South Africa’s export-driven economy, already grappling with myriad challenges, faces a potentially devastating blow as a new wave of global climate policies, specifically cross-border carbon taxes, threatens to derail key industries and imperil hundreds of thousands of jobs. A new study by Net Zero Tracker paints a stark picture of the impending economic fallout, warning that the “rubber is going to hit the road next year.”
The report, released Monday CET, reveals that a staggering 422 000 South African jobs are currently supported by exports to countries that have either implemented or are set to introduce Carbon Border Adjustment Mechanisms (CBAMs). These mechanisms, designed to level the playing field by imposing surcharges on carbon-intensive imports, are gaining traction globally, spearheaded by the European Union – South Africa’s second-largest trade partner after China. The EU’s CBAM charges are set to kick in next year, with the UK planning to follow suit, and nations like Australia and Japan also mulling similar measures.
“It’s bad for South Africa,” cautioned John Lang, the project lead at Net Zero Tracker, an initiative run by a consortium of organisations including the UK’s Energy and Climate Intelligence Unit. Lang’s grim prognosis highlights the direct and severe implications these taxes hold for a nation already wrestling with deep-seated inequality and the urgent need to alleviate poverty. “The taxes have implications for jobs, inequality and tackling poverty in one of the world’s most unequal societies,” the researchers underscored in their report, while simultaneously urging wealthier nations to step up and support South Africa’s arduous journey towards decarbonisation.
South Africa finds itself in a particularly precarious position due to its heavy reliance on coal for approximately four-fifths of its electricity generation, rendering it the most carbon-intensive economy among the G20 major economies. This carbon dependency is a major Achilles’ heel as the world shifts towards a greener economy.
The Net Zero Tracker study points to the country’s basic metals sector, which accounted for almost a third of its exports in 2023, as a prime example of this vulnerability. This sector, according to the report, “has nearly twice the embodied carbon dioxide emissions of its next most carbon-intensive peer country.”
Worryingly, the researchers anticipate that CBAMs will expand beyond raw materials, putting other vital South African industries squarely in the crosshairs. The nation’s automotive sector, for instance, has the second-highest emissions globally, while its agricultural producers generate a staggering three times the emissions of some peer countries.
In response to what it perceives as a thinly veiled form of protectionism, South Africa has joined India and Brazil in vociferously protesting against CBAMs, even threatening to lodge a complaint with the World Trade Organisation.
As the deadline for the EU’s CBAM approaches, the stakes for South Africa couldn’t be higher. The government, industry leaders, and workers alike are now staring down a formidable challenge that demands urgent and decisive action to safeguard jobs and navigate the complex, carbon-conscious landscape of international trade.
