• South Africa rejects EU's Carbon Border Adjustment Mechanism (CBAM) but seeks flexibility.

• CBAM threatens South African exports of steel, aluminum, iron, and fertilizers to the EU and UK.

• Pretoria advocates for recognition of its domestic carbon tax and calls for industrial diversification.

The European Union's (EU) Carbon Border Adjustment Mechanism (CBAM) will fully enter into force in January 2026. In South Africa, the mechanism intensifies tensions. These tensions exist between the need to protect local industry and the urgent requirement for an energy transition, which remains heavily reliant on coal.

South African exports of steel, aluminum, iron, and fertilizers to the EU and the United Kingdom (where the mechanism anticipates full activation by 2027) will face direct exposure to CBAM. According to the Net Zero Tracker network, over 500,000 jobs already depend on markets committed to adopting similar mechanisms.

The South African government has adopted a dual strategy in response to this threat. Diplomatically, Pretoria officially rejected the CBAM. The Department of Trade, Industry and Competition (DTIC) characterized it as a unilateral measure. They deem it contrary to WTO rules and the spirit of the Paris Agreement. Concurrently, discussions are underway with Brussels to secure relaxations comparable to those granted to the United States. Mahendra Shunmoogam, DTIC director, advocates for the recognition of South Africa's carbon tax. He argues that it, despite its modest nature, should be considered equivalent to the European mechanism. However, he also acknowledges the lack of technical capacity to implement the monitoring, reporting, and verification (MRV) methodologies that CBAM demands.

Meanwhile, industrial stakeholders sound the alarm. Economist Seitame Maimele stresses the need for a clear competitiveness strategy. Former Trade Minister Rob Davies describes a "double penalty." He states that the European CBAM adds to existing 50% American tariffs on steel and aluminum. He calls for an offensive industrial policy, focusing on new value chains like battery production. Otherwise, South Africa risks remaining confined to a role as a raw material supplier.

South Africa ranks among the most carbon-intensive economies in the G20. Nearly 80% of its electricity generation comes from coal. CBAM acts as a stark revealer of this dependence. It threatens not only export competitiveness but also social stability.

Strategic Choices: Social Urgency vs. Green Transition

The September 2025 report, "Competitive Interdependence: A New Era for Europe-Africa Industrial and Energy Cooperation," emphasizes a critical point. Without technical and financial support, Africa risks exclusion from global green industrial chains. In this context, industrial viability for Pretoria can no longer solely rely on its traditional sectors. It necessitates ambitious diversification. This diversification must center on green steel, hydrogen, and batteries for electric vehicles.

The "Carbon Competitiveness: South Africa at the Net Zero–Trade Nexus" report, published in June 2025, highlights a significant figure. 1.2 million jobs depend on exports to countries targeting carbon neutrality. The experiences of companies like Egypt Aluminium, which signed a $650 million solar contract to decarbonize its production, or Morocco's OCP, which reinforces its solar capacities, demonstrate the feasibility of adaptation.

This article was initially published in French by Olivier de Souza

Adapted in English by Ange Jason Quenum