# Does South Africa's Carbon Tax Reduce CBAM Costs?

Canonical: https://senseible.earth/climate-intelligence/south-africa-carbon-tax-cbam

Published 2026-10-13.

South Africa is one of the few CBAM-exposed exporters that already has a carbon price. Its carbon tax has applied since 2019, and from 1 January 2026 the headline rate rose sharply. The obvious question for a steel, aluminium or ferroalloy exporter is whether that tax counts at the EU border, so that the EU importer pays less.

The short answer: it can, but only for the carbon price effectively paid, which is much lower than the headline rate.

## How South Africa's carbon tax works in 2026

- **Headline rate:** R308 per tonne of CO2e from 1 January 2026, up from R236.
- **Phase 2:** the current phase runs from 2026 to the end of 2030.
- **Tax-free allowances:** emitters receive allowances that reduce the share of emissions taxed, extended to the end of 2030.
- **Offsets:** the share of liability that can be met with carbon offsets rose by 5 percentage points in 2026, to 15 percent for combustion emissions and 10 percent for process and fugitive emissions. Credits from projects under the Clean Development Mechanism, Gold Standard and Verra are eligible.
- **Fuel levy:** from 1 April 2026, the carbon fuel levy is 19 cents per litre on petrol and 23 cents on diesel.

Because of the allowances, the effective rate is far below R308. Discovery estimated it at about R105 per tonne in 2026, roughly €5.5, against a CBAM certificate price above €75.

## How CBAM treats a carbon price paid at origin

Article 9 of the CBAM Regulation lets the EU importer claim a reduction in the certificates it must surrender for a carbon price effectively paid in the country of origin on the embedded emissions, net of any rebate or compensation. Two consequences follow:

1. **Only the effective price counts.** Free allowances and rebates are deducted, so the reduction reflects the roughly €5.5 a tonne paid, not the headline R308.
2. **It must be documented for the goods.** The producer needs to show the tax paid on the emissions embedded in the specific products exported, and the importer must have that evidence.

The law firm Werksmans has reported that the EU will publish default carbon-price references for third countries from 2027, which may simplify claims.

## What a South African exporter should do

- **Record the tax by installation and product,** from the carbon tax returns, so the effective price per tonne of embedded emissions can be shown.
- **Pair it with actual emissions data.** The deduction applies to the emissions declared, so verified actual figures help twice: lower emissions and a documented price paid on them.
- **Do not count on the deduction to close the gap.** At current effective rates it reduces the certificate cost by a few percent. The larger lever is lower embedded emissions, as covered in [green finance for Johannesburg steel and metals firms](https://senseible.earth/climate-intelligence/green-loan-steel-business-johannesburg) and [South African ferrochrome smelters](https://senseible.earth/climate-intelligence/renewable-power-ferrochrome-smelter-south-africa).

The [CBAM calculator](https://senseible.earth/cbam-calculator) lets you enter a carbon price paid to see how much it changes the cost per tonne.

This is general guidance, not tax or legal advice.

## Related guides

- [EU CBAM explained](https://senseible.earth/climate-intelligence/eu-cbam-explained-emerging-market-exporters)
- [why CBAM tests Indian industry](https://senseible.earth/climate-intelligence/survival-of-the-greenest-cbam-litmus-test)
- [rerouting supply chains to cut CBAM cost](https://senseible.earth/climate-intelligence/reroute-supply-chains-reduce-cbam-exposure)
- [India's carbon market and the EU carbon price](https://senseible.earth/climate-intelligence/trading-air-for-assets-india-carbon-markets-eu-price)