Understanding the Role of Subsidies in South Africa’s Coal-Based Liquid Fuel Sector

The document examines how market price support and carbon tax exemptions sustain Sasol's coal-to-liquid operations in South Africa. It estimates that in 2019, these support measures totaled ZAR 8.05 billion, contributing to carbon lock-in and significant environmental externalities, including the operation of the world's largest single point source of greenhouse gases.

• Sasol operates the only commercial coal-to-liquid (CTL) plant in South Africa, located in Secunda, which is identified as the largest single point source of greenhouse gases globally.
• Synthetic fuels produced by Sasol account for approximately 30% of all fuels used in South Africa.
• Between 2012 and 2019, Sasol received a total of ZAR 12.65 billion (USD 938 million) in Market Price Support (MPS), which is derived from a fuel pricing mechanism that often sets the Basic Fuel Price higher than the cost of imports.
• In 2019, the Market Price Support represented approximately 1.63% of Sasol's total revenues, or roughly 3.68% of its revenues specifically from energy operations.
• Sasol benefits from significant carbon tax exemptions under the Carbon Tax Act 15 of 2019; in 2019, over 90% of its emissions were not taxed, resulting in an indirect subsidy exceeding ZAR 6.5 billion.
• The total value of carbon tax exemptions and Market Price Support provided to Sasol in 2019 was ZAR 8.05 billion (USD 490 million).
• Sasol's operations create substantial environmental externalities, including the emission of approximately 65 Mt CO2e and the generation of 328 kt of hazardous waste, which negatively affect local community health and ecosystems.

APA

Pant, A., Mostafa, M., & Bridle, R. (2020). Understanding the Role of Subsidies in South Africa’s Coal-Based Liquid Fuel Sector. International Institute for Sustainable Development. https://www.iisd.org/system/files/2020-10/subsidies-south-africa-coal-liquid-fuel.pdf

Chicago

Pant, Aditya, Mostafa Mostafa, and Richard Bridle. Understanding the Role of Subsidies in South Africa’s Coal-Based Liquid Fuel Sector. International Institute for Sustainable Development, 2020. https://www.iisd.org/system/files/2020-10/subsidies-south-africa-coal-liquid-fuel.pdf.

Wikipedia

{{cite report |last1=Pant |first1=Aditya |last2=Mostafa |first2=Mostafa |last3=Bridle |first3=Richard |title=Understanding the Role of Subsidies in South Africa’s Coal-Based Liquid Fuel Sector |publisher=International Institute for Sustainable Development |date=October 2020 |url=https://www.iisd.org/system/files/2020-10/subsidies-south-africa-coal-liquid-fuel.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{pant2020understanding, author = {Pant, Aditya and Mostafa, Mostafa and Bridle, Richard}, title = {{Understanding the Role of Subsidies in South Africa’s Coal-Based Liquid Fuel Sector}}, institution = {International Institute for Sustainable Development}, year = {2020}, month = oct, url = {https://www.iisd.org/system/files/2020-10/subsidies-south-africa-coal-liquid-fuel.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }