Policy Support for CBAM: How SA Governments Can Help Businesses Adapt and Comply
Gaylor Montmasson-Clair, Senior Economist at Trade & Industrial Policy Strategies
Summary
Gaylor Montmasson-Clair emphasises the critical role of local and national governments in helping South African businesses adapt to the Carbon Border Adjustment Mechanism (CBAM).
Governments can support companies, particularly small and medium-sized enterprises, by assisting in setting up Monitoring, Reporting, and Verification (MRV) systems that align with existing national carbon tax and greenhouse gas reporting, reducing administrative burdens. Diplomatic efforts to negotiate more time for businesses to comply with CBAM, especially in carbon-intensive industries like steel and aluminium, are essential, as more countries, including the UK, are implementing similar mechanisms.
Additionally, a robust green industrial policy package is needed to support companies in decarbonising their operations, adopting new production processes, and procuring renewable energy, which will enhance resilience and competitiveness.
If companies are required to pay CBAM fees at the EU border, it is crucial that these funds remain in South Africa through the local carbon tax system, enabling the government to reinvest the revenue in decarbonisation initiatives and further support businesses in their transition.
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