The European Union’s Carbon Border Adjustment Mechanism (CBAM) entered its transition period on 1 October 2023, with the first CBAM report for the fourth quarter of 2023 submitted on 29 February 2024. Key industries most affected in South Africa are iron, steel and aluminium. The transition period will run for over two years, ending in December 2025. South Africa is not ready financially and administratively to comply with CBAM requirements during the transition period.
South Africa is not ready financially and administratively to comply with CBAM requirements during the transition period. Issues include domestic industries struggling to deal with logistical and energy problems, i.e. the collapse of Transnet infrastructure and loadshedding, short timelines for the transition, lack of awareness of decarbonisation and climate change measures, increasing costs of accessing global markets amid greening global value chains, incompatible infrastructure of accounting GHG emissions, and the rise of carbon clubs as a form of protecting industries in the Global North. It is paramount to act collaboratively on these issues. Government and affected industries, labour unions and researchers, need to work together to find solutions on CBAM for both large and small exporters.
This paper relies heavily on industry-government-researchers workshops on the iron and steel and aluminium value chains held in November 2023, which formed part of initial efforts to raise these issues and try to find solutions in adapting trade to green international trade laws introduced in the Global North.