Department of Environmental Affairs’ (DEA) promulgation of a first set of regulations namely The National Greenhouse Gas Emission Reporting Regulations (Reporting Regulations).

The objectives of these Carbon Emission Reporting Regulations are to:

  • Establish a system for South Africa to capture information on its national carbon footprint;
  • So that South Africa can report on its progress in terms of achieving its national greenhouse gas emissions reductions target; and
  • Inform further formulation and implementation of climate change related legislation and policy.

In short, the Reporting Regulations require companies to have calculated their carbon emissions for the calendar year 2017 and report them in a pre-determined format to the DEA by 31 March 2018.

The South African Technical Guidelines

The Intergovernmental Panel on Climate Change (IPCC) has developed guidelines for establishing National Greenhouse Gas Inventories. The purpose of these guidelines is to ensure that countries calculate their national greenhouse gas emissions in a consistent manner. The Department of Environmental Affairs has developed “Technical Guidelines for Monitoring Reporting and Verification of Emissions by Industry” (Technical Guidelines) which are to be read with the Reporting Regulations. These guidelines contain the methodologies for South African businesses to follow when calculating their carbon footprints. These Technical Guidelines are to ensure that information on South Africa’s carbon emissions is aligned to calculation methods developed by the IPCC. Moreover, the South African Technical Guidelines are a tool to support the National Greenhouse Gas Emission Reporting Regulations.

The remainder of this paper is touching on eight key concepts that companies need to look at for determining whether the Carbon Emision Reporting Regulations are applicable and provides some explanation of specific terminology contained within the Technical Guidelines for the calculation of carbon emissions at company level.

The key concepts contained in the technical guidelines:

1. Determine what gases are to be reported.

There are six gases that need to be reported.  This include Carbon dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs) and Sulphur Hexafluoride (SFs). Often greenhouse gas emissions are expressed in carbon dioxide equivalents (CO2e) which is a common unit for describing the different greenhouse gases. For any quantity and type of greenhouse gas, CO2e represents the amount of CO2 which would have the equivalent global warming impact. Each of the six identified greenhouse gases has their specific global warming potential (GWP) which is the conversion factor to be applied to achieve the CO2e for a given amount of a specific type of greenhouse gas. For example, the GWP of carbon dioxide is 1 and the GWP of methane is 23[2]. GWPs are adjusted regularly in order to reflect the latest findings established through ongoing climate change research. However, the Technical Guidelines prescribe that the GWP values provided by the IPCC 3rd Assessment Report (IPCC 2001) are to be applied for the purpose of the Reporting Regulations.

2. Determine which activities trigger the requirement to report emissions

The Reporting Regulations distinguish two types of so-called data-providers:

persons in control of or conducting an activity that is listed in Annexure 1 of the Reporting Regulations – referred to as “Category A Data Providers”; and

an organ of state, research institution or academic institution which holds greenhouse gas emission data relevant for calculating South Africa’s national carbon footprint – referred to as “Category B Data Providers”.

Annexure 1 to the Reporting Regulations is important because activities triggering the Reporting Regulations are listed here. This annexure classifies activities into the following categories: Energy – such as fuel combustion activities and fugitive emissions from fuels; Industrial Process and Product Use (IPPU) – such as the Mineral Industry and the Chemical Industry; Agriculture, Forestry and Other Land Use – such as certain land use activities; Waste – such as a solid waste disposal; and Other. Because this list of activities is adopted from the IPCC guidelines, each activity has been allocated a specific IPCC code.

3. Assess the installed capacity of the company that performs an activity listed in Annexure 1 of the Reporting Regulations.

Even if identified as a data provider as per the consideration above, a company only has to register and report if their installed capacity exceeds the capacity threshold which is provided per listed activity. Annexure 1 to the Carbon Emission Reporting Regulations contains a column which specifies the threshold capacity per listed activity.

4. Register of your facilities to the NAEIS.

Once you have determined that:

  • you are in control of or conducting an activity listed in Annexure 1 to the Reporting Regulations; and
  • your installed capacity exceeds the specified capacity threshold;
  • you will need to register on the National Atmospheric Emissions Inventory System (NAEIS[3]).  Registration involves submission of name, facilities and the relevant IPCC code, the methodology used in the computation of the emissions, and the source of the emissions.  The system will produce the data provider number which is a unique identification for each emitter within the NAEIS.

5. Determine the Data Providers reporting boundaries.

A Category A Data Provider is required to define its reporting boundaries based on operational control.  This boundary must include all emissions for normal and abnormal operating conditions.

6. Determine the applicable method for calculating greenhouse gas emissions.

Different from calculation-methodologies provided by the GHG Protocol – the IPCC guidelines on emissions accounting uses a tiered-approach where each tier describes a different method for calculating emissions from listed activities. The higher the tier (1, 2 or 3) the more detailed the methodology to be applied. Tier 1 is based on readily available data such as globally applied default emission factors etc. Where tier 1 uses internationally approved emission factors, tier 2 calculation-methodologies require the use of country-specific factors. Tier 3 (any methodology more detailed than tier 2) may include process models and measurements as specified in the 2006 IPCC guidelines.

7. Select an appropriate emission factor for your activities

An emission factor translates processes – e.g. consumption of fuels through combustion processes or the release of carbon dioxide during the production of lime, etc. – in units of carbon dioxide equivalent emitted per unit of e.g. fuel consumed or material produced. An emission factor is often expressed as kgCO2e per unit (e.g. tonne of diesel, kWh or travelled, etc.). When applying a Tier 1 methodology for calculating greenhouse gas emissions, a default emission factor can be applied. One must, however, take into account that the default factors are conservative and as a result will contribute to some overestimation of your emissions. Tier 2 approaches allow the use of nationally specified emission factors hence taking into account country-specific circumstances and as such the estimation of the carbon footprint is improved. In an attempt to avoid overestimation, companies can decide to apply a tier 3 methodology for calculating their footprint. However, this may be a costly process as it would typically involve extensive modelling and measurements requiring expensive equipment, etc. But with the carbon tax looming and considering that such tax payable is determined by the number of emissions, some cases would justify investing in measures allowing for a tier 3 calculation methodology. Data providers are invited to develop and/or modify approved emission factors as per the procedure outlined in the Reporting Regulations. The Competent Authority has 60 days in which to approve or reject a request for the revision of an emission factor.

8. Determine how the data submitted will be verified and validated

The Reporting Regulations require that the Competent Authority[4] must assess the data submitted by a data-provider within 60 days upon actual submission. Without a response from the Competent Authority during this period, the submission has been approved.  If the Competent Authority has reason to question the transparency, completeness and/or correctness of the data submitted, it can request that the data be verified and validated by the Data Provider, at their own cost. The validated and verified data needs to be re-submitted within 60 days.

These eight considerations introduce key concepts to help companies assess whether the Reporting Regulations impact their operations and to clarify some technical aspects for the calculation of carbon emissions in situations where the Reporting Regulations apply.


The Reporting Regulations as elaborated on in this paper are only the foundation of a mix of measures that is foreseen to be implemented in the very near future since time is running out for South Africa to be on track with its internationally bound commitments to reduce national greenhouse gas emissions. As businesses are major contributors to the emissions, these measures will have a direct impact on companies’ bottom-line. Understanding your own carbon footprint does not only help you to comply with the regulations, it will also enable you to manage the impacts on your bottom-line and turn challenges that come with South Africa’s transition to a low carbon economy into opportunities. In other words: can you afford not to define your carbon footprint? We recommend that you invest the necessary time to ensure that you are able to understand your exposure to carbon risks and determine the best response for your business.




[2] For the purpose of the Reporting Regulations

[3] The NAEIS is an online national reporting platform for capturing greenhouse gas emissions inventories and activity data for the purpose of reporting as is required by the National Environmental Management Air Quality Act of 2004.

[4] The National Inventory Unit within the Department of Environmental Affairs