Report

South Africa's Energy Fiscal Policies

An inventory of subsidies, taxes, and policies impacting the energy transition

This report aims to assist the South African government by identifying whether or not its energy fiscal policies are aligned with its stated objectives for the energy sector. Fiscal policies denote broad government spending, including subsidies, taxes, and grants. As such, the report is a tool to support government and foster informed discussion among national stakeholders.

By Richard Bridle, Max Schmidt, Tara Laan, Anjali Viswamohanan, Anna Geddes, Chido Muzondo on January 28, 2022
  • Our subsidy inventory found ZAR 172 billion (USD 10.4 billion) of energy subsidies in total in FY 2020/21.

  • Current environmental taxation does not match the social costs associated with the combustion of fossil fuels. Societal costs associated with air pollution and GHG emissions from fossil fuels in South Africa are estimated to be a minimum of ZAR 550 billion (USD 33 billion) per year.

  • Government should review energy fiscal policies and align them with South Africa's Paris Agreement commitments and long-term economic interests.

Energy fiscal policies (of which fossil fuel subsidies are a subset) in South Africa are linked to promoting domestic energy production, increasing energy security, and providing access to affordable energy. This report aims to assist the South African government by identifying whether or not its energy fiscal policies are aligned with its stated objectives for the energy sector. Fiscal policies include broad government spending, including subsidies, taxes, and grants.

The report compares fossil fuel subsidies, tax and non-tax revenues, and externalities, revealing that social costs are five times higher than revenues and that billons are spent every year on propping up the fossil fuel industry.

Report details

Topic
Climate Change Mitigation
Energy
Just Transition
Subsidies
Region
South Africa
Project
IISD Global Subsidies Initiative
Focus area
Climate
Economies
Publisher
IISD
Copyright
IISD, 2022