Implications and impacts of CBAM on South Africa and the continent

A Carbon Border Adjustment Mechanism (CBAM) is a levy on carbon intensive goods imported into specific regions (like the EU) to fight carbon leakage.
Carbon leakage occurs when companies transfer production to places where decarbonisation requirements are less strict or when products are replaced by more carbon intensive imports from these places.
As an exporting country, South Africa will face additional costs due to this carbon border adjustment, making several major South African exports less competitive in the EU compared to products using less carbon-intensive methods and materials.
On the other hand, CBAM could also create incentives for South African producers to reduce their carbon footprint, which could ultimately benefit South Africa and the environment.
CBAM currently covers cement, aluminium, fertiliser, electricity, hydrogen, iron and steel, iron ore, and a number of downstream products.
In South Africa, there is an immediate risk to exports amounting to some R52.4-billion based on 2022 data, and this risk is expected to grow as CBAM expands its coverage.
The European Commission adopted an implementing regulation on 13 July 2023, and entered a transitional phase on 1 October 2023 which requires importers to report emissions embedded in the CBAM products they import. During this transitional period no financial obligation is due. The definitive CBAM will start in 2026, with a gradual phase-in to be fully operational by 2034.
The South African government has called the EU’s CBAM “policy coercive” and a threat to a “delicate national consensus”, as it imposes additional costs that could negatively impact the South African economy, labour, businesses and their competitiveness in the EU market.
This webinar is intended to be a wake-up call to business, industry and labour in South Africa, as it explores the implications and impacts of CBAM on South Africa, the region and the continent.