Electricity Deputy Minister Reassures on Energy Cost and Taxe Pressures

The government’s emphasis on renewable energy aims to safeguard jobs, foster sustainable growth, and align South Africa with global climate commitments.

As South Africa grapples with escalating energy costs and new carbon tax pressures, Deputy Minister of Electricity and Energy, Samantha Graham-Maré, has pledged government support to protect jobs, promote renewable energy, and sustain economic growth amid the challenges.

The upcoming Scope 2 tax on indirect emissions and the European Union’s Carbon Border Adjustment Mechanism (CBAM) are expected to increase operational costs for South African businesses, potentially putting R52.4 billion worth of exports at risk.

Electricity Costs: By 2034, electricity rates could climb by 60%, driven by carbon taxes, rising from R190 per tonne currently to R462 per tonne by 2030.

Tax Implications for Industries: Some sectors could experience up to a 340% hike in carbon tax payments as existing allowances phase out.

Government's Renewable Energy Vision

Speaking to stakeholders, Graham-Maré stressed the urgent need to diversify South Africa's energy sources, currently dominated by coal (80% of the mix), and to transition toward renewables to mitigate economic risks.

"Investing in renewable energy reduces emissions, stabilizes costs, and ensures the competitiveness of South African businesses in a global market increasingly focused on sustainability," she said.

Key benefits outlined include:

Job Creation: Renewable energy projects could stimulate employment in the manufacturing, construction, and technology sectors.

Global Competitiveness: Transitioning to clean energy ensures compliance with international trade requirements such as CBAM.

Cost Efficiency: Renewables promise long-term stability in energy prices compared to fluctuating coal markets.

Government-Private Sector Collaboration

The Ministry of Electricity and Energy reaffirmed its readiness to collaborate with industries to accelerate renewable energy adoption. Proposed measures include:

Streamlining permits for renewable projects.

Expanding public-private partnerships to fund energy transitions.Implementing subsidies or incentives for industries shifting to cleaner energy sources. New Measures to Support Industries

To ease the burden on businesses, the government is considering:

Gradual carbon tax adjustments to reduce short-term financial strain.

Establishing a transition fund to support high-emission sectors as they adapt to greener energy sources.

Launching education campaigns for businesses to optimize energy efficiency practices and reduce operational costs.

Deputy Minister's Call to Action

Graham-Maré concluded with a rallying message: "Together, we can protect jobs, enhance resilience, and chart a sustainable economic path for all South Africans. Energy efficiency and renewable energy are the cornerstones of a brighter future for our nation."

The government’s emphasis on renewable energy aims to safeguard jobs, foster sustainable growth, and align South Africa with global climate commitments. With collaboration between government and business, South Africa can navigate the challenges of carbon taxes and rising energy costs while building a greener, more resilient economy.