South African exporters could face increased pressure to reduce the carbon intensity of their electricity consumption as the European Commission considers expanding its Carbon Border Adjustment Mechanism (CBAM) to additional sectors and reviewing the treatment of indirect emissions.
Speaking during a webinar hosted by EE Business Intelligence on May 28, European Commission Directorate-General for Taxation and Customs Union Head of Unit Vicente Hurtado Roa said the commission intends to review the CBAM regulation in 2027.
“In particular, we will be looking at the possibilities of extending the CBAM to other basic sectors,” Hurtado Roa said. “Chemicals, ceramics and glass industries are all under consideration.”
The review will also consider whether indirect emissions associated with electricity consumption during production should be applied more broadly across CBAM-covered sectors.
According to Hurtado Roa, the issue is particularly relevant for South Africa where a significant portion of electricity generation remains coal-based. He noted that the European Commission has engaged with Eskom on the matter and is aware of the utility’s efforts to increase renewable energy generation.
CBAM entered its definitive implementation phase on January 1 following a transition period focused on emissions reporting. While importers are now subject to compliance requirements, the first certificate surrender obligations will only take effect in 2027.
The mechanism is intended to address the risk of carbon leakage by ensuring that imported products entering the European Union (EU) face carbon costs comparable to those paid by European producers.
EU Deputy Ambassador Fulgencio Garrido Ruiz said the European Commission views CBAM as an opportunity to support greener industrial development and strengthen participation in emerging clean energy supply chains.
The EU and South Africa are already engaging through the Clean Trade and Investment Partnership, which includes technical discussions on CBAM implementation and carbon pricing policies, Ruiz added.
