Economy at Risk: 5 Ways Global Carbon Rules Threaten South Africa’s Export Future

South Africa’s Export Economy Faces Rising Threat from Global Carbon Rules
South Africa’s export economy is under threat due to new global carbon rules. Discover how carbon border taxes and international climate policies could reshape the country’s future trade landscape.

South Africa’s carbon-intensive export economy is under mounting pressure as global carbon rules tighten and climate-focused trade policies begin to shape international markets. According to a new report by Net Zero Tracker (https://zerotracker.net/), the clean energy transition is redrawing global trade maps, putting countries like South Africa — with high emissions and a fossil-fuel-heavy energy system — at serious risk.

With a formal net zero target of 2050, South Africa faces a credibility challenge. Short-term policies that promote fossil fuel expansion and delay coal phase-out are undermining trust in the country’s commitment to decarbonisation. This dissonance not only raises doubts domestically but also affects international confidence in South Africa’s export model, especially in carbon-sensitive markets.

In 2023, South Africa exported goods worth over $135 billion, with 78% destined for countries committed to net zero emissions. These exports support an estimated 1.2 million jobs, making up 7.5% of total employment. But as the climate policy landscape becomes more stringent, these jobs and revenues are increasingly vulnerable to measures like Carbon Border Adjustment Mechanisms (CBAMs).

Carbon Border Adjustments: A Looming Trade Threat

CBAMs — or carbon tariffs — are designed to level the playing field between countries with strict carbon pricing and those without. These measures calculate the carbon intensity embedded in goods and impose a corresponding fee at the border. Currently, 422,000 South African jobs are linked to exports to economies with active or soon-to-be-implemented CBAMs, while another 90,000 are exposed to countries discussing similar policies.

China, South Africa’s largest trading partner, imported goods worth $31.1 billion in 2023 — 98% of which were from sectors with a higher carbon intensity than their Chinese counterparts. As China begins to price domestic carbon emissions more systematically, South African exports could face stricter scrutiny and potential tariffs.

“As climate policies like CBAMs gain traction, there is a risk that Global South countries like South Africa are unfairly penalised, despite having low historical and per capita emissions,” the report notes.

Criticism from the Global South: Environmental Colonialism?

South Africa, alongside Brazil, India, and China — the BASIC group — has heavily criticised CBAMs. These countries argue that such policies shift the burden of decarbonisation from rich nations to the developing world, violating the principle of “common but differentiated responsibilities” under the Paris Agreement (https://unfccc.int/process-and-meetings/the-paris-agreement).

The report warns that unilateral measures like CBAMs could deepen mistrust between developed and developing nations and calls on wealthy countries to offer technical, financial, and capacity-building support to help poorer economies adjust.

Key Export Sectors Under Threat

South Africa’s major exports — especially in mining, metals, and automotive — face significant exposure. The mining and basic metals sectors alone contributed over 50% of export value in 2023, supporting 404,000 jobs. However, these sectors are among the world’s most carbon-intensive.

The country’s basic metals industry has nearly double the embodied CO₂ emissions of its next highest peer. Over 80% of these exports go to net-zero committed countries, while 30% ($16.7 billion) are exposed to active or pending CBAMs.

The automotive sector, South Africa’s third-largest exporter, is similarly at risk. With 65% of its export value exposed to CBAMs in various stages, automakers in South Africa may soon be required to reduce their emissions or face trade barriers. Notably, South Africa’s auto manufacturing emissions rank second highest globally.

Even agriculture, often seen as a lower-emission sector, is under pressure. Competing nations with much lower embodied carbon are positioned to undercut South African farmers in key export markets.

Energy Transition: From Risk to Opportunity

Despite its challenges, South Africa holds unique advantages. It is rich in renewable energy potential and critical minerals such as platinum, vanadium, chromium, and manganese — all vital for technologies like hydrogen fuel cells and batteries.

The International Energy Agency (IEA) (https://www.iea.org/) projects that South Africa will exceed its 2030 goal of 30 GW of renewable capacity. Leveraging this growth could position the country as a climate leader in clean energy production and green trade.

Multinational firms are also pressuring supply chains to decarbonise. In the top 10 export markets for South Africa, 323 major companies (with combined revenues of $11 trillion) have net-zero targets — forcing local suppliers to measure, report, and reduce emissions.

The Role of Global Partnerships

South Africa’s future climate resilience hinges on collaboration. The Just Energy Transition Partnership (JETP) — backed by the UK, EU, France, Germany, Denmark, and the Netherlands — promises support for a just transition. But this support must be real, sustained, and responsive to local concerns.

“Climate-related trade measures like CBAMs should be accompanied by finance and capacity-building support — otherwise these policies risk reinforcing inequality,” the report warns.

Conclusion: A Strategic Pivot Needed

To protect its export economy from rising climate risk, South Africa must shift course — from being a carbon laggard to a climate-smart exporter. This requires real policy action: phasing out coal, scaling up renewables, and ensuring industries are equipped to compete in low-carbon markets.

Failure to act could see the country’s trade relationships and jobs eroded by an increasingly carbon-conscious global economy. The opportunity exists — but it demands urgency, strategy, and global solidarity.

Table of Contents:

1. Carbon Border Adjustments: A Looming Trade Threat
2. Criticism from the Global South: Environmental Colonialism?
3. Key Export Sectors Under Threat
4. Energy Transition: From Risk to Opportunity
5. The Role of Global Partnerships
6. Conclusion: A Strategic Pivot Needed

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