The Carbon Border Adjustment Mechanism (CBAM) is the European Union’s measure to encourage countries where it sources imports to adopt cleaner manufacturing.
The CBAM which goes into force on a transitional basis in October introduces a carbon tax on exports to the EU.
But the measure has elicited concern in Africa which counts Europe as a major export market.
A study carried out by the African Climate Foundation and the London School of Economics suggests that the CBAM’s economic repercussions will be ‘far-reaching’ and most strongly felt in Africa.
Their modelling based on €87 per ton suggests that the CBAM would lead to around $25 billion in losses based on 2021 GDP levels, nearly four times higher than what the EU gave to Africa in development assistance in 2021.
Products such as iron and steel, cement, aluminium, fertiliser, hydrogen, and electricity – which make up a significant portion of Africa’s exports to Europe, will be the first victims of the mechanism.
After 2026, the CBAM’s scope will extend to other products, potentially leading to bigger economic loss.
Experts say the measure is punitive, and dramatically reduces the space for developing countries to achieve growth and to create jobs.
Our guest this week is Faten Aggad, the senior advisor climate diplomacy and geopolitics at the African Climate Foundation.
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