• Border carbon taxes planned by rich nations threaten more than 500,000 South African jobs
• 78% of South Africa’s exports go to countries with net-zero targets or carbon pricing plans
• Basic metals, agriculture, and auto sectors face the highest risk without a fast energy shift

A June 9 report from the Net Zero Tracker initiative warns that more than 500,000 jobs in South Africa are at risk as rich countries prepare to roll out carbon border taxes in the coming years.

The report, titled “Carbon Competitiveness: South Africa at the Net Zero–Trade Nexus”,  examines how the so-called carbon border adjustment mechanisms (CBAMs) being developed by several advanced economies could impact countries that rely on fossil fuels, especially coal.

These mechanisms aim to level the playing field by applying the same carbon charges to imports as to locally made products, discouraging carbon-heavy production. But for South Africa, where coal fuels around 80% of electricity generation and the economy ranks among the most carbon-intensive in the G20, this spells major trouble for exports and jobs.

Exports, jobs, and looming border taxes

The report estimates that 422,000 South African jobs are tied to exports headed for countries that already have CBAMs in place—such as the European Union (set for full enforcement in 2026) and the United Kingdom (scheduled for 2027). Another 89,000 jobs rely on exports to nations actively considering similar measures, including Japan and Australia.

In total, 78% of South Africa’s $135 billion in exports in 2023 went to markets that have set net-zero emissions targets. This trade supports roughly 1.2 million jobs, making the country highly exposed to global carbon regulation.

South Africa’s top trading partner, China, imported $31.1 billion worth of goods and services in 2023. Over 98% of that came from sectors where South Africa’s emissions per product are higher than China’s. As Beijing looks to adopt more rigorous domestic carbon pricing, these South African exports could soon face stricter emissions checks.

The basic metals sector is the most vulnerable. More than 80% of its exports go to countries with net-zero commitments, and 30% of them are bound for markets with active or upcoming CBAMs.

The agriculture sector is also feeling the pressure. South African producers now face tougher competition from countries with lower carbon footprints. Across nearly all major agricultural products and destination markets, the report notes that alternative suppliers exist who emit at least three times less carbon.

The risks go beyond raw materials. The automotive sector, a major employer, is highly exposed: 65% of South Africa’s car exports by value go to countries where carbon taxes are already in place or under discussion.

Risk and opportunity

Net Zero Tracker also points out that the growing use of carbon border adjustment mechanisms presents both a serious challenge and a real opportunity for South Africa. The country is not starting from scratch; it holds several key advantages: world-class renewable energy potential, rich reserves of critical minerals needed for the global shift to a low-carbon economy, and a seat at major trade and governance platforms like the G20 and BRICS.

As the most industrialized country in Africa, South Africa is one of the top global producers of platinum group metals, manganese, vanadium, and chrome. These minerals are essential for clean energy technologies, including electric vehicle batteries, wind turbines, and hydrogen fuel cells.

The country has already laid the groundwork for long-term decarbonization through its Climate Change Act of 2024 and the Just Transition Framework. But success depends heavily on financial and political backing from developed nations, especially those involved in the Just Energy Transition Partnership (JETP) with South Africa: the United Kingdom, the European Union, Denmark, France, Germany, and the Netherlands. These partners are now under increased pressure to deliver on their pledge of $8.5 billion in funding to help reduce South Africa’s reliance on fossil fuels.