Draft regulations reveal big changes for SA's high-emission businesses

Robin van Wyk - Senior Associate and Head of Environmental Practice at LnP Beyond Legal

Both have been issued under the Climate Change Act 22 of 2024 (Climate Change Act) and are open for comment until 30 September 2025.

These Draft Regulations are the next big step in making the Climate Change Act a reality. They give the Department of Forestry, Fisheries and the Environment (DFFE) the power to set carbon budgets for major emitters and to require greenhouse gas (GHG) mitigation plans.

The goal is clear: to shift South Africa towards a low-carbon, climate-resilient economy while keeping our system aligned with global obligations under the UNFCCC and the Paris Agreement.

Below are the key points that businesses and other affected stakeholders need to understand.

Carbon budget allocation

The Draft Regulations introduce a formal carbon budget system:

• It applies to “data providers” who emit 30,000 tons or more of declared GHG emissions.
• The DFFE will assign a carbon budget to each qualifying data provider based on their actual emissions data.
• The allocation will follow a tiered methodology:

1. Product-based benchmarking
2. Mitigation potential analysis
3. Fixed-target approach

In simple terms, the system looks at your emissions profile, applies a mix of benchmarking and mitigation assessments, and then gives you a set “budget” you must not exceed.

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Mitigation plans

Every data provider that receives a carbon budget must prepare and submit a mitigation plan to the DFFE for approval.

This plan must spell out, in detail:

• the data provider’s production processes and activities;
• the GHGs generated by those processes; and
• the mitigation measures the business will adopt to stay within its carbon budget.

Mitigation measures may include:

• technology upgrades,
• energy efficiency improvements,
• switching to cleaner fuels, and
• integrating renewable energy.

Reporting and verification

Once a carbon budget and mitigation plan are in place, the following reporting obligations apply:

1. An annual progress report must be submitted to DFFE, showing compliance with both the budget and the mitigation plan.
2. Emissions data and mitigation results must undergo independent validation and verification.

These assurance requirements are critical: they are designed to ensure that all reported information is accurate, credible, and transparent.

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Consequences of non-compliance

Failure to comply with the Draft Regulations comes with real consequences:

• Non-compliance may lead to fines, imprisonment, or both.
• Companies that do not comply may also be hit with a higher carbon tax rate.

The message is clear: there is now a direct financial incentive to comply, and to invest early in emissions-reduction strategies.

What should businesses do now?

With the comment deadline fast approaching, affected businesses should act immediately:

1. Check exposure: Assess whether your operations exceed the 30,000 tCO₂-e threshold and fall within listed GHG activities.
2. Prepare data and baselines: Gather at least three years of historical emissions data. This will be critical for your carbon budget allocation.
3. Draft mitigation strategies: Identify cost-effective measures to reduce emissions and secure board-level approval for these strategies.

Conclusion

The Draft Regulations represent a major turning point for how South African companies measure, report, and reduce their greenhouse gas emissions.

They are not simply technical rules, they are the backbone of South Africa’s transition to a low-carbon future. All stakeholders, especially large emitters, should treat them with urgency.

Members of the public are invited to submit written comments on both the Draft Regulations and Draft Guidelines within 60 days of publication (by 30 September 2025).