Government Fossil Fuel Subsidies Triple Under Ramaphosa

• The new Climate Change Commission announced in January does not include climate change or biodiversity scientists or health experts, but former executive director Crispian Olver says its mandate is to serve labour, business, government and community constituencies rather than being an expert panel.
• Government subsidies to fossil fuels have tripled in real terms since Ramaphosa became president in 2018, reaching almost R200-billion last year, mostly from Eskom bailouts and carbon tax exemptions.
• Subsidies for renewables amounted to less than 5% of fossil fuel subsidies in 2024.
• But investment in green energy across Africa is now about the same as fossil fuels.

President Ramaphosa announced the new members of the Climate Change Commission on 2 January. Of the 25 commissioners, only five served on the inaugural commission of 2020 to 2025.

As with the first commission, the new body does not include climate change or biodiversity scientists, or health experts. Crispian Olver, who served as executive director for four years and as deputy chair in 2025 on the previous commission, says this reflects its mandate to serve four constituencies: labour, business, government and the broader community. It is therefore not an expert but a stakeholder forum.

However, Olver acknowledges that there is a legitimate question as to whether the commission should include a wider range of voices to properly assess the impact of climate change.

Olver identifies three major achievements of the first commission: updating the National Determined Contribution (our commitment under the Paris Agreement to reduce greenhouse gas emissions) for the next decade, developing a policy framework for the Just Energy Transition, and assessing the decommissioning of the Komati power station.

In 2021, the commission was successful in persuading the government to set South Africa’s target for greenhouse gas emissions for 2030 to be 20% lower than the target set in 2016. This would see the country’s “emissions decline in absolute terms … a decade earlier than planned”, the commission said in a press statement.

Yet there is little evidence that the government’s actions are directed towards this goal. A recent report by the International Institute for Sustainable Development (IISD) shows that since Ramaphosa became President in 2018, government subsidies to fossil fuels have tripled in real terms, reaching almost R200-billion last year. Most of this increase stems from Eskom bailouts and carbon tax exemptions that were implemented from 2020.

According to Olver, the two primary beneficiaries of the carbon tax exemptions are Eskom and Sasol, the country’s two largest carbon emitters. Sasol’s Secunda coal-to-liquids plant is the world’s largest single point source of greenhouse gas, producing 56.5 megatonnes of CO₂ a year, more than Portugal emitted in 2023.

By contrast, government subsidies for the renewable sector have been a fraction of those for the fossil fuel industry: a tax exemption for households in 2024, estimated at R4-billion, and for businesses over two financial years 2023 to 2025, estimated at about R10-billion. Both subsidies have since lapsed.

The renewables’ subsidy in 2024 amounted to less than 5% of the subsidy for fossil fuels, but it helped unlock the 7.3 GW (13% of national capacity) now generated by renewable energy produced by households and businesses outside ESKOM.

At the same time, government support for fossil fuels appears to be increasing. Last month, the National Energy Regulator approved a one-year reduction in Eskom tariffs for ferrochrome refineries, at an estimated cost of R10-billion. The industry has asked for further reductions, to which ESKOM must respond by the end of this week.

The shortfall is expected to be covered by an additional government subsidy.

Economist Neva Makgetla has argued that there was an alternative available that would not have burdened the fiscus. Glencore had proposed supplying its own coal, at cost, to fuel one of Eskom’s older coal stations in order to power its two smelters.

The IISD report recommends that South Africa should collaboratively develop a comprehensive action plan for energy subsidy reform with local stakeholders.

Private sector investment

A decade ago, investment in fossil fuels in Africa was an order of magnitude greater than investment in renewables. Last year, for the first time investment in fossil fuels and renewables on the continent reached parity.

Fossil fuel investment has halved from a peak of $125-billion in 2014. In South Africa, two major coal power projects – Thabametsi ($2-billion) and Khanyise ($1.5-billion) – were cancelled following the withdrawal of Standard Bank, Nedbank and other investors. A planned $2-billion plant on Kenya’s Lamu island was also scrapped after the withdrawal of the Industrial and Commercial bank of China and the African Development Bank.

However, Megan Euston-Brown, director of Sustainable Energy Africa, points out that investment in renewables is still a fraction of what is required. “Africa houses 19% of the global population and receives only one per cent of global energy investment,” says Euston-Brown.

Euston-Brown believes that until there is certainty over the government’s policy and commitment to renewables and reducing fossil fuels, we will not attract the required investment.

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