Page 11 - AfrOil Week 39 2021

AfrOil POLICY AfrOil

Green Deal, CBAM seen posing high risks to

poorer African, Eastern European countries

REGIONAL THE EU’s Green Deal and Carbon Border in a large levy under the CBAM.
Adjustment Mechanism (CBAM) will hit the Mozambique’s lower GDP and low level of
EU’s trading partners in Africa and non-EU economic development mean the complex-
Eastern Europe particularly hard, with countries ity and cost of reporting the carbon content
that are highly dependent on trade with Europe of export products is a particular challenge.
and too weak to change trading patterns quickly The country still does not have the expertise,
set to face the most risk. capacity or reliable data to quantify its carbon
A new study from the Institute for Advanced footprint.
Sustainability Studies (IASS) in Potsdam, Ger- Bosnia and Herzegovina, meanwhile, needs
many warned that the EU’s efforts to prevent more investment in the transition. “Previous
carbon leakage and to create a level-playing experience of low-carbon transitions in ener-
field for promoting decarbonisation will dam- gy-intensive industries shows that these require
age exports from these regions. large-scale investment over a longer period.
If trading volumes fall, then the CBAM Efforts to mobilise and subsidise investment in
could actually miss its stated target of tackling these industries are already underway within the
carbon leakage and reducing emissions across EU. Manufacturers in Bosnia and Herzegovina
the world. will struggle to ‘go green’ at a pace sufficient to
remain competitive in the EU,” says co-author
Uneven impact Silvia Weko.
The report noted that the CBAM’s impact on Measuring the cost of the CBAM to export-
trading patterns and on carbon-intensive indus- ers into the EU has so far been an inexact sci-
tries is unevenly distributed across Africa and ence. The green think-tank E3G has estimated
Eastern Europe. that Russia would face the highest additional
For Morocco, a reliance on fossil fuels to net costs of €602mn by 2035, coming mainly
generate electricity leaves little room for a rapid from iron and steel imports. For China, the new
decarbonisation. This means that its exports to costs would stand at €208mn by 2035, the report
the EU, from clothes to food, will have a high found.
carbon footprint, making them liable to a high The EU revealed details of the CBAM in July
CBAM levy. Mozambique, meanwhile, is in a 2021, and expects to have the system up and
possibly worse situation, as the country lacks running by 2026.
the resources to reliably measure and verify the
carbon footprint of its exports. Looking ahead
The CBAM could in fact narrow the coun- To address the problem, the report calls on the
try’s trading options rather than act as an incen- EU to send some of its future CBAM revenues
tive to decarbonise, as there is no data available to countries that will be severely impacted by
to make the system work, Bosnia-Herzegovina the CBAM, such as the very vulnerable devel-
features a poorly diversified list of trading part- oping countries. This could then be used to
ners and export goods. Some 72% of its exports, fund decarbonisation measures in Africa and
headed by steel and aluminium, go to the EU, Eastern Europe. For example, the money could
which the country hopes to join in the future. fund technical assistance programmes in the
“Exposure relates to the importance of trade steel and aluminium sectors, two areas that will
with the EU for the economy in question. Vul- be affected the most by the CBAM.
nerability, in turn, can be defined as the inability “If the Carbon Border Adjustment Mecha-
to adapt by, for example, shifting trade flows, or nism is to contribute to climate protection, the
decarbonising and verifying a product’s carbon EU should provide financial and technical sup-
content,” said the report’s lead author Laima port to those countries for which it represents
Eicke. a considerable risk. These countries simply lack
the resources to afford the massive investments
Africa and Eastern Europe required for decarbonisation,” said Eicke.
Morocco’s energy infrastructure, as well as its Other possible measures include provid-
existing long-term power purchase agreements ing capacity-building expertise to promote the
(PPAs), create a strong path dependency that uptake of best practices to reduce emissions
leaves little room for a rapid decarbonisation, in the energy-intensive and trade-exposed
the report said. This emissions-intensive energy industries. European partner countries could
system increases the carbon footprint of prod- also provide training in emissions monitoring,
ucts produced in Morocco and is likely to result reporting and verification. ™

Week 39 29•September•2021 www. NEWSBASE .com P11