A scorecard on fossil fuel funding by international think-tanks has ranked SA as the second worst performer among its emerging-market peers for its lack of transparency over subsidies and its continued support for coal production.
Released on Tuesday, a report by the International Institute for Sustainable Development (IISD), the Overseas Development Institute (ODI), and Oil Change International (OCI), ranked SA as the worst among non-OECD (Organisation for Economic Co-operation and Development) member countries of the G20, after Saudi Arabia.
The report, named “Doubling Back and Doubling Down: G20 Scorecard on Fossil Fuel Funding”, found the SA government spends more than R93bn a year on direct support for fossil fuel use through subsidies to its predominantly coal-based electricity system.
Ninety percent of SA's electricity is provided for by Eskom's coal-fired power stations. Although a monopoly, the utility is in financial crisis and its income from operations is not adequate to service its growing debt.
A lack of transparency around other hidden forms of price support to fossil fuels and bailouts of Eskom means that this figure is likely to be higher, the report said.
“The SA government fails to regularly report and quantify various forms of state support for heavy fossil fuel users such as Eskom and Sasol,” said Anna Geddes, lead author of the report.
“SA has committed to reduced reliance of fossil fuels, yet we have seen a 14% increase in total government support for fossil fuels over the last three years. This is predominantly due to a 79% increase in price support for fossil-fuel-based power.”
The researchers raised concern about the government's continued spending to pipe water from drought-prone areas to coal-fired power plants with more than R1bn in government funding made available for water transportation projects to supply water to coal power plants in Limpopo.
G20 countries are ranked according to seven indicators: transparency, pledges, public money for coal, oil and gas, production and consumption of fossil fuel-based power, as well as how support has changed over time.
Germany was ranked first among the G20’s OECD-member countries, with the UK last. Among the non-OECD members, Brazil was ranked highest.
More broadly, the report found that between 2017 and 2019, G20 governments provided $584bn (R9.12-trillion) via direct budgetary transfers and tax expenditure, price support, public finance, and state owned enterprise investment for the production and consumption of fossil fuels at home and abroad. Forty-seven percent of that support was provided to oil and gas production.
Still, G20 government support has dropped 9% relative to the annual average between 2014 and 2016, indicating that some progress has been made, “although around a third of this decrease can be attributed to an average decrease in oil prices”, the report said.
The drop does not represent a consistent decline across G20 countries over time with seven of the G20 countries having increased their fossil fuel support, namely Australia, Canada, China, France, India, Russia and SA.
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