The South African government amended Part 3F of Schedule 1 of the Customs and Excise Act of 1964 on 11 April 2025, as published in Government Gazette no. 52491. This amendment adjusted environmental levy items 157.01, 157.03, and 157.05. The government has set the environmental levy rates at R236 per ton of CO₂ emissions for fuel combustion (tariff subheading 9903.00.10), fugitive emissions (tariff subheading 9903.00.30), and industrial processes (tariff subheading 9903.00.50). This carbon emission levy aims to reduce the environmental impact of non-renewable energy use. The environmental levies on carbon emissions were previously levied at a rate of R146/g CO₂ emissions for every km exceeding 95g of carbon emissions on passenger motor vehicles and R175/g of CO₂ emissions for every km exceeding 175g of CO₂ emissions on vehicles for transport of goods as of 1 April 2024.
These adjustments align with the European Union’s Carbon Border Adjustment Mechanism (CBAM), which aims to reduce carbon leakage by taxing imported goods based on their carbon emissions. Since the EU accounts for over 21% of South Africa’s exports, meeting their environmental standards is essential to maintain competitiveness. Mining and engineering products make up most of these exports. However, these sectors are still far from meeting the EU’s 2030 target of a 55% cut in carbon emissions due to their high reliance on non-renewable energy sources. This gap could weaken South Africa’s position in the EU market.
Environmental levies are designed to promote sustainable practices, fund green initiatives, and align with global standards like CBAM. However, South Africa’s ability to shift away from non-renewable energy remains uncertain. The economy grew by only 0.6% in 2024, reflecting weak investment in key sectors like manufacturing. Raising environmental levies could further slow growth by increasing production costs in already struggling industries, as it could negatively affect both GDP and employment.