South Africa's coal dependency puts economy at risk
Africa's most industrialised nation is one of the largest polluters in the world and generates about 80% of its electricity through coal.
This makes it "uniquely vulnerable" as companies decarbonise their supply chains and countries penalise carbon-intensive imports, according to the group, a collaboration of four non-profit organisations that tracks net zero pledges.
"78% of South Africa's exports, worth $135 billion, are traded with 139 jurisdictions which have net zero targets in place. Collectively, these exports support over 1.2 million domestic jobs," the report said.
If the country fails to decarbonise its supply chains, it could lose some of that trade and related jobs, it said.
The group said South Africa could avoid this scenario by phasing out coal more rapidly and positioning itself as a "strategic supplier in low-emission value chains".
"South Africa has the tools to pivot - proven renewables potential, critical minerals, and seats at global tables," said Net Zero Tracker project lead John Lang.
The report argued that South Africa was "well-positioned to become a key supplier of low-emission goods".
One of the driving forces behind the decarbonisation push is the European Union's Carbon Border Adjustment Mechanisms (CBAMs).
Adopted in 2022, the policy imposes a carbon price on imports of goods such as steel, aluminium and cement from countries with lower environmental standards.
A test period began in October 2023 before the law's full entry into force in 2026.
The South African Reserve Bank has warned that carbon-based tariffs could reduce exports by up to 10% and that CBAMs alone could shrink exports to the EU by 4% by 2030.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Maverick
6 hours ago
- Daily Maverick
Parks Tau's ‘Plan A' turns to new markets to outrun Trump's trade war
SA dangles blueberries and pork in a bid to avert the US tariff blow. South Africa has offered easier market access for American blueberries, poultry and pork in a revised trade offer to the US Trade Representative on Tuesday, 12 August. In a fortnight, container-loads of the exports will hit the waters from Georgia, South Carolina, North Carolina and Alabama from three American ports. This is the cornerstone of a multi-pronged revised offer that SA hopes will stave off punitive tariffs of 30% that are steadily being implemented, and which have already cost jobs and contracts. Will it be enough to see off the trade war from truculent US President Donald Trump? It's unlikely, although a sharpened talks team will go to the US to walk through the revised offer. Trade Minister Parks Tau and Agriculture Minister John Steenhuisen, along with new trade attachés and negotiating teams, will jet off to Asia and the Middle East to bolster new markets primarily for SA's fruit exports and motor cars – the casualties of the sky-high US tariffs. South Africa is now exporting apples to Thailand after a 16-year hiatus, an example of what new trade routes may look like. Steenhuisen said a beachhead had been opened with China, open to negotiations on access for five kinds of stone fruit, avocados and citrus once the black spot restriction is solved. The avo industry in Limpopo is so resilient, Steenhuisen revealed, that it believes it can still be competitive even at a 30% US export tariff. He also said SA was in negotiations for biofuels and wine exports. Market access talks are open in Vietnam and Japan (for wine, citrus and possibly ship-building exports). The Middle East is a key target with state visits to and from Qatar, the UAE and a wider number of Gulf countries scheduled for later this year. 'This is not a Plan B; it is a Plan A for long-term resilience and competitiveness,' said Tau at a briefing on the new trade offer. While Asia and the Middle East offer bigger markets, the obvious trading partners are on our doorstep. With the African continent forecast to grow at above 5% this year (albeit off a low base), the most significant opportunities are through the African Continental Free Trade Area and with the EU, still SA's largest trading partner, and China. The government also wants South Africans to buy cars, clothes and other manufactured goods made locally to grow domestic demand. The enhanced trade offer to the US was made as part of the Southern African Customs Union (Sacu) bloc of SA, Botswana, Eswatini, Lesotho and Namibia. 'The imposition of reciprocal tariffs by the US has created substantial obstacles for Sacu member countries, pressure on vital industries and employment. Although there are ongoing efforts to secure exemptions and expand trade relations, this situation highlights the susceptibility of smaller economies to global policy shifts,' said the Trade and Industrial Policy Strategies think-tank. Non-disclosure agreements govern trade talks, so the South African team may not have disclosed details, but key deals are missing from the revised offer made public. In July, Tau included the import of 750-1,000 petajoules of LNG for 10 years; SA foreign direct investment into the US of $3.3-billion in mining and metals recycling, and the exemption of specific sectors from reciprocal tariffs, including ship-building and counter-seasonal agricultural trade in citrus and other fruit. DM
