(Bloomberg) -- South Africa will approach the European Union to discuss its planned tax on carbon-intensive imports, saying it will hurt the economies of BRICS nations.
The EU’s so-called carbon border adjustment mechanism — a tax on goods such as fertilizer, cement, iron, steel, and aluminum entering the bloc — will fully kick in come 2026. While the measure is meant to encourage companies to adopt better clean-energy technology and discourage the production of such goods outside the EU, nations including South Africa argue it shifts the burden for climate action to poorer regions.
South Africa — which is the world’s 14th-biggest source of greenhouse gas emissions and whose exports include coal — says the tax may contravene World Trade Organization rules and that countries need to share responsibility for the climate-adjustment process.
At a meeting of the BRICS alliance that includes Brazil, Russia, India and China last week, trade ministers were “united on the need to have the conversation about the reconsideration of CBAM,” South African Trade Minister Parks Tau told reporters in Cape Town on Tuesday.
“Unilateral action on that front is unhelpful,” he said. “We cannot just wake up one day and say ‘OK, these ones are not coming in because you are totally prejudicing the developing world’.”
To comply with the new tax, some European customers are giving South African companies targets to reduce the carbon content in products they ship to the EU, according to Business Leadership South Africa Chief Executive Officer Busisiwe Mavuso.
These are proving to be difficult to meet given that the nation derives the bulk of its electricity from coal, she said last week. BLSA — the nation’s biggest lobby group for the private sector — has requested talks with Energy Minister Gwede Mantashe on how to deal with CBAM targets amid the nation’s plans to extend the life of its coal-fired plants so as to prevent a return of rolling blackouts, she said.
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