For most businesses, the financial implications of climate change remain unclear. Part of the reason for this is that most of the economic impact assessments conducted so far have focused on “transition” risks, which are a narrow range of market impacts limited to coal exports, oil markets, metals and minerals, domestic power supply and coal to liquids. What these have not included are the implications of natural disasters on business operations, or the effect of “carbon barriers” such as emission trading systems (ETSs), carbon taxes or internal carbon pricing (ICP).    

In the case of the products we export, these “carbon barriers” result in an increased total cost of the product for buyers, due to costs added in the form of carbon taxes and fees. This is a problem for SA in light of our long history of balance of payments problems. We rely on our exports to bring in much-needed foreign exchange, without which our economy would grind to a halt. But our exports are drowning in...

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