The Citizen
11 hours ago
- The Citizen
US tariffs: SA sends new proposal but no changes to laws
The new offer sent by South Africa responds to the issues the US previously raised. South Africa sent off its new proposal to avoid the US tariff of 30% on goods from South Africa exported to the US, but the country is not planning to change the laws that seem to be on the US president's agenda. Parks Tau, minister of trade, industry and competition, said at a press conference on Tuesday that since the 30% unilateral tariff imposed by the US which came into force on 7 August, government has been working on a response anchored on five key elements: continued engagement with the United States to secure a deal and reduce the tariffs; diversification of exports to alternate markets; an economic response package to vulnerable companies and workers; trade defence against import surge and dumping; and demand side interventions. He said regarding continued engagement with the US, cabinet approved that South Africa submits a revised offer as a basis for negotiations. The new offer builds on the previous offer submitted in May and substantively responds to the issues the US raised in the 2025 National Trade Estimates Report. ALSO READ: BEE left out of US trade talks – Minister Lamola SA on top of sanitary measures Tau pointed out that South Africa already addressed sanitary and phytosanitary measures in compliance with the bio-security protocols for: Poultry: South Africa granted market access under the conditional self-ban and self-lifting system to ensure that the US can leverage the tariff rate quota of 72 000 tons already agreed to in 2016; Blueberries: South Africa granted market access for states that are free of fruit fly and agreed to mitigation measures with those states with fruit fly; and Pork: which is open subject to the bio-security requirements. 'Consequently, the USA-Africa Trade Desk informed us that it will be shipping containers of poultry and pork to South Africa in two weeks' time, which is testimony that these issues have been resolved.' Another significant request from the US was that South Africa consider reducing tariffs as a way to address the deficit and tariff disparity with the European Union due to the SADC-EU Economic Partnership Agreement. Tau said South Africa continues consultations with industry and in this regard, in consultation with other members of the Southern African Customs Union, will identify specific lines to respond to this request.' ALSO READ: Government must actively manage fallout from US tariffs with trade crisis committee – BLSA Cabinet endorsed economic response package to US tariffs Cabinet also endorsed the economic response package that includes: The establishment of an export support desk, which will serve as a direct point of contact for affected companies. Tau said, so far, it has helped 23 companies. In addition, the department also initiated meetings with more than 54 South African exporters to the US, focusing on updates on the negotiations, clarifications on tariffs, elements of an economic response package and issues linked to market diversification. Measures to assist companies to absorb the tariff and facilitate long-term resilience and growth strategies to protect jobs and productive capacity in South Africa. A localisation support fund (LSF) for affected companies to contribute to the national effort. The Export and Competitiveness Support Programme (ECSP), which will include a working capital facility and plant and equipment facility to address short to medium term needs across all industries. Working with the department of employment and labour on measures to mitigate potential job losses, using existing instruments within its entities that can be adjusted to respond to the current challenges. After consultations with the Competition Commission, a block exemption for exporters was introduced to enable collaboration and coordination among competitors. A draft block exemption will be published by the end of the week to conclude the process as fast as possible. Information will be available on the department's website. ALSO READ: South Africa has to cast its trade net wider Finding alternative export markets About finding alternate export markets, Tau said the new US tariff on South Africa's exports is a significant policy shift that necessitates a clear and decisive response. 'South Africa accelerated its diversification efforts of export markets and enhanced competitiveness to mitigate the economic impact of losing preferential trade access. 'The diversification is a strategic imperative to ensure our economy is more resilient to economic shocks. This is not a plan B but a plan A for long-term resilience and competitiveness. 'We are committed to strengthening our relationships, particularly under the African Continental Free Trade Area, to build regional resilience. We will also continue the work we started with our European partners towards enhancing our trade and investment relations in a manner that unlocks sustainable growth and development and entrenches South Africa in new supply chains.' He added that government is also looking at Asia, including Japan, Vietnam and Thailand, the Middle East and India. 'We are pursuing these markets because we see growing demand, existing negotiations and a positive reception to South African products. 'This is not just about trade numbers but directly linked to job protection. Diversification is about protecting rural livelihoods and sustainable agricultural growth for our people.' ALSO READ: 'It's just gone' – Trump's tariffs cost SA company R750m overnight High-level negotiation team ready to talk about US tariffs A high-level negotiation team, including the Department of Trade, Industry and Competition and the Department of Agriculture, has been identified to engage the US, Tau says. 'Our goal is to demonstrate that South African exports do not pose a threat to US industries and that our trade relationship is in fact complementary. 'While the US is our third largest trading partner after the EU and China, South Africa is the 43rd export destination for the United States and accounts for 0.25% of total US imports and therefore not a threat to US production. 'In addition, the US market accounts for about 4% of our total agriculture exports, or R9.8 billion ($537 million) of our total agricultural exports, an increase of 104% from 2018.' Turning to protecting domestic industry against import surge and dumping, Tau pointed out the unilateral US tariffs do not only apply to South Africa. The US tariffs also affect over 130 trading partners and many of the US orders that now face prohibitive restrictions will seek other 'outlets', he said. 'In addition, chronic overcapacity observed in the world markets for key product markets like steel, glass, subsidised agricultural products, solar and automotive vehicles will make this search incessantly harmful for our domestic industry.' ALSO READ: US tariff an existential threat for a third of metals and engineering sector SA ready to protect its industry, Tau says 'Therefore, South Africa stands ready to make use of its trade remedy measures to safeguard and protect its industry, within the prevailing agreements of the World Trade Organisation. This will involve the consideration and use of anti-dumping, anti-subsidy and safeguard measures to protect the domestic industry which may be affected by trade deflection and/or diversion.' Speaking about demand side interventions to leverage the buying power of local consumers, private sector and government, Tau said Proudly South Africa will intensify outreach with corporates and retailers through its online store and Market Access Platform (MAP) procurement tool targeted at the private sector to support increased domestic sales of products, with future export capability of the online platform to be used to assist with export market diversification.
eNCA
11 hours ago
- eNCA
SA to offer US new deal to avoid 30% tariff
PRETORIA - South Africa will offer a "generous" new trade deal to the United States to avoid 30-percent tariffs, ministers said on Tuesday. Washington on Friday slapped the huge tariff on some South African exports, the highest in sub-Saharan Africa, despite efforts by Pretoria to negotiate a better arrangement to avoid massive job losses. The ministers did not release details of the new offer but said previously discussed measures to increase imports of US poultry, blueberries and pork had been finalised. "When the document is eventually made public, I think you would see it as a very broad, generous and ambitious offer to the United States on trade," Agriculture Minister John Steenhuisen said at a press briefing. Officials have said the 30-percent tariff could cost the economy around 30,000 jobs. "Our goal is to demonstrate that South African exports do not pose a threat to US industries and that our trade relationship is, in fact, complementary," Trade Minister Parks Tau said. The United States is South Africa's third-largest trading partner after the European Union and China. However, South African exports account for only 0.25 percent of total US imports and are "therefore not a threat to US production", Tau said. Steenhuisen said US diplomats raised issues related to South African domestic policies, which was a "surprise given the fact we thought we were in a trade negotiation". The two nations are at odds over a range of policies. US President Donald Trump has criticised land and employment laws meant to redress racial inequalities that linger 30 years after the end of apartheid. "Things like expropriation without compensation, things like some of the race laws in the country, are issues that they regard as barriers now to doing trade with South Africa," he told AFP on the sidelines of the briefing.
