Carbon offsetting is a way for businesses to compensate for the emissions they emit, by funding verified projects that reduce, remove or avoid an equivalent amount of carbon dioxide elsewhere. It should follow measuring and reducing your own direct emissions.
These three terms get used interchangeably, but they are not the same thing. A carbon credit represents one tonne of CO₂e reduced, removed or avoided from the atmosphere, and is the instrument used for carbon offsetting, typically addressing Scope 1 emissions. A carbon offset is the act of using that credit to compensate for your own footprint. A renewable energy certificate (REC), by contrast, is a verified, tradable certificate representing one megawatt-hour of electricity generated from a renewable source, such as solar or wind. RECs address Scope 2 emissions from purchased electricity, not Scope 1. Both instruments support decarbonisation, but only carbon credits can be used for offsetting your Scope 1 emissions.
Because the voluntary carbon market has no single regulator, using established standards and registries is a business's best defence against greenwashing, misleading or overstated sustainability claims. Registries track projects so that every credit carries a unique serial number and is officially retired once used, so it cannot be double-counted or resold. Credible programmes also align to international frameworks such as the GHG Protocol and ISO 14064, the standards used to quantify and verify emissions consistently. Recognised registries include:
Note that these registries are not interchangeable for compliance purposes. For carbon tax, SARS recognises only three standards (the CDM, Verra's Verified Carbon Standard and Gold Standard), so credits from other registries can support voluntary claims but cannot reduce your carbon tax liability.
Beyond the choice of registry, evaluate individual projects against four quality principles:
South Africa's Carbon Tax Act, administered by SARS, has applied the polluter-pays principle since 1 June 2019, compelling large emitters to factor the cost of carbon into their decisions. Phase 2 of the tax began on 1 January 2026, and with it the headline rate rose from R236 to R308 per tonne of CO₂e, a 31% increase and the steepest since the tax was introduced, compelling enterprises to fundamentally embed carbon mitigation into their long-term operational strategies.
Net zero commitments are when organisations pledge to remove as many greenhouse gases as they emit. However, it takes more than a public pledge. It requires audit-ready data behind every claim. Because entities face increasing regulatory scrutiny and environmental audits, keeping transparent, accurate and fully documented emission records is essential. This is why organisations increasingly lean on standardised Environmental, Social and Governance (ESG) and integrated reporting frameworks to structure their disclosures.
The EU's Carbon Border Adjustment Mechanism (CBAM) adds another layer of pressure for carbon offsetting as it is designed to ensure that goods imported into the European Union face a carbon cost similar to that borne by EU producers, reducing the risk of carbon leakage, where production simply relocates to countries with laxer rules. While the EU importer carries the legal compliance obligation, South African exporters feel the commercial pressure directly. Importers need accurate, verified emissions data from their suppliers to calculate their CBAM costs, so suppliers with high emissions or poor-quality emissions data risk higher costs and reduced competitiveness with EU buyers.
Scope 1: direct emissions from sources your organisation owns or controls, such as fuel burned in boilers, furnaces or company vehicles.
Scope 2: indirect emissions from the electricity, steam, heat or cooling your organisation purchases.
Scope 3: all other indirect emissions across your value chain, from upstream suppliers through to downstream customer use.
Before you know how many carbon credits you need, or what to prioritise for reduction, you first need to understand your current footprint. A Greenhouse Gas (GHG) assessment builds a clear picture of your organisation's emissions by tracking activity data such as energy use, business travel, fuel consumption and logistics, then converting it into tonnes of CO₂ equivalent (tCO₂e). Once you have your baseline, you can prioritise your biggest sources of emissions, set realistic reduction targets, and determine how many credits you need for what remains. From there, you choose a verified carbon project aligned with your goals and then buy, sell, hold or retire your credits to cover your residual footprint.
Carbon credit prices in South Africa are not fixed. They vary by project type, registry, vintage, and the co-benefits a project delivers, so there is no single number that applies to every purchase. What is fixed is the carbon tax rate against which offsets are measured: R308 per tonne of CO₂e from 1 January 2026. Credits used for compliance have tended to trade at a discount to the tax rate itself, since that discount is part of what makes buying a credit more attractive than simply paying the tax.
There is no single, centralised public exchange for carbon credits in South Africa, so buyers have traditionally sourced them through bilateral agreements, brokers or intermediaries. When selecting a broker or intermediary, it's important to check the fundamentals before you buy credits from them. Confirm that the credit is issued by a recognised registry, such as Verra or Gold Standard, ask for the credit's unique serial number and confirm it can be tracked on the registry through retirement. Review the project's methodology and vintage to verify that the reduction is real and current. Finally, insist on a retirement certificate once your credits are used. It is your audit trail, and the document you will need if a claim is ever challenged.
Through the Fuel Switch platform, we manage the full lifecycle of a carbon credit: registering a project, issuing the credits, and then trading, transferring and retiring them. We create a serialised, auditable trail from generation to final retirement, built specifically to prevent greenwashing and double counting, backed by transparent documentation to support the claims you make.
Start your offsetting journey now with Fuel Switch.
Carbon offsetting means compensating for emissions you emit by funding verified projects, such as renewable energy or reforestation, that reduce, remove or avoid an equivalent amount of carbon elsewhere. In South Africa, credible voluntary offsetting uses carbon credits from recognised registries and standards such as Verra, Gold Standard, the Clean Development Mechanism (CDM) or Credible Carbon. For carbon tax purposes the list is narrower: only three standards are recognised by SARS (the CDM, Verra's Verified Carbon Standard and Gold Standard), so credits from other registries can support voluntary claims but cannot reduce your carbon tax liability.
Start with a GHG assessment to establish your baseline emissions in tonnes of CO₂e. Use that data to prioritise reductions where possible, then choose a verified carbon project that matches your goals and purchase enough credits to cover your remaining footprint. Retire the credits and keep the retirement certificate as evidence for your sustainability reporting.
A carbon credit is the instrument: a verified certificate representing one tonne of CO₂e reduced, removed or avoided. A carbon offset is the action of using that credit to compensate for emissions you cannot yet eliminate.
Yes, within limits. From 1 January 2026, businesses can use approved carbon credits to offset up to 10% of their carbon tax liability for fugitive and process emissions, and up to 15% for combustion emissions. Only credits from SARS-approved registries and methodologies qualify, so verification and documentation matter as much as the purchase itself.
Smaller businesses are rarely direct carbon taxpayers, but many face pressure from customers, funders or supply chain partners to show climate action. The same principles apply at a smaller scale: measure what you can, reduce where practical, and offset a modest, verifiable footprint through a credible registry, rather than making broad claims you cannot back with data.