The journey of the Section 12L tax Incentive scheme from its inception to date is one filled with great success. The Section 12L of the Income Tax was initially designed to support international initiatives to confront climate change-related challenges. It was implemented on 1 November 2013 and currently has a sunset clause effective for 31 December 2030.

The introduction of a Tax Incentive dedicated to encouraging energy efficiency  savings, highlights  the growing urgency of enhancing energy security, improving energy productivity and reducing carbon emissions to help nudge the economy towards a more sustainable growth path. The Tax Incentive aimed to lighten the up-front capital investment required for energy efficiency technologies, process modifications and conversion of old, inefficient technologies to more efficient alternatives.

The Tax Incentive scheme has enormously contributed to the advancement of Energy Impacts reporting and the field of measurement and Verification. As a result of the Tax Incentives, South Africa has developed it's technical standard for Measurement and Verification of energy and demand savings, SANS 50010:2018 (initially published in September 2011). South Africa's development of SANS 50010 was used as a primary input for the creation of the global standard, ISO 50015.

The section 12L Tax Incentive has reported massive impacts, especially for the Mining and the Manufacturing sectors since the programme inception in 2013 to the end of the third quarter for the FY 25/26. The manufacturing sector has a total of 178 Projects completed with over 17 303 GWh in reported energy consumption saving and R16.05 Billion in Tax incentive benefit derived from implemented projects. The mining sector has equally reported massive figures at the end of the third quarter of FY 24/26. The total number of projects completed from the Mining sector was 122, with a total 16 161 GWh of energy savings with a sectoral tax incentive benefit of R 12.24 Billion  from the implemented projects by end of December 2025.

The Section 12L Tax Incentive has established itself as a cornerstone of South Africa’s energy strategy, according to Ms. Faith Mkhacwa, General Manager of Energy Efficiency and Demand Side Management at SANEDI. By incentivising investment in efficient technologies and institutionalising rigorous measurement and verification (M&V) standards, the policy has delivered substantial savings within the mining and manufacturing sectors. This collaboration between government and industry not only bolsters energy security and reduces emissions but also proves that targeted fiscal incentives can drive sustainable industrial growth while fulfilling national climate mandates said Ms Mkhacwa.

The outstanding results achieved through the Section 12L Tax Incentive affirm its critical role in transforming South Africa’s energy economy. With more than 33 000 GWh in verified savings and billions of rand returned to industry through tax benefits, the programme continues to stimulate investment, safeguard competitiveness and reduce the country’s carbon footprint. As the Programme move towards its 2030 sunset date, SANEDI remains committed to strengthening implementation, expanding participation across sectors and ensuring that energy efficiency remains a cornerstone of South Africa’s just and sustainable energy transition.