Increasing Taxes on Fossil Fuel Consumption

The document analyzes how Saudi Arabia, China, and South Africa have implemented various taxes on fossil fuel consumption to address budget deficits and fund renewable energy. It highlights China's Renewable Electricity Surcharge, which raised USD 16 billion in 2016, and South Africa's multi-layered approach including fuel and electricity levies. Saudi Arabia's 2018 introduction of a 5% VAT is noted as a move to diversify revenue away from oil dependency.

• China utilizes a Renewable Electricity Surcharge to fund the integration of renewable energy and feed-in tariffs, shifting the financial burden of the energy transition from the national budget to consumers. In 2016, this surcharge reached CNY 0.019/kWh, generating approximately CNY 112 billion (USD 16 billion), which represented about 0.7 per cent of total tax revenues for that year.
• South Africa employs a variety of fossil fuel consumption taxes for both fiscal and regulatory purposes, including the Fuel Tax, Road Traffic Levy, and an Electricity Levy introduced in 2009. In the 2016/17 financial year, total environmental consumption tax revenues reached ZAR 72,446 million (USD 4,821 million), accounting for approximately 6 per cent of the country's total tax revenues.
• Saudi Arabia introduced a 5 per cent value-added tax (VAT) on January 1, 2018, primarily to reduce budget deficits caused by low oil prices between 2014 and 2017. Unlike targeted energy taxes, this blanket VAT was designed to raise general revenue rather than encourage a switch between different fuel types.
• Globally, the under-taxation of fossil fuel use was estimated at USD 5.3 trillion in 2015 due to the failure to internalize negative impacts such as climate change, air pollution, and traffic congestion.

APA

International Institute for Sustainable Development (n.d.). Increasing Taxes on Fossil Fuel Consumption. https://www.iisd.org/system/files/publications/stories-g20-saudi-arabia-china-south-africa-en.pdf

Chicago

International Institute for Sustainable Development. Increasing Taxes on Fossil Fuel Consumption. n.d. https://www.iisd.org/system/files/publications/stories-g20-saudi-arabia-china-south-africa-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Increasing Taxes on Fossil Fuel Consumption |url=https://www.iisd.org/system/files/publications/stories-g20-saudi-arabia-china-south-africa-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndincreasing, author = {{International Institute for Sustainable Development}}, title = {{Increasing Taxes on Fossil Fuel Consumption}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/stories-g20-saudi-arabia-china-south-africa-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }