Energy and chemical company Sasol has entered into an Emissions Reduction Purchase agreement with Wonderbag, a local company involved in the production and issuance of carbon credits.

This follows a deal in May where Wonderbag was named as a partner to help offset Nando’s UK emissions to become carbon neutral later this year.

Wonderbag’s chief financial officer Rob McIntosh on Friday said the agreement with Sasol was for a substantial number of carbon credits to be delivered by Wonderbag.

“We are excited to be partnering with Sasol in their efforts to reduce their greenhouse gas emissions and contribute to sustainable development in South Africa. At Wonderbag, we are very proud to have successfully developed a unique carbon mitigation model that helps to counteract the release of CO2 whilst simultaneously improving the livelihood of people across the country,” said McIntosh.

Shamini Harrington, Sasol vice-president for climate change and Presidential Climate Change Commissioner for South Africa, said the firm was committed to reducing its operational greenhouse gas emissions profile through various mitigation activities, including carbon offsets, which were recognised under article 6 of the Paris Agreement as a critical tool to reach climate ambitions.

“Our strategic choices and updated Future Sasol strategy informs our path to ensuring Sasol remains sustainable in the long-term and in a carbon-constrained future,” she said.

As the deadline looms for the payment of the 2020 carbon tax, South Africa’s large greenhouse gas emitters like Sasol and others have been actively engaging with companies that could provide them with verified carbon credits, which could be used to offset 5–10 percent of their taxable emissions. These carbon credits, together with their own sustainable carbon emission mitigation projects, could significantly reduce their tax liabilities.

Under the Carbon Tax Act, entities exceeding the threshold of 10 MW installed thermal input capacity threshold for combustion activities that result in emissions could use domestic carbon offsets to reduce their carbon tax liabilities. South Africa is the 14th largest greenhouse gas (GHG) emitter in the world, and the carbon tax was introduced as a “new” tax effective from July 2019, aimed at reducing GHG emissions in a sustainable, cost-effective and affordable manner.

Treasury has set a 10 MW installed thermal input capacity threshold for combustion activities that resulted in emissions. This meant that regardless of utilisation or fuel type, if a taxpayer had the capacity to combust 10 MW(th) then their emissions would be subject to carbon tax.

Carbon offsets are one of the four allowances that make provision for an allowance for those that invest in emission-reducing projects. Projects that reduce emissions in South Africa, but were not directly subject to the carbon tax, may be able to register the emissions reductions as carbon offsets. These can then be purchased by carbon taxpayers and retired to reduce the amount of emissions they were liable to pay tax on.

Wonderbag Founder and chief executive Sarah Collins said Wonderbag was about more than just carbon credits, as it was ‘Carbon that Counts’ – an investment in people enabling resilient communities to emerge.

“This transaction with Sasol marks the start of a very important step in acknowledging and meeting the huge demand for special carbon offset projects that not only help heal our planet, but that also give back to the communities that are most affected by climate change,” said Collins.

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