Page 16 - AfrElec Annual Review 2021

AfrElec SEPTEMBER AfrElec

Green Deal, CBAM poses high risks

to Africa, Eastern Europe

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

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