Energy tax incentive drives job creation and savings

One of South Africa’s major energy efficiency tax incentive initiatives, has proven to be a huge success – not only in addressing environmental challenges, but in driving employment, according to the latest Job Impact Report released by the South African National Energy Development Institute (Sanedi).

Sanedi’s newest study highlights the positive impact that energy tax incentives have had on jobs since 2013.

In looking at what has been achieved over the 10-year period from 2013 to 2023 key findings of the report include:

• Total energy savings of 27.6 TWh (Terawatt hours, which is a unit of energy);
• A gross tax rebate of R22.6 billion;
• Achieving a greenhouse gas emission reduction of 26.7 tons; and
• Creating about 449 jobs, with an estimated R136 million per annum injected into the economy.

Notable beneficiaries of the incentive scheme

Sanedi said notable beneficiaries of the incentive scheme included Woolworths Holdings, which achieved a 10% reduction in energy consumption and about R35 million in electricity cost savings over a six-year period, starting from the 2015 financial year.

Golden Arrow Bus Services recorded a 2.5% reduction in energy consumption, with more than R1.8 million saved between April 1, 2016 and March 31, 2017.

The government introduced the 12L energy efficiency tax incentive in November 2013 to encourage businesses to cut their energy costs and tax burdens.

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The aim was to alleviate strain on national energy resources, while curbing greenhouse gas emissions.

Over the past decade, job creation has emerged as a significant side-effect of the programme.

“The incentive has been able to generate new jobs, maintain existing jobs and create a residual effect of indirect jobs,” said Stalin Ndlovu, 12L lead and senior advisor for measurement and verification at Sanedi – the regulatory body behind the tax incentive programme.

12L tax incentive was claimable until December 2025

“Businesses can expand their operations with access to the incentive, thereby creating and sustaining jobs,” added Ndlovu.

He said the 12L tax incentive was claimable until December 2025, maintaining it “will not end there”.

“Our aspiration is that the scheme will be extended with mechanisms implemented to facilitate and enhance the participation of small and medium-sized enterprises,” Ndlovu said.

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In assessing the 12L tax incentive’s impact on job creation, Sanedi surveyed 150 participating organisations, with 23 “acknowledging a noticeable benefit on employment”.

“It is from these 23 responses that Sanedi was able to confirm a minimum of 449 jobs had been created directly by the incentive.

“Ninety-eight of the new job holders were South Africans, with 60% being black.”

New jobs associated with work of energy-services companies

He said new jobs were associated with the work of energy-services companies, which implemented energy-efficiency projects.

The report suggested that a far greater number of jobs were created, both directly and indirectly, “with a substantial impact on the current and future economy”.

“Job creation has become a significant point of consideration for energy initiatives – even if it is not the primary focus,” said Ndlovu.

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