The first comprehensive study focusing on the implications of the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) on Africa has been released by the African Climate Foundation (ACF) and the Firoz Lalji Institute for Africa at the London School of Economics and Political Science (LSE).
The report raises concerns about the economic ramifications of the CBAM on Africa, as it is likely to hit the competitiveness of African exports, particularly industrial exports if product coverage expands over time. It also notes that the CBAM process introduces administrative hurdles to market access by African countries, which historically struggled to access the European market.
The joint report sets out the implications of the CBAM for Africa regarding relevant obligations under international legal frameworks as well as strategic considerations for African countries, ensuring the CBAM is designed and implemented in such a way that is neither more trade restrictive than necessary nor discriminatory. The CBAM will be introduced on 1 October 2023, with a three-year transition period during which only emissions reporting obligations will apply, without any financial payments or adjustments. After the transition period, the CBAM will be gradually phased in from 2026 to 2034. It will initially cover imports of iron and steel, cement, aluminium, fertiliser, hydrogen, and electricity.
Following this in June 2023, the African Climate Foundation made a submission on the United Kingdom Government Consultations on addressing carbon leakage risk to support decarbonisation.