South Africa's fossil fuel subsidies tripled between 2018 and 2023, to hit R118 billion, up from R39bn five years earlier, according to the Blackouts and Backsliding: Energy Subsidies in South Africa 2023 report.
The report was released by the International Institute for Sustainable Development (IISD), an independent think tank working to accelerate solutions for a stable climate, sustainable resource management, and fair economies.
The increase was said to be largely driven by the global energy crisis, with consumer subsidies rising to reflect higher prices for oil, gas, and coal following Russia's invasion of Ukraine.
“The increases came as global fossil fuel subsidies hit a record high of$1.5 trillion (R28trl) in 2022, with governments around the world scrambling to respond to the energy crisis. The largest share of fossil fuel subsidies in South Africa in 2023 went to oil and gas consumption, carbon tax exemptions, and the electricity sector,” reads the report.
Anna Geddes, the co-author of the report and associate consultant at IISD, said soaring fossil fuel subsidies in South Africa meant the country was still locked into dependence on economically volatile fuels, with ill-targeted consumer subsidies failing to protect the poorest families.
“Carbon tax exemptions for big emitters like Eskom, as well as current plans to expand gas-generated power, are undermining South Africa’s commitments to shift away from fossil fuels. Government support should send a clear signal to investors and the market, and therefore be consistent with climate targets and social priorities, such as ending load shedding and ensuring access to energy for all,” Geddes said.
According to the Blackouts and Backsliding: Energy Subsidies in South Africa 2023 report, fossil fuels provided 91% of South Africa’s total energy supply in 2021, compared to 80% globally.
It said that coal dominated the electricity sector, accounting for 86% of all generation, while wind and solar made up just 6%. This was said to be despite the fact that the average cost of renewable energy installation bids in South Africa had decreased by more than 77% since 2011.
The IISD said that while fossil fuel subsidies had increased, the country's creaking electricity system was deteriorating rapidly, with load shedding reaching record levels last year.
South Africa experienced outages on 335 of 365 days of the year, taking a significant toll on the economy. Core issues include a lack of investment in new generation and in the grid by the government and Eskom, the heavily indebted state-owned utility, the report said.
According to the think tank, South Africa committed to phasing out inefficient fossil fuel subsidies as a member of the G20 in 2009 and, more recently, as part of the COP 28 agreement, to tripling the world’s installed renewable capacity to 11 000 GW by 2030 and to transitioning “away from fossil fuels in energy systems in a just, orderly and equitable manner…to achieve net zero by 2050.”
Despite these commitments, the IISD said the South African government’s latest draft Integrated Resource Plan 2023 outlined a future energy system increasingly dependent on gas, potentially at the expense of renewables.
Geddes said the worsening blackouts were taking a heavy social and economic toll on South Africa. “Expanding subsidies for economically volatile fossil fuels will ultimately increase the risks South Africans face and fail to address long-term energy security concerns. In a world increasingly united in bringing an end to fossil fuel dependency, South Africa must set its sights higher or risk being left in the dark,” she said.
As South Africa looks set for a continuation of an unprecedented level of power outages, many parts of the country are also facing looming threats of water shortages and a major input in electricity generation.
According to the latest data from the World Bank, South Africa emitted 6.7 metric tons of carbon per capita each year, compared to 4.3 as the global average. As some of the biggest emitters, private sector industries had a key role in going green and reduce the country’s overall carbon footprint, Rectron said.
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