Grace Ashiru
A June 9 report from the Net Zero Tracker initiative has raised alarms, warning that over 500,000 jobs in South Africa are at risk as wealthy nations move to implement carbon border taxes in the coming years.
The report, titled “Carbon Competitiveness: South Africa at the Net Zero–Trade Nexus”, analyzes how the carbon border adjustment mechanisms (CBAMs) being developed by several advanced economies could affect fossil fuel-dependent countries, particularly those reliant on coal.
These mechanisms are designed to create a level playing field by imposing the same carbon-related costs on imports as those applied to domestically produced goods—discouraging carbon-intensive production. However, in South Africa—where coal generates approximately 80% of the electricity and the economy is among the most carbon-intensive within the G20—this poses a significant threat to both exports and employment.
Exports, Jobs, and Looming Border Taxes
The report estimates that 422,000 South African jobs are connected to exports destined for countries that already have CBAMs in place, such as the European Union (scheduled for full enforcement in 2026) and the United Kingdom (planned for 2027). An additional 89,000 jobs are tied to exports heading to countries like Japan and Australia, which are actively considering similar policies.
Altogether, 78% of South Africa’s $135 billion in exports in 2023 were directed to markets that have committed to net-zero emissions goals. This trade supports an estimated 1.2 million jobs, underscoring the country’s vulnerability to global carbon regulation.
China, South Africa’s largest trading partner, imported $31.1 billion in goods and services in 2023. Notably, over 98% of these exports came from sectors where South Africa’s emissions per product exceeded those of China. With Beijing poised to adopt more stringent domestic carbon pricing, South African exports may soon face tighter emissions scrutiny.
The basic metals industry is especially at risk. Over 80% of its exports are sent to countries with net-zero commitments, and 30% are bound for markets with existing or imminent CBAMs.
Agriculture is also under pressure, as South African producers struggle to compete with countries that have lower carbon footprints. The report highlights that for nearly every major agricultural export and destination market, there are alternative suppliers whose emissions are at least three times lower.
The risks aren’t limited to raw materials. The automotive industry—an important source of employment—is highly exposed: 65% of South Africa’s vehicle exports by value go to countries with carbon taxes either already in place or under serious consideration.
Risk and Opportunity
The Net Zero Tracker report also stresses that while the rise of CBAMs presents serious risks, it offers a significant opportunity for South Africa. The country is not starting from zero—it already enjoys key advantages such as world-class renewable energy potential, rich reserves of critical minerals essential to the global low-carbon transition, and representation in major trade and governance bodies like the G20 and BRICS.
As Africa’s most industrialized nation, South Africa is a leading global producer of platinum group metals, manganese, vanadium, and chrome—all vital components for clean energy technologies like electric vehicle batteries, wind turbines, and hydrogen fuel cells.
The government has already laid the foundation for long-term decarbonization through the Climate Change Act of 2024 and the Just Transition Framework. However, the success of these initiatives hinges largely on financial and political support from developed countries, particularly those involved in the Just Energy Transition Partnership (JETP) with South Africa: the UK, EU, Denmark, France, Germany, and the Netherlands. These nations are now under mounting pressure to honor their commitment of $8.5 billion in funding to help South Africa reduce its dependence on fossil fuels.
