PREVIEW
The President has gone from rejecting the carbon border tax outright to negotiations to ease the effects of this new green tax
South Africa and other African states need to move away quickly from their high carbon emitting economic models, President Cyril Ramaphosa told a climate change conference in Pretoria on 15 July. But he called for better coordination between African countries on the energy transition.
In 2021, South Africa became Africa’s first recipient of a Just Energy Transition Partnership (JETP) programme worth US$8.5 billion to finance its move away from coal dependency to cleaner energy (AC Vol 62 No 22, Leaders clash over climate).
Although Ramaphosa made no direct reference to the EU’s Carbon Border Adjustment Mechanism (CBAM) that will impose levies on imports on products such as cement and aluminium which contribute to high carbon emissions from 2026, there is little doubt that this is what he had in mind.
Impact assessments suggest that South Africa’s economy will be one of the worst hit by CBAM in Africa, along with Mozambique and Angola. In a worst-case scenario, the African Climate Foundation says there could be a 4% drop in the continent’s exports. (Dispatches 4/6/24, A disputed levy & Vol 64 No 13, How Brussels's green tax will hit Africa).
Other economists have pointed out that African states could impose their own carbon levies or use ‘resource shuffling’ to export low-emission intensity goods to Europe and send high-emission goods to other markets to limit their exposure to CBAM.
However, having previously threatened to challenge CBAM, together with India, at the World Trade Organization, Ramaphosa has been less combative in recent months. The European Commission has opened talks with several governments, including Pretoria, aimed at ameliorating the effects of the new tax.
Copyright © Africa Confidential 2024
https://www.africa-confidential.com
Prepared for Free Article on 21/12/2024 at 12:39. Authorized users may download, save, and print articles for their own use, but may not further disseminate these articles in their electronic form without express written permission from Africa Confidential / Asempa Limited. Contact subscriptions@africa-confidential.com.