In a recent revelation, the President of the African Development Bank Group, Akinwumi Adesina, has expressed grave concerns about the potential economic impact of the European Union's new carbon border tax on Africa. According to Adesina, the continent stands to lose up to $25 billion annually due to the tax, casting a dark shadow over Africa's economic future.
Understanding the Carbon Border Tax
The tax, officially known as the Carbon Border Adjustment Mechanism (CBAM), is aimed at carbon-intensive goods like fertilizers, cement, iron, steel, and aluminum imported into the EU. The primary objective of the CBAM is to incentivize companies to adopt cleaner energy technologies and to prevent the production of goods with high carbon content outside of the EU. The tax aligns with the EU's ambitious goal to reduce its greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.
However, for Africa, which is already grappling with an acute energy deficit and a heavy reliance on fossil fuels, the implications of the CBAM are significantly more challenging. Adesina warns the carbon border tax could push Africa back into the position of merely exporting raw commodities to Europe. This could potentially trigger a further de-industrialization of the continent, setting back efforts to build a robust, diversified, and sustainable economy.
Criticism of the Carbon Border Tax
The tax has drawn criticism for its potential to be detrimental and discriminatory towards developing economies. National Assembly Speaker Nosiviwe Mapisa-Nqakula of South Africa echoed this sentiment at the COP28 climate summit in Dubai, stating that the tax raises concerns about equity and the development of trade initiatives for struggling economies. The African Development Bank has further advocated that African countries should be exempted from the tax, considering the disproportionate economic impact it could have on the continent.
In conclusion, while the EU's carbon border tax aims to curb carbon emissions globally, its potential impact on developing economies like Africa raises serious concerns. It underscores the need for policies that balance environmental objectives with the imperative of economic development, particularly in regions grappling with energy deficits and poverty.