Fiscal Policy and a Just Energy Transition

This research paper proposes a worker-centric climate response for South Africa, emphasizing state-led financing through a dedicated climate response fund to ensure an equitable transition to a green economy.

• South Africa is encouraged to adopt state-led financing to overcome market failures where private companies prioritize short-term gains and fail to account for externalities. This strategy involves creating a climate response fund supported by earmarked revenues from mineral royalties, fuel levies, and carbon taxes.
• The paper outlines specific fiscal mechanisms to fund the transition: issuing government climate bonds for renewable energy infrastructure, allocating 30% of the General Fuel Levy (which earned an estimated R93 billion in 2023/24) to the climate response fund, and earmarking all mineral and petroleum royalties, estimated at R15 billion annually, for the same fund.
• A progressive carbon tax aligned with Paris Agreement targets is recommended, with revenue split equally between green industrial policies and the climate response fund.
• Fiscal reforms could provide additional funding, such as capping retirement contributions to yield R20 billion annually for climate action. These resources, alongside other measures, could result in an estimated R100 billion annually allocated to climate priorities.
• The proposed climate response fund is intended to prioritize equity and adaptation, specifically supporting vulnerable workers in coal-dependent regions such as Mpumalanga and protecting poorer households from disproportionate impacts of the transition.

APA

iej_admin (2025). Fiscal Policy and a Just Energy Transition. Institute for Economic Justice. https://iej.org.za/resource/working-paper/fiscal-policy-and-a-just-energy-transition/

Chicago

iej_admin. Fiscal Policy and a Just Energy Transition. Institute for Economic Justice, 2025. https://iej.org.za/resource/working-paper/fiscal-policy-and-a-just-energy-transition/.

Wikipedia

{{cite report |last1=iej_admin |title=Fiscal Policy and a Just Energy Transition |publisher=Institute for Economic Justice |date=28 February 2025 |url=https://iej.org.za/resource/working-paper/fiscal-policy-and-a-just-energy-transition/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{iejadmin2025fiscal, author = {iej\_admin}, title = {{Fiscal Policy and a Just Energy Transition}}, institution = {Institute for Economic Justice}, year = {2025}, month = feb, url = {https://iej.org.za/resource/working-paper/fiscal-policy-and-a-just-energy-transition/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }