As the EU’s carbon border adjustment mechanism (CBAM) expands, we face a defining moment. The CBAM, which taxes high-carbon imports to protect EU producers, threatens to cut SA’s exports by a staggering 10% by 2025.
This figure transcends mere statistics — it heralds a full-blown economic body slam that threatens to send 2.6-million jobs into the abyss.
The CBAM’s initial emphasis on industries like iron, steel, cement, aluminium, fertiliser, hydrogen and electricity — with a gradual implementation phase spanning 2026 to 2034 — places SA in a precarious situation. Our pronounced carbon intensity, in conjunction with a carbon tax that has yet to make a significant impact, poses the danger of a marked decline in the global demand for exports.
To steer through this impending crisis, experts — in research reports posted on the Reserve Bank’s website — propose higher, predictable carbon taxes, a move that would generate the necessary funds to support the economy’s green makeover and ensure that SA remains a contender in the global market place.
If anything, the research reports by Reserve Bank-endorsed specialists are a call to action for SA policymakers not only to acknowledge that CBAM is a challenge that could unravel the nation’s economic fabric, but also an invitation to join the green party. By embracing a sturdier carbon tax, SA could protect its economic interests while also becoming a poster child for environmental responsibility.
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