Impact of CBAM on Western Cape Exports: What Businesses Need to Know

Wesgro explains how the Carbon Border Adjustment Mechanism (CBAM) presents both challenges and opportunities for Western Cape exports, particularly as the EU remains a crucial market for the region. In 2023, the Western Cape exported goods worth 37.6 billion Rand to the EU, representing nearly 20% of the province's global exports. Among these, 180 million Rand was subject to the CBAM.

Currently, the sectors most exposed to CBAM are iron and steel, as well as aluminum exports. Although the immediate impact may be incremental - since indirect emissions won't be charged for certain categories initially - there are concerns about future expansions of the mechanism and its implementation in other jurisdictions, which could heighten risks for these industries.

To navigate this evolving landscape, it's vital for local and national governments to support businesses with robust methodologies for reporting, verification, and certification of clean energy use.

Access to clean energy will be essential for maintaining global competitiveness. Ultimately, the CBAM signals a shift towards greater accountability for carbon emissions in global trade.

The Western Cape's commitment to providing stable and increasingly clean energy enhances its attractiveness as an investment destination and supports the competitiveness of its exports in a rapidly changing market.