South Africa's National Treasury has published a consultation paper on developing the country’s carbon credit market, proposing reforms to clarify the legal nature of credits, upgrade registry infrastructure and align financial market and exchange control rules to support a higher-integrity secondary market. Key recommendations include providing legislative clarity that carbon credits are intangible, incorporeal assets with ownership and transferability, and recognising them as capable of forming part of recognised financial instruments to reduce regulatory capital disincentives for banks and intermediaries. The paper also proposes redesigning the Carbon Offset Administration System (COAS) to speed up processing, reduce manual intervention and strengthen security, while improving links across compliance and voluntary markets and considering a dedicated repository for tracking and approving Internationally Transferred Mitigation Outcomes under Article 6.2 of the Paris Agreement. Measures to build local capacity include developing South Africa-specific crediting standards and empowering the South African National Accreditation System to accredit domestic validation and verification bodies. On financial regulation, the paper envisages more active oversight by financial regulators, engagement with the Bank for International Settlements on risk weightings, and treating carbon credits as “unlisted securities” under the Financial Markets Act to enable over-the-counter trading, clearing and settlement through regulated infrastructure alongside optional exchange listing. It further calls for an exchange control framework to enable cross-border transfers and consistent treatment of carbon credits and related derivatives such as futures and options. Stakeholders are invited to provide feedback via an online questionnaire by 1 December 2025.

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