South African policymakers are under pressure as Carbon Border Adjustment Mechanisms (CBAMs) spread globally. The EU’s version will take effect in January 2026, while the UK, US, Australia, and Japan are weighing similar measures.
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At a Presidential Climate Commission (PCC) webinar, Mahendra Shunmoogam, director at the Department of Trade, Industry and Competition (the DTIC), stressed that the government had formally opposed the EU’s CBAM, calling it a unilateral measure that undermines global trade rules and the sovereignty of developing countries.
He added, “Our position is that we fundamentally oppose CBAM because it potentially violates the WTO Agreement and also the Paris Agreement. We have also asked for the equivalence that our carbon tax be taken as an equivalent border mechanism.” But he warned South Africa lacks the technical capacity to enforce such a system domestically.
South Africa is one of the countries most exposed to the EU’s CBAM. Iron, steel, and aluminium exports face the greatest threat due to the nation’s coal-heavy grid and low domestic carbon tax. In 2023 alone, EUR 1.1 billion (USD 1.298 billion) worth of CBAM-covered exports went to the EU, equivalent to 5 per cent of South Africa’s total exports.
In March 2023, nearly 59 per cent of steel exports went to EU countries, while aluminium accounted for 35 per cent of South Africa’s aluminium exports to the region in 2022. The aluminium industry contributes 1 per cent of GDP and supports about 11,000 direct jobs and an estimated 29,000 indirect jobs, meaning CBAM levies could have a deep social impact.
Economist Seitame Maimele warned that there is a risk of export displacement of R2.6bn (USD 149.76 million) of these goods, including the UK and the EU, covered by the mechanisms.
The European Union launched CBAM reporting in October 2023, requiring importers of aluminium, steel, fertiliser, cement, electricity, and hydrogen to declare embedded emissions. From 2026, importers must purchase carbon certificates.
The EU commented, “Climate change is a global problem that needs global solutions.” Paolo Gentiloni, EU Commissioner for Economy, insisted, “The Carbon Border Adjustment Mechanism is not about trade protection. It is about protecting the EU’s climate ambition and seeking to raise the level of climate ambition worldwide.”
Former DTIC Minister Rob Davies cautioned that CBAM, combined with US tariffs on steel and aluminium, creates a double whammy. He argued, “There is no way that the transition to a less carbon economy will be anything but unjust for the African continent unless we industrialise… What we should do is tell them to do it; we do it. What is good for you is good for us.”
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