CARBON COMPETITIVENESS: SOUTH AFRICA AT THE NET ZERO-TRADE NEXUS

South Africa's carbon-intensive export model is increasingly vulnerable as 78% of its exports are sold to countries with net zero targets. The report highlights acute risks in the basic metals, automotive, and agricultural sectors due to high embodied CO2 emissions compared to global competitors. While the EU's CBAM and shifting US trade policies pose immediate threats, South Africa's reserves of critical minerals and renewable energy potential offer a strategic path toward 'carbon competitiveness'. The report argues that success depends on decarbonising the national electricity grid, implementing the Climate Change Act 2024, and securing international support through the Just Energy Transition Partnership (JETP).

• A vast majority of South Africa's trade is exposed to climate-aligned markets, with 78% of exports—valued at $135 billion—going to jurisdictions with net zero targets, supporting 1.2 million domestic jobs.
• South Africa faces significant economic risk from Carbon Border Adjustment Mechanisms (CBAMs), with 422,000 jobs tied to exports to economies with active or incoming CBAMs. The country ranks second globally in CBAM exposure after Canada.
• The Basic Metals sector is highly vulnerable, accounting for 32% of exports and 14% of GDP, with embodied CO2 emissions nearly twice those of its next most carbon-intensive peer. Approximately 30% of these exports, worth $16.7 billion, go to countries with active or incoming CBAMs.
• The automotive sector is at risk due to high emissions intensity and shifting market demands; South Africa's embodied CO2 emissions from auto manufacturing are the second highest globally, and 65% of its export value is exposed to CBAMs that are active, incoming, or under discussion.
• South Africa's agricultural exports are acutely vulnerable to competition from lower-emissions suppliers, with domestic embodied emissions (1,128 tCO2 per million dollars) being at least three times higher than those of key competitors in similar product categories.
• South Africa possesses strategic advantages in critical minerals essential for the energy transition, including the world's largest reserves of platinum group metals (PGMs), manganese, and chromium.
• The national electricity grid is a primary driver of export vulnerability, as South Africa has the second-highest carbon intensity of electricity generation among major economies, trailing only India.
• Recent legislative and policy shifts, including the Climate Change Act 2024 and the Electricity Regulation Amendment Act (ERA), provide a framework for decarbonisation and the dismantling of Eskom's state monopoly to create a competitive electricity market.
• The report emphasizes that developed countries supporting the Just Energy Transition Partnership (JETP)—specifically the UK, EU, Denmark, France, Germany, and the Netherlands—must deliver financial and technical support to prevent CBAMs from being perceived as 'environmental colonialism'.

APA

Elliott, M., Lang, J., Sarkar, S., Cran-McGreehin, S., Chalkley, P., Hale, T., Hay, N., Kuramochi, T., Manya-Gutierrez, D. C., Smith, S., & Tatlow, H. (2025). CARBON COMPETITIVENESS: SOUTH AFRICA AT THE NET ZERO-TRADE NEXUS. Net Zero Tracker. https://ca1-nzt.edcdn.com/PDFs-and-Excels/Carbon_Competitiveness_SA_at_the_Net_Zero_Trade_Nexus_9_Jun_2025.pdf?v=1749551166

Chicago

Elliott, Matt, John Lang, Sujay Sarkar, Simon Cran-McGreehin, Peter Chalkley, Thomas Hale, Nick Hay, et al. CARBON COMPETITIVENESS: SOUTH AFRICA AT THE NET ZERO-TRADE NEXUS. Net Zero Tracker, 2025. https://ca1-nzt.edcdn.com/PDFs-and-Excels/Carbon_Competitiveness_SA_at_the_Net_Zero_Trade_Nexus_9_Jun_2025.pdf?v=1749551166.

Wikipedia

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BibTeX

@techreport{elliott2025carbon, author = {Elliott, Matt and Lang, John and Sarkar, Sujay and Cran-McGreehin, Simon and Chalkley, Peter and Hale, Thomas and Hay, Nick and Kuramochi, Takeshi and Manya-Gutierrez, Diego Cristobal and Smith, Steve and Tatlow, Helen}, title = {{CARBON COMPETITIVENESS: SOUTH AFRICA AT THE NET ZERO-TRADE NEXUS}}, institution = {Net Zero Tracker}, year = {2025}, url = {https://ca1-nzt.edcdn.com/PDFs-and-Excels/Carbon_Competitiveness_SA_at_the_Net_Zero_Trade_Nexus_9_Jun_2025.pdf?v=1749551166}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }