Prepare for South Africa's Proposed Carbon Budget and Regulations on Carbon Emission Planning for Contractors
South Africa has taken a significant step forward in its fight against climate change with the announcement of new draft regulations for climate change governance. The Draft Regulations, released by the Department of Forestry, Fisheries and the Environment (DFFE) on August 1, 2025, aim to institutionalize carbon budgeting and mitigation planning for emitters producing 30,000 tons or more of declared greenhouse gas emissions per year.
These regulations will have a profound impact on several sectors, particularly the construction industry, a significant driver of carbon emissions. The draft regulations will significantly reshape the construction value chain, affecting developers and contractors in energy and infrastructure projects. Cement manufacturing, steel and ferro-alloy production, coal mining, brick manufacturing, mining (both extractive activities and processing), and electricity generated from fossil fuels are identified as priority areas of focus in the drive to decarbonise embodied and operational carbon in the construction sector.
Developers and contractors should consider revising or updating procurement policies to ensure suppliers of high-emission embodied materials are compliant with carbon budgeting requirements. Organisations able to demonstrate compliance, implementation of robust procedures, and an international track record in carbon reduction measures will be advantageous in South Africa's drive to decarbonise the construction sector.
The draft regulations also bring up considerations such as alignment with the second draft of South Africa's nationally determined contribution (NDC), readiness of sectors to meet compliance obligations, planning for carbon capture use and storage technologies, increased use of renewable energy, meeting the EU Carbon Border Adjustment Mechanism carbon tariff, Carbon Tax implications, influence on lending and investment requirements, and the need for behavioural, systems-based change and collaborative contracting models.
The Draft Regulations are part of the Climate Change Act 22 of 2024 and are a response to the obligations of all individual States in addressing climate change, as outlined in an advisory opinion by the International Court of Justice. The organization that introduced these climate protection rules for heavy industry sectors in South Africa is the United Nations, specifically a group co-chaired by South African Ambassador Nozipho Joyce Mxakato-Diseko and the European Commission's Director-General for Energy Ditte Juul Jørgensen.
Failure to comply with the regulations can result in fines of up to R10million or 10 years in jail. Companies are required to submit GHG emissions data, determine emissions baselines, develop mitigation plans, submit annual progress reports, and maintain data integrity through third-party verification. Public comments on the Draft Regulations are due by 30 September 2025.
These new regulations are significant for heavy industries such as mining, steel, cement, and fossil fuel-based electricity generation. The construction industry, a major contributor to carbon emissions, will be affected by these regulations, marking a significant shift towards a more sustainable future for South Africa.
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