The Energy Tab

South Africa's energy subsidies reached at least ZAR 198 billion (USD 10.8 billion) in FY 2025, with 55% consisting of direct fossil fuel subsidies. The report highlights that electricity subsidies, largely driven by bailouts for the state-owned utility Eskom, support a coal-dominated system where 83% of generation came from fossil fuels in 2024. Key inefficiencies identified include a carbon tax with an effective rate as low as ZAR 7/tCO2 in FY 2022 due to high exemptions, and a Free Basic Electricity (FBE) policy where an estimated 80% of funding is not reaching eligible households. The author recommends a stakeholder-led action plan to align subsidies with just transition frameworks, revise the carbon tax to reflect the social cost of carbon, and shift blanket liquid fuel subsidies toward targeted transport support for low-income households.

• Energy subsidies in South Africa totaled at least ZAR 198 billion (USD 10.8 billion) in FY 2025, with direct fossil fuel subsidies accounting for 55% of this amount.
• Direct fossil fuel consumption subsidies tripled between FY 2018 and FY 2025, rising from ZAR 37 billion (USD 2.9 billion) to an estimated ZAR 110 billion (USD 6 billion). This increase was driven by carbon tax exemptions (ZAR 57 billion in FY 2025), tax exemptions and refunds for petrol, diesel, and paraffin (ZAR 41 billion in FY 2025), and a General Fuel Levy freeze (ZAR 4 billion in FY 2025).
• Electricity subsidies increased more than fourfold from FY 2018 to FY 2025, reaching ZAR 87 billion (USD 4.8 billion). These subsidies primarily support a carbon-intensive system where 83% of generation was fossil-fuel based in 2024, making South Africa the 12th most carbon intensive electricity generator globally. Since FY 2020, over 70% of nominal electricity subsidies have been used for Eskom debt relief rather than affordability or supply.
• The Free Basic Electricity (FBE) policy is plagued by implementation failures; in 2025, Eskom reported that 8 million of 10 million eligible households were not receiving their allowance. This suggests that only 20% of the ZAR 18.3 billion allocated in FY 2025 is used for its intended purpose, with approximately ZAR 14.6 billion being used elsewhere by municipalities.
• The carbon tax is considered ineffective due to high exemptions and a low rate. In FY 2025, the headline rate of ZAR 236/tCO2e was only a fraction of international social cost of carbon estimates (e.g., USD 283/tCO2). The IMF estimated the average effective rate in FY 2022 was only ZAR 7 (USD 0.47)/tCO2, which is insufficient to drive behavioral change.
• Liquid fuel subsidies are untargeted and heavily favor fossil fuels over electric vehicles. For example, a proposed electric vehicle tax incentive for FY 2027 is predicted to reduce revenue by ZAR 500 million, which is only 2% of the VAT zero-rating for petrol sales reported in FY 2023.
• Data on renewable energy subsidies is largely unavailable to the public, as National Treasury and the South African Revenue Service (SARS) have not published the value of claims for key incentives such as Section 12B.

APA

Bridle,, R. H. (n.d.). The Energy Tab. International Institute for Sustainable Development. https://www.iisd.org/publications/digital-story/the-energy-tab

Chicago

Bridle,, Richard Halsey,Richard. The Energy Tab. International Institute for Sustainable Development, n.d. https://www.iisd.org/publications/digital-story/the-energy-tab.

Wikipedia

{{cite report |last1=Bridle, |first1=Richard Halsey,Richard |title=The Energy Tab |publisher=International Institute for Sustainable Development |url=https://www.iisd.org/publications/digital-story/the-energy-tab |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bridlendenergy, author = {Bridle,, Richard Halsey,Richard}, title = {{The Energy Tab}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/publications/digital-story/the-energy-tab}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }