Background and context
The latest IPCC report has demonstrated once more that greenhouse gases from human activities are responsible for global warming, thus leading to an accelerated global climate change. In an effort to reduce Carbon Dioxide (CO2), the greenhouse gas most responsible for global warming, different policy measures have been introduced.
The Green Deal of the European Union includes a critical instrument – the Carbon Border Adjustment Mechanism (CBAM). The CBAM is aimed at promoting the importation of only products from hard to abate sectors that meet high climate standards and serves to protect EU companies that are meeting such standards while encouraging trading partners to make efforts to reduce emissions. The CBAM aims to prevent the risk of carbon leakage and support the EU’s increased ambition on climate mitigation. CBAM aims to equalize the price of carbon within and outside the European Union and is schedule to become operational in October 2023. It will initially cover products from carbon-intensive sectors such as iron and steel, aluminium, cement, electricity, fertilizers, and hydrogen. The current provisional agreement foresees that imports from the product groups will be subject to a levy when imported into the European Union. This levy is calculated from the amount of emissions caused during production and the then current price of a CO2 certificate in the European certificate trading system (EU-ETS).
Discussing the CBAM in relation to the African continent is important for two reasons: Firstly, in view of the development of global trade relations, the European economies must have an interest in expanding their trade relations with African partners. Not only as a sales market, but also as a supplier in global value chains, the importance of many African states will increase in the medium term. Their role as suppliers of raw materials will also change. In the future, it will no longer be just about mineral raw materials and oil, but also about hydrogen and possibly electricity. All this will increase the economic interrelations with the African continent and therefore the impact on climate of value chains will become more important.
Secondly, apart from Africa's growing economic importance, documentation of CO2 emissions is already necessary in many areas. For the sectors from which goods are currently sourced from Africa, little would change at the moment. However, it is to be expected that the instrument will be adapted in the future, depending on the success and reactions of European trading partners. The inclusion of further sectors in the CBAM is not excluded in the medium term. But even if there is no legal basis (requirement?) for pricing imports from Africa, the carbon footprint still becomes important for marketing reasons. African producers who want to export into Europe will need to prove the emissions of their products even without CBAM. To an even greater extent, this applies to German companies that produce in Africa, which are often already now subject to sustainability reporting obligations.
With many Africa countries exporting products from the affected categories to the EU, and given the (i) need for a just and equitable energy transition in Africa, (ii) urgent need to curb global emissions to tackle climate change whose adverse impacts remain a major risk to attaining Africa’s development goal, (iii) huge investments needed to implement Africa’s NDCs, and (iv) growing interest to tap Africa’s abundant clean energy resources to produce green hydrogen and related products for use on the continent and exports to the EU, from Africa, African countries need to work together to address challenges posed by the implementation of the CBAM, while turning those challenges into opportunities for accelerating green growth and poverty reduction on the continent.
It is against this backdrop that KAS and the African Climate Policy Centre of the United Nations Economic Commission for Africa organize a webinar to inform about the potential impact of CBAM on the African continent. The webinar also wants to give the audience the opportunity to deepen their understanding about the general proceedings under CBAM ruling.
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