The European carbon tax could cost Africa dearly

The European Carbon Border Adjustment Mechanism risks reducing African exports to Europe. Some African countries are more threatened than others.

Just a year ago, the European countries came to an agreement: the Economy Ministers of the countries of the Old Continent decided to tax imports according to their carbon footprint. Good news for ecology, but not necessarily for Africa. Because the Carbon Border Adjustment Mechanism (MACF), defended in particular by France, could cost the continent dearly. Explanations.

The principle of the MACF, decided in March 2022 and ratified in December, is quite simple: it involves taxing imports from the EU at the borders, according to the environmental balance of the imported products. Five sectors are concerned which, for the environment, are harmful: steel, aluminium, iron, cement, hydrogen, fertilizer and electricity.

However, Africa is a major exporter of raw materials to Europe. This is for example the case of Guinea. A mining country par excellence, Guinea covers 60% of European bauxite supplies. And in the short, or even medium, term, it is difficult to imagine a bauxite extraction that would be neutral in terms of carbon emissions.

“At the African level, other countries seem even more affected by these border carbon adjustment measures. In particular South Africa, Mauritania or Mozambique, which are losing the opportunity to reap the creation of added value induced by the transformation of their main export product,” wrote Mohamed Lamine Sidibé, founder of the Guinean Observatory of Mines and Metals, last April.

Soon other sectors concerned?

This has just been confirmed by a report by the Presidential Commission on the Climate, in South Africa. According to the experts behind this report released on February 14, the MACF “could lead to a drop of between 30 and 35% in African exports to the European Union”.

While Africa still has a few months to prepare for the worst – this mechanism will be implemented gradually from October 2023 – the future looks bleak. Because in addition to the seven sectors concerned, other sectors could be included in the MACF list in the years to come, such as refined petroleum, paper, organic chemicals or even lime.

The South African Climate Commission estimates that “African exports from sectors covered by the Carbon Border Adjustment Mechanism to the European market are expected to be €3,9 billion in 2030”. Estimating losses of up to more than 2 billion euros per year.

Already, indicates the South African report, in addition to the shortfall due to the taxes applied at the borders, Europe should reduce its imports. The commission predicts declines in exports to the EU of 16%, 30% and 45% for aluminium, iron and steel, and cement by 2030.