Beyond Fossil Fuels: Fiscal Transition in BRICS | Case study: South Africa

This case study examines South Africa's heavy reliance on coal and the resulting fiscal implications for its energy transition. It details the role of state-owned enterprises, the structure of fossil fuel revenues and subsidies, and the government's climate commitments via its Nationally Determined Contribution.

• South Africa is highly dependent on coal, which provided 76 per cent of the total energy supply and 89 per cent of the country's electricity in 2017. In 2018, the country's proved coal reserves represented 1.3 per cent of the global total.
• The South African government maintains significant ownership in the fossil fuel sector through state-owned enterprises (SOEs). Eskom, a wholly government-owned utility, supplies approximately 90 per cent of the nation's electricity, and PetroSA is also wholly state-owned. Additionally, the government holds a 22 per cent stake in Sasol.
• Fiscal revenues from fossil fuels are dominated by consumption taxes rather than production. In 2017, consumption revenues accounted for 6.4 per cent of general government revenue (1.8 per cent of GDP), while production revenues contributed only 0.4 per cent of general government revenue (0.13 per cent of GDP). The fuel levy was the largest single contributor, providing 5.5 per cent of general government revenue.
• South Africa provides substantial fossil fuel subsidies, primarily through regulated electricity prices and free basic electricity access. IEA estimates place these regulated price subsidies at 1.5 per cent of GDP or 5.3 per cent of general government revenue. OECD estimates for direct budgetary transfers and tax expenditures are lower, at 0.7 per cent of GDP or 2.4 per cent of general government revenue.
• The government's Nationally Determined Contribution (NDC) targets a "peak, plateau and decline" for carbon emissions, with a goal to decarbonize the electricity sector by 2050 at an estimated cost of USD 349 billion. South Africa is noted as one of the few countries to explicitly include the need for a "just transition" for workers in its NDC.
• Despite climate commitments, energy policy is described as being in a state of flux. The government has explored for shale and offshore gas to diversify supply, but since 2016, an impasse between the government, Eskom, and developers led to a refusal to sign power purchase agreements for new renewable energy.

APA

International Institute for Sustainable Development (n.d.). Beyond Fossil Fuels: Fiscal Transition in BRICS | Case study: South Africa. https://www.iisd.org/system/files/publications/beyond-fossil-fuels-south-africa.pdf

Chicago

International Institute for Sustainable Development. Beyond Fossil Fuels: Fiscal Transition in BRICS | Case study: South Africa. n.d. https://www.iisd.org/system/files/publications/beyond-fossil-fuels-south-africa.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Beyond Fossil Fuels: Fiscal Transition in BRICS | Case study: South Africa |url=https://www.iisd.org/system/files/publications/beyond-fossil-fuels-south-africa.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndbeyond, author = {{International Institute for Sustainable Development}}, title = {{Beyond Fossil Fuels: Fiscal Transition in BRICS | Case study: South Africa }}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/beyond-fossil-fuels-south-africa.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }