07/12/23

AFRICA: EU Carbon Tax Could Cost Africa $25 Billion, AfDB Chief Says

As published on: bloomberg.com, Thursday 7 December, 2023.

Africa could lose as much as $25 billion annually due to the European Union’s new carbon border tax, hurting the continent’s trade by penalizing valued-added exports such as iron and fertilizers, African Development Bank Group President Akinwumi Adesina said.

The EU’s carbon border adjustment mechanism is a tax on carbon-intensive goods such as fertilizers, cement, iron, steel, and aluminum imported into the region. It’s meant to encourage companies to adopt better clean-energy technology and prevent production of carbon-rich goods outside the EU.

“With Africa’s energy deficit and reliance mainly on fossil fuels, especially diesel, the implication is that Africa will be forced to export raw commodities again into Europe, which will further cause de-industrialization,” Adesina said in an emailed statement Thursday.

“Africa has been short-changed by climate change; now it will be short-changed in global trade,” he said.

South Africa has also spoken out against the effects of the EU’s tax.

“The introduction of the carbon-adjustment measures by the EU undermine equity and the development of trade initiatives,” National Assembly Speaker Nosiviwe Mapisa-Nqakula said at the COP28 climate summit in Dubai on Wednesday. “It can be detrimental and discriminatory in outlook towards the struggling economies, particularly on developing and underdeveloped countries.”

Tags

Africa EU Carbon Tax Green finance