South Africa’s Carbon-Heavy Exports Face Risk Amid Global Climate Trade Shifts

South Africa’s carbon-intensive export economy is facing increasing risks as climate-aligned trade policies and carbon pricing mechanisms reshape global commerce.

According to a comprehensive report from Net Zero Tracker, countries accelerating decarbonisation to meet Paris Agreement targets are dramatically altering trade flows, placing pressure on carbon-intensive exporters like South Africa.

Despite its formal net-zero goal for 2050, South Africa’s ongoing reliance on coal and slow adoption of clean energy undermines international confidence in its climate transition. This has left its $135 billion export economy—78% of which is shipped to net-zero committed nations—vulnerable to trade-based climate policies.

Carbon Border Adjustment Mechanisms: A New Trade Reality

The rise of Carbon Border Adjustment Mechanisms (CBAMs) is a direct challenge. CBAMs levy tariffs on imported goods based on their carbon intensity, effectively penalizing countries with high-emissions production systems.

In 2023 alone, 422,000 South African jobs depended on exports to nations implementing or planning CBAMs. An additional 90,000 jobs are linked to trade with countries discussing similar frameworks.

South Africa’s top trading partner, China, imported over $31 billion in goods, 98% of which came from emissions-intensive industries. As China tightens its domestic carbon policies, these imports may come under scrutiny.

Critically, Net Zero Tracker warns of an emerging trend of what South Africa’s government has called “environmental colonialism“—a perception that CBAMs disproportionately burden developing nations while protecting developed economies.

Key Export Sectors at the Epicenter

Mining and basic metals are most at risk. In 2023, these industries represented over 50% of South Africa’s export value and supported 404,000 jobs. The basic metals sector alone accounts for 32% of exports and 14% of GDP, with carbon intensity nearly double that of its next-closest global peer.

Over 80% of these exports go to countries with net-zero commitments. Of particular concern: 30% of basic metal exports—worth $16.7 billion—are destined for CBAM-implementing nations.

The automotive industry, South Africa’s third-largest exporter, is also exposed. Around 65% of its export value is subject to existing or proposed carbon border taxes. South African auto manufacturing is the second-most carbon-intensive in the world.

Even agriculture is under pressure. Competitors in key markets now offer products with emissions three times lower, giving them an edge as buyers seek climate-smart imports.

Corporate Pressure and Global Standards

Global corporations are enforcing emissions cuts across their value chains. In South Africa’s 10 largest export markets, 323 major firms—with combined revenues of $11 trillion—have net-zero supply chain goals. Local suppliers must adapt or risk being cut out.

High Emissions, High Stakes

South Africa has the second-highest carbon intensity in electricity generation globally, trailing only India. High embedded emissions in its exports make them increasingly uncompetitive and threaten employment in an economy where over 30% of the population lives in poverty.

Yet, the report notes, South Africa also holds advantages:

• World-class renewable energy potential
• Abundant critical minerals (e.g., platinum, manganese, vanadium, chromium)
• Access to influential trade and diplomatic blocs like BRICS

According to the International Energy Agency, the country is on track to surpass its renewable energy target of 30 GW by 2030 as outlined in the Integrated Resource Plan.

The Geopolitical Dimension

CBAMs have been denounced by the BASIC group—Brazil, South Africa, India, and China—as unfair burdens on the Global South. They warn these policies threaten global cooperation and deepen the “trust deficit” between developed and developing nations.

To maintain fairness, developed nations must uphold the Paris Agreement’s principle of “common but differentiated responsibilities”. This includes pairing carbon tariffs with adequate financial, technical, and capacity-building support.

South Africa’s success in climate-aligned trade depends largely on follow-through from countries backing the Just Energy Transition Partnership—notably the EU, UK, France, Germany, Netherlands, and Denmark.

A Strategic Pivot

South Africa must shift from laggard to leader in climate-smart trade. This means:

• Accelerating coal phase-out
• Scaling renewable energy investment
• Supporting emissions reporting across supply chains
• Promoting green manufacturing and transport

Failure to act risks job losses, trade exclusion, and deepened inequality. The time to lead is now.

For more, explore related analysis on The M&G Environment Section and visit National Business Initiative for updates on corporate sustainability trends in South Africa voiceafricadaily.