How South Africa's Carbon Tax Offsets CBAM Costs

A detailed guide to how carbon prices paid in the country of origin (including South Africa's carbon tax) can be used to offset CBAM certificate costs.

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

The CBAM Carbon Price Offset Mechanism

One of the most important provisions of the CBAM Regulation is the carbon price offset — Article 9 of EU Regulation 2023/956 provides that CBAM certificate costs can be reduced by the carbon price already paid in the country of origin.

How the Offset Works

The offset formula is: CBAM Certificates to Surrender = (Embedded Emissions × CBAM Certificate Price) − Carbon Price Paid in Country of Origin

For South African exporters paying the carbon tax:

▸Carbon Tax Rate (2025): R190/tCO₂ (approximately €9.50/tCO₂ at current exchange rates)
▸EU ETS Price (2025): ~€70/tCO₂
▸Net CBAM Cost: (€70 − €9.50) × Effective CBAM Rate = €60.50 × 2.5% = €1.51/tCO₂ in 2026

The Carbon Tax Escalation Schedule

South Africa's carbon tax escalates annually: | Year | Carbon Tax Rate (R/tCO₂) | EUR Equivalent | Offset Value | |---|---|---|---| | 2025 | R190 | €9.50 | €9.50/tCO₂ | | 2026 | R209 | €10.45 | €10.45/tCO₂ | | 2027 | R230 | €11.50 | €11.50/tCO₂ | | 2028 | R253 | €12.65 | €12.65/tCO₂ | | 2030 | R306 | €15.30 | €15.30/tCO₂ |

EUR/ZAR exchange rate assumed at R20/€1 for illustration. Actual rates will vary.

The Offset Gap

Even with South Africa's carbon tax, there is a significant offset gap — the difference between the carbon tax rate and the EU ETS price:

▸2026: Gap = €70 − €10.45 = €59.55/tCO₂ (but only 2.5% effective rate applies)
▸2030: Gap = €110 − €15.30 = €94.70/tCO₂ (82% effective rate applies)

The gap widens as the EU ETS price rises faster than South Africa's carbon tax escalation. This creates a growing net CBAM cost for South African exporters that the carbon tax alone cannot eliminate.

Documentation Requirements for the Offset

To claim the carbon price offset, the Authorised CBAM Declarant must provide:

▸Proof of carbon tax payment (SARS carbon tax assessment)
▸Evidence that the carbon tax applies to the specific production facility
▸Calculation of the carbon price per tonne of embedded emissions

Register at the Digital Product Passport Registry to document your South African carbon tax payments for CBAM offset purposes.

Frequently Asked Questions

Can South Africa's carbon tax offset CBAM costs?

Yes. Article 9 of the CBAM Regulation allows the carbon price paid in the country of origin to be deducted from CBAM certificate costs. South Africa's carbon tax (R190/tCO₂ in 2025, approximately €9.50/tCO₂) can offset a portion of CBAM costs.

Does South Africa's carbon tax fully offset CBAM costs?

No. South Africa's carbon tax rate is significantly lower than the EU ETS price (€9.50/tCO₂ vs €70/tCO₂ in 2025). The offset gap widens as the EU ETS price rises faster than the carbon tax escalation, creating a growing net CBAM cost.

What documentation is needed to claim the carbon tax offset?

The Authorised CBAM Declarant must provide proof of carbon tax payment (SARS assessment), evidence that the carbon tax applies to the specific production facility, and a calculation of the carbon price per tonne of embedded emissions.

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