South Africa’s export-driven economy is facing growing international pressure due to its heavy reliance on carbon-intensive industries, as global climate policies and carbon pricing mechanisms tighten. A new report from Net Zero Tracker warns that these developments could threaten trade, employment, and economic stability if the country does not align its energy and industrial policies with its net-zero commitment.
The report highlights a critical disconnect between South Africa’s official 2050 net-zero target and its short-term policy choices, which continue to favor fossil fuel expansion and delay the coal phase-out. Researchers caution that this inconsistency is eroding global confidence in the country’s climate strategy and exposing its major export sectors to economic risks.
In 2023, 78% of South Africa’s exports, worth $135 billion, were destined for countries with net-zero targets. These exports supported approximately 1.2 million jobs, or 7.5% of the national workforce. Of particular concern are the 422,000 jobs tied to exports to countries implementing or preparing carbon border adjustment mechanisms (CBAMs), with an additional 90,000 linked to nations considering similar policies.
CBAMs are designed to level the playing field by taxing imports based on the carbon emissions embedded in their production. While these mechanisms are gaining traction in the Global North, they are viewed critically by the BASIC group, comprising Brazil, South Africa, India, and China, as a form of ‘environmental colonialism.’ The group argues such policies shift responsibility to developing nations, potentially worsening global trust in climate negotiations.
China, South Africa’s top trading partner, imported $31.1 billion in goods in 2023, nearly all from sectors with higher emissions than comparable Chinese industries. As China advances its domestic carbon pricing, the report warns that these South African exports may face increased scrutiny.
Key industries are particularly vulnerable. Mining and basic metals accounted for over half of South Africa’s export value last year, supporting more than 404,000 jobs. The basic metals sector alone represents 32% of exports and 14% of GDP, but emits nearly double the carbon of its closest competitor globally. Over 80% of these exports go to markets with net-zero goals, while 30%, worth $16.7 billion, head to countries with active or incoming CBAMs.
The automotive sector, South Africa’s third-largest exporter, is also at risk. Around 65% of its export value is exposed to CBAMs in some form. Although current CBAMs largely target raw materials, experts expect them to expand to include manufactured goods, making decarbonization urgent.
Agriculture, another vital export sector, faces growing competition from countries with significantly lower-emission supply chains. Across South Africa’s top agricultural exports and destination markets, alternative producers with emissions up to three times lower are emerging and poised to scale.
Beyond trade, the analysis points to deeper socioeconomic consequences. With one of the world’s highest carbon intensities in electricity generation, second only to India, South Africa’s economy remains highly vulnerable. This risk extends to poverty reduction efforts in a country already marked by extreme inequality.
The report urges developed nations to pair trade measures like CBAMs with financial, technical, and capacity-building support for developing economies. It also calls for a reaffirmation of the Paris Agreement’s principle of ‘common but differentiated responsibilities’ to ensure a just transition for countries like South Africa navigating the global low-carbon shift.
POLICY & LAW | Malaysia–EFTA Free Trade Agreement Spurs Investment Ties
