CBAM and South Africa's Coal Grid: The Electricity Emission Factor Problem

South Africa's electricity grid is approximately 80% coal-fired, resulting in one of the highest grid emission factors in the world. This significantly increases the CBAM liability for electricity-intensive SA exporters.

Published April 2026·Last updated April 2026·carbonborderadjustment.co.za

CBAM and South Africa's Coal Grid: The Electricity Emission Factor Problem

South Africa's electricity grid is one of the most carbon-intensive in the world, and this creates a significant CBAM disadvantage for SA electricity-intensive exporters compared to competitors in countries with cleaner grids.

South Africa's Grid Emission Factor

The South African electricity grid is dominated by Eskom's coal-fired power stations, which account for approximately 80% of installed generation capacity. The result is a grid emission factor of approximately 0.9 kgCO₂/kWh — more than three times the EU average.

| Country/Region | Grid Emission Factor | |----------------|---------------------| | South Africa | ~0.9 kgCO₂/kWh | | EU average | ~0.25 kgCO₂/kWh | | Norway | ~0.02 kgCO₂/kWh | | Iceland | ~0.001 kgCO₂/kWh | | Germany | ~0.35 kgCO₂/kWh |

The CBAM Impact on Electricity-Intensive Sectors

For electricity-intensive sectors, the grid emission factor is the dominant driver of embedded carbon. Consider aluminium smelting:

| Scenario | Electricity Source | Embedded Carbon | CBAM Cost (per tonne) | |----------|-------------------|-----------------|----------------------| | SA smelter (Eskom grid) | 0.9 kgCO₂/kWh | ~13.5 tCO₂/t | EUR 883 | | SA smelter (100% renewable) | 0.05 kgCO₂/kWh | ~1.5 tCO₂/t | EUR 98 | | Norwegian smelter | 0.02 kgCO₂/kWh | ~0.5 tCO₂/t | EUR 33 |

The difference between a coal-grid SA smelter and a renewable-powered Norwegian smelter is EUR 850/tonne in CBAM costs — a massive competitive disadvantage.

The Renewable Energy Solution

The most impactful strategy for reducing CBAM liability in electricity-intensive sectors is switching to renewable electricity. Options include:

1. Renewable Power Purchase Agreements (PPAs) SA industrial consumers can procure renewable electricity directly from independent power producers (IPPs) through bilateral PPAs. The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has created a growing market of renewable IPPs.

2. On-site renewable generation Large industrial facilities can install solar PV or wind turbines on-site to generate their own renewable electricity. This provides both cost certainty and CBAM benefits.

3. Renewable energy certificates (RECs) In some cases, SA exporters can purchase renewable energy certificates to claim a lower emission factor for their electricity consumption. However, CBAM rules require that RECs be linked to actual renewable generation in the same grid zone.

South Africa's Renewable Energy Transition

South Africa's Integrated Resource Plan (IRP 2023) projects a significant increase in renewable energy capacity:

▸Solar PV: 18 GW by 2030
▸Wind: 14 GW by 2030
▸Combined: Approximately 40% of generation capacity by 2030

As renewable capacity increases, the national grid emission factor will gradually decrease, reducing CBAM liabilities for all SA exporters — even those without dedicated renewable PPAs.

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Frequently Asked Questions

What is South Africa's electricity grid emission factor?

South Africa's electricity grid emission factor is approximately 0.9 kgCO₂/kWh, one of the highest in the world. This is due to the dominance of coal-fired power stations (approximately 80% of generation capacity) in the Eskom grid.

How does the SA grid emission factor compare to the EU average?

The EU average grid emission factor is approximately 0.25 kgCO₂/kWh — less than one-third of South Africa's factor. This means SA electricity-intensive exporters face significantly higher CBAM liabilities than their EU competitors.

Can SA exporters use a different emission factor for their electricity?

Yes. If you have a renewable energy power purchase agreement (PPA) or generate your own renewable electricity, you can use the emission factor of that electricity source rather than the national grid average. This can significantly reduce your embedded carbon.

What is the impact of Eskom's load shedding on CBAM calculations?

Load shedding can affect CBAM calculations if exporters use diesel generators as backup power. Diesel generation has an emission factor of approximately 0.7 kgCO₂/kWh, which must be included in embedded carbon calculations.

Is South Africa's grid emission factor expected to decrease?

Yes. South Africa's Integrated Resource Plan (IRP 2023) projects a significant increase in renewable energy capacity over the next decade, which should reduce the grid emission factor. However, the transition will take time, and the grid will remain coal-dominated until at least 2030.

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