• South Africa urges EU to ease carbon tax for African nations
• Warns CBAM could harm economies, derail climate efforts
• Report estimates $25B annual revenue loss for Africa from tax

South Africa officially requested on Tuesday, August 26, 2025, that the European Union reconsider the application of its carbon border adjustment mechanism (CBAM). The nation is also asking that the same "flexibilities" recently promised to the United States be extended to South Africa and other African countries that risk suffering severe economic damage.

"We urge the European Union to reconsider the implementation of the CBAM and not to expand the scope further as it will lead to further negative impacts on South Africa and other developing countries, especially in Africa," wrote Xolelwa Mlumbi-Peter, Deputy Director of the Trade Department at South Africa's Department of Trade, Industry and Competition (DTIC), in a letter to the European Commission.

Mlumbi-Peter added that the mechanism, more commonly known as Europe’s carbon tax, could end up stifling the efforts made by South Africa and other developing countries to combat climate change and decarbonize their economies.

The official also noted that on August 21, the EU concluded a transatlantic trade and investment agreement with the U.S. in which it pledged to grant "additional flexibilities" to American small and medium-sized enterprises (SMEs) regarding the application of taxes, including the carbon tax.

"South Africa calls on the EU to extend such flexibilities to South Africa and other African countries," she emphasized.

The EU's carbon border adjustment mechanism will impose taxes on imports into Europe of carbon-intensive products. It was implemented on October 1, 2023, with a three-year transition period during which only reporting obligations apply. Payments will not be required until 2026.

A Potential $25 Billion Shortfall for Africa

Initially, the tax will apply to seven sectors: cement, steel, iron, aluminum, fertilizers, electricity, and hydrogen. The list of covered sectors is expected to expand gradually.

The European carbon tax is intended both as a means to achieve a 55% reduction in greenhouse gas (GHG) emissions by 2035 (compared to 1990 levels) and as a trade defense measure. It aims to level the playing field between EU companies and those in third countries by assigning a carbon price to certain imported products.

However, South Africa, which produces more than 80% of its electricity from coal, and other African countries, most of which are dependent on fossil fuels, believe that the CBAM will penalize developing nations that are struggling to secure the significant investments needed to reduce CO2 emissions from their industries.

Even when limited to seven sectors, the European carbon tax could lead to a revenue shortfall of $25 billion annually for Africa, according to a recent report by the African Climate Foundation (ACF) and the Firoz Lalji Institute for Africa, a research center at the London School of Economics and Political Science. To estimate the tax's impact on African economies, the report used models that took into account several data points, including carbon prices, products exported to the EU, the GDP of different countries on the continent, and their CO2 emission levels.

Walid Kéfi