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“Cost of EU CBAM climate tariff for Africa is four times higher than EU developmend aid”

Experts have warned that EU’s carbon border scheme is punitive, and dramatically reduces the space for developing countries to achieve growth and to create jobs.

The so-called CBAM enters into force on a transitional basis in October and it introduces a carbon tax on exports to the EU.  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.

“The CBAM aims to position the EU as a global leader on climate action and reduce greenhouse gas emissions to 55% below the 1990 levels by 2030. However, the proposal has faced scrutiny from partners like Africa, who question its compliance with Paris commitments and its impact on African exports,” says Carlos Lopes – the ACF’s chairman of the board and advisory council has commented.