South Africa's Energy Fiscal Policies
An inventory of subsidies, taxes, and policies impacting the energy transition
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.
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