On November 13 2024, National Treasury released a discussion paper on phase 2 of the carbon tax that had come into effect in June 2019. Interested parties had until December 13 to make submissions.
Given the technical nature of the discussion paper and its year-end release, the 30-day deadline was distressingly tight for most interested parties. Especially seeing as the document was initially flagged as far back as February 2024.
The proposals reflected more of the glacial pace at which the government was committing to cut South Africa’s carbon emissions as part of the just transition away from a coal-dependent economy.
But at least it contained signs of progress.
Until, that is, the Budget Review was released in March 2025. The review revealed little evidence of any of the suggestions contained in the discussion document. Key proposals for increasing the effectiveness of the carbon tax during phase 2, due to begin in December 2025, had been abandoned.
Amazingly, a significant concession had been made to the country’s major polluters: the 60% basic tax-free allowance, which was initially due to phase out during phase 1, was to be retained until the end of 2030. And there was now a reasonable likelihood that between 85% and 95% of tax-free allowances would be retained during phase 2.
It was a fairly devastating development for the civil society and community groups that had pulled out all the stops to make their submissions by the December 13 deadline.
Outsourcing climate legislation
So, what happened between the release of the discussion document in November and the Budget Review in March?
Well, it seems, pretty much the same that’s happened for most of the past quarter century. The big carbon emitters moved in on the discussion process and ensured their voices were the only ones listened to.
Just Share, a non-profit shareholder activism organisation, released a report this week shedding much-needed light on precisely what has happened.
The report, “The Obstruction Playbook: How Corporate Lobbying Threatens South Africa’s Just Transition”, is a detailed account of the efforts made by corporates and their business associations to push back against a democratic law-making process.
It makes for chilling reading and inevitably leads to the stark conclusion that the ANC government has outsourced climate legislation to none other than the country’s largest carbon emitters.
Inevitably, Sasol features front and centre in the report.
Consider what happened immediately after the November release of Treasury’s document. Not happy to merely make a submission, like all the other interested parties, Sasol sought and obtained three private meetings with National Treasury.
In a meeting in December 2024 attended by five senior Sasol executives, the petrochemical giant sought to “clarify” some of the proposals in the discussion paper. According to Just Share, it was particularly concerned about the proposed reduction of a basic tax-free allowance and wanted to know if investment incentives could be considered.
In two subsequent meetings with Treasury in January 2025, each attended by seven senior Sasol executives, the company was given the opportunity to present its estimate of the impact of the carbon tax on its operations.
This, of course, is not the first time Sasol has lobbied aggressively against legislation aimed at discouraging its production of CO2; it’s just the most recent.
It’s not known precisely what Sasol said to National Treasury during their December and January meetings, but its usual spiel includes a rather fanciful calculation of its contribution to the economy and society (the implicit suggestion being, as Just Share points out, that any attempt to reduce emissions will harm jobs, communities and competitiveness).
Take for example comments by Sasol CEO Simon Baloyi in February 2025 claiming that through direct and indirect impact “our integrated value chain supports around 500,000 jobs and contributes approximately 5% to GDP and 12% to the national tax base”.
Unlike most politicians and government employees, Just Share took a moment to interrogate these claims. For example, Sasol says it contributed 12.31% to total government revenue in FY2022, a year when government revenue came to R1.56-trillion. This pegs Sasol’s claimed contribution at about R290bn.
“However, the company’s 2022 integrated annual report states it paid taxes of R52.6bn in South Africa. It is unclear how the additional R237.4bn of ‘indirect and induced’ tax contribution is calculated,” says Just Share.
As for the jobs claim, even using the most elastic interpretation of the multiplier effect it would be difficult to stretch Sasol’s 27,678 permanent employees to 500,000 jobs supported.
It is, of course, Sasol’s business to push hard against any legislation that threatens its ability to make profits. By this measure, if by almost no other over the past several years, Sasol has been extremely successful. Its carbon tax bill is currently just R1.8bn, which is laughably small for a company that pumps out 64,000 kilotons of CO2 each year. Its Secunda plant alone produces more CO2 than all of Portugal.
A carbon tax bill along the lines originally envisaged by the ANC government 20 years ago would soak up something closer to R20bn a year, which is equivalent to almost 50% of the group’s annual operating profit. So, perhaps some leeway is appropriate. But R1.8bn after two decades of legislative effort? That suggests there is something horribly wrong with our governance processes. It suggests a government that is in thrall to big business.
A green industrial agenda
It’s not as though government is not aware of the need to reduce carbon emissions. National Treasury has been looking into policymaking on this front since the early 2000s.
And 20 or more years later, Just Share’s report reveals that as recently as July 2024 President Cyril Ramaphosa warned that the carbon intensity of South Africa’s economy is unsustainable and emphasised the importance of rapidly pursuing a green industrial agenda that will create jobs and grow the economy.
“Speaking at the National Treasury’s Climate Resilience Symposium, President Ramaphosa highlighted that South Africa’s reliance on coal, previously beneficial for providing cheap, reliable electricity, now presents significant economic risks,” says Just Share.
The president warned: “The EU’s carbon border adjustment mechanism exemplifies the potential financial impact on the economies of developing nations which are overly reliant on fossil fuels.”
Yes, that’s the same National Treasury that caved in to Sasol’s lobbying six months later.
In 2023, this is what the South African Reserve Bank had to say about the issue: “South Africa has a high carbon intensity and a very low effective carbon price. This exposes the country to adverse economic shocks from carbon border adjustment mechanisms and changing consumer sentiments … South Africa needs a higher, more predictable, and effective carbon price to drive the green transition and avoid revenue leakage.”
As Just Share makes clear, the carbon tax is intended to spur Sasol – and other carbon emitters – to develop technologies that will help reduce the production of carbon as part of a just transition to a low-carbon economy.
Instead, Sasol has devoted much of its energy, and not inconsiderable amounts of money, to blocking the tax. This might have sheltered its profits in the short term, but it makes the company’s long-term viability far more precarious.
In response to a request for comment, Sasol told Currency: “Sasol has noted the release of Just Share’s report and we will study this further.”
Sign up to Currency’s weekly newsletters to receive your own bulletin of weekday news and weekend treats. Register here.
