The cost of importing African goods into the European Union is about to shoot up, with the EU's carbon border tax set to enter its "definitive phase" on 1 January. A 2023 study published by the African Climate Foundation and the Firoz Lalji Institute for Africa at the London School of Economics and Political Science LSE looked at six scenarios for the Carbon Border Adjustment Mechanism CBAM, using two different economic modelling approaches. In one model, the CBAM with carbon priced at 87 101 per tonne is forecast to reduce the GDP of no single African country by more than 0.18. The other model, at the same price, forecasts a reduction in the GDP of the continent by 0.91 - equivalent to a fall of 25bn at 2021 levels of GDP.
The study suggests the aluminium sector is most exposed, followed by electricity and iron and steel exports. The CBAM could cause a fall of up to 13.9 in exports from Africa to the EU of aluminium of iron and steel by 8.2 of fertiliser by 3.9 and cement by 3.1.
An EU official, Vicente Hurtado Roa, visited the African Union's Pan-African Parliament last month to deliver a briefing on preparing for CBAM. But his argument that CBAM would help ensure fairness was met with a storm of objections from African delegates. Kenyan representative Esther Passaris warned the policy could amount to "economic colonialism", while The Gambia's Sawaibou Touray suggested CBAM could amount to a "trade barrier" from a Europe seeking to protect its industries.