The EU needs to give South Africa and other emerging markets time to prepare for the Carbon Border Adjustment Mechanism (CBAM), says Niveshen Govender, CEO of the South African Wind Energy Association (Sawea).
Govender told Business Times that CBAM, combined with the US abandoning the Paris climate agreement, presented a unique energy challenge for the developing world.
“This one is a double-edged sword and it has major implications for South African businesses. While I think the South African government will see the strategic partnership with the EU very much more aligned, now that the US has done what they’ve done, I think we have to look at the implications to South African businesses, particularly the manufacturing concerns.”
CBAM will introduce a tax on carbon-intensive goods entering the EU from other regions, such as cement and steel, starting in 2026.
Govender said while CBAM was a good opportunity for businesses to embrace renewable energy and achieve real green industrialisation, South Africa and other emerging markets would need time to adjust to its requirements.
“I ... believe that the EU should reconsider the implementation of CBAM, not scrapping it at all, but really allowing more time for South African manufacturing businesses to develop and deploy carbon reduction strategies ... at a pace and scale that they can afford.”
He said using renewable energy sources would allow South Africa to meet its energy imperatives while contributing to climate change commitments, but this could not be done at the expense of energy security and affordability.
“On a high level, global politics will always be dynamic. We should expect these challenges and changes considering that geopolitics is usually centred around power dynamics, which has now seeped in climate change and energy. With the recent decision by the US to abandon not just clean energy, but the climate change science holistically and the associated commitments, we should also expect that others will follow suit,” said Govender.
The wind energy sector in South Africa was looking forward to the release of the latest integrated resource plan (IRP) — the government's energy mix blueprint — in the next two months.
Combined with the transmission development plan and the renewable energy industrialisation master plan, the IRP envisages up to 76GW of wind energy connected to the grid by 2050.
“The industry is extremely happy with the new draft IRP, which projects between 69GW and 76GW of wind energy by 2050. What the industry really expects is an IRP that recognises the central role of renewable energy ... with the transition to a green economy and the drive to lower the cost of electricity remaining at the heart of this IRP.”
Red Cap CEO and business lead in a work stream of the national energy crisis committee's grid access work, Mark Tanton, said expanding renewable energy was the best way of complying with CBAM but businesses could experience a four-year lag.
Red Cap CEO and business lead in the national electricity crisis committee, Mark Tanton, said expanding renewable energy was the best way of complying with CBAM but businesses could experience a four-year lag.
He said the earliest new generation can be given capacity according to the current Eskom Transmission Development Plan (TDP) to come into the system is around 2030, which exposes businesses in the renewables sector for four years to no new projects.
“So, regardless of how quickly we can roll out the infrastructure, we have a problem right now. We have a four-year gap, which we're going to have to solve if we are to decarbonise the energy supply for exporters quicker,” he said.
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