About 422 000 local jobs are tied to exports to economies with active or incoming carbon border adjustment mechanisms (Oupa Nkosi)
South Africa’s carbon-intensive export model faces rising risks in a global economy that is increasingly shaped by climate policy, clean energy industrial strategies and cross-border carbon pricing.
This is according to a new report released by Net Zero Tracker, which noted that, as countries ratchet up decarbonisation to meet their Paris Agreement climate commitments, the clean energy transition is redrawing the global trade map.
“South Africa’s formal net zero target for 2050 sits uneasily alongside short-term energy decisions that prioritise fossil fuel expansion and delay coal phase-out,” the analysis from researchers at Net Zero Tracker said, adding that this is undermining confidence in the country’s decarbonisation trajectory and exposing its carbon-intensive exports to growing international risk.
Overall, 78% of South Africa’s exports, worth $135 billion, are sold to countries with net zero targets, supporting 1.2 million domestic jobs — or 7.5% of national employment in 2023.
The report found that 422 000 South African jobs are tied to exports to economies with active or incoming carbon border adjustment mechanisms (CBAMs), with almost 90 000 linked to countries considering similar measures.
CBAMs involve the imposition of a carbon tariff on imported goods, based on the level of embedded emissions in the goods and the carbon price paid by the manufacturers thereof in the country of origin.
China, South Africa’s largest trading partner, imported $31.1 billion in goods and services in 2023, more than 98% from sectors where the emissions intensity of the country’s production exceeds that of China, Net Zero Tracker said.
“As China moves to price domestic carbon more systematically, these sectors may face growing carbon scrutiny. 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 Basic group — Brazil, South Africa, India, and China — has criticised CBAMs as an “unfair shifting of responsibilities from developed to developing countries”, warning they
could “aggravate the trust deficit amongst parties”, the analysis noted.
“For developed countries, closing this trust gap and aligning trade with international equity requires upholding the Paris Agreement principle of common but differentiated responsibilities and ensuring unilateral measures like CBAMs are paired with financial, technical and capacity support for developing economies,” it said.
Key sectors under threat
Alongside government policy, multinational companies are decarbonising supply chains, increasing the economic costs of inaction for countries that lag on driving decarbonisation of their electricity grids.
In South Africa’s 10 largest export markets, 323 major companies — representing $11 trillion in annual revenue — have full value chain net zero commitments, “meaning South African firms in their supply chains will have to measure and reduce their own emissions”.
South Africa’s key export industries face especially acute exposure, according to the report, which said that mining and basic metals made up over 50% of South Africa’s export value in 2023, supporting more than 404 000 jobs.
The country’s basic metals sector has nearly twice the embodied carbon dioxide emissions of its next most carbon-intensive peer country, accounting for 32% of exports and 14% of GDP. More than 80% of basic metals exports go to net zero-aligned markets, and 30% — worth $16.7 billion and supporting 23,000 jobs — go to countries with active or incoming CBAMs.
The automotive sector, South Africa’s third-largest exporter, is also at risk with 65% of its export value being exposed to CBAMs that are either active, incoming or under discussion.
“South Africa’s embodied carbon dioxide emissions from auto manufacturing are the second highest in the world, and while existing CBAM schemes are currently focussed on raw materials their scope is expected to expand, so a proactive approach to mitigating this risk will be rewarded.”
In agriculture, South Africa faces growing competitive pressure from lower-emissions suppliers, the report said. Across all top agricultural export categories and destination markets, alternative producers exist with at least three times lower embodied emissions — and are poised to scale into those markets.
‘Environmental colonialism’
With the second-highest carbon intensity of electricity generation among major economies (behind only India), and high embodied emissions in goods, South Africa’s exports will become more vulnerable. This has implications for jobs and tackling poverty in one of the world’s most unequal societies, the analysis said.
“Yet South Africa also holds key advantages: world-class renewable energy resources, critical minerals essential to the global transition and access to major trade and diplomatic frameworks, including Brics.”
The country is a leading producer of platinum group metals, manganese, vanadium and chromium, which are critical to clean energy technologies, such as hydrogen fuel cells, batteries and wind turbines, the report said. The researchers noted, too, that the International Energy Agency projects that the country will surpass its target of nearly 30 gigawatts of total renewable capacity by 2030, as outlined in its Integrated Resource Plan.
As the US administration undermines the multilateral rules-based system, and the global trade landscape shifts beneath its feet, South Africa’s path forward is clear, according to the authors. This is to “pivot both geographically and strategically from climate laggard to leader in climate-aligned, trade-competitive growth”.
This path, however, hinges on developed countries, especially those backing South Africa’s Just Energy Transition Partnership — the UK, EU, Denmark, France, Germany and the Netherlands — delivering on their commitment to support the country’s clean energy transition.
“These governments should carefully address concerns expressed by South Africa’s government and industries to avoid CBAMs from being seen as ‘environmental colonialism’ or overly protectionist,” the researchers urged.
“Climate-related trade measures like CBAMs should be accompanied by finance and capacity-building support — otherwise these policies risk further entrenching inequality and reinforcing the perception that wealthy countries are protecting their own industry while ‘kicking away the ladder’ for others.”