EU border carbon tax could sabotage climate targets, think think tank says

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The EU could inadvertently “sabotage efforts” to limit global warming to 1.5 ° C or 2 ° C following a controversial border carbon tax, a think tank said.

The European Council on Foreign Relations (ECFR) said the EU’s proposed ‘Carbon Border Adjustment Mechanism’ (CBAM) – which would force importers of energy-intensive goods to pay a price for environmental damage – could lead African producers to sell in other markets. with lower standards, hampering climate action.

According to the EU proposal, companies that import iron, steel, aluminum, fertilizers, cement or electricity into the bloc would be required to purchase carbon certificates. These certificates would reflect the same carbon prices faced by European producers under the EU’s emissions trading scheme.

Long defended by France, the plan aims to prevent European manufacturers from going bankrupt while their international competitors are not subject to the same green standards. In such a situation, the emissions are unchanged, a problem known as “carbon leakage”.

While the policy would have the greatest financial impact on China, Russia and Ukraine, African countries that depend on a small number of industries are most at risk, according to the ECFR. Mozambique, Guinea, Sierra Leone, Ghana and Cameroon are large exporters of aluminum, while Zambia and Zimbabwe sell a lot of steel, and fertilizer exports from Algeria and Egypt would be affected.

The ECFR supports the border tax, but says the EU should redistribute CBAM revenues to low-income countries that are most affected by the measure.

African states “have limited fiscal space and face multiple challenges related to development and the pandemic,” the researchers write. “As such, it is understandable that they perceive the CBAM and the EU’s refusal to grant exemptions to least developed countries as a threat. African exporters are unable to compete with Europeans in green innovation or research and development, they add. “These concerns could undermine the EU’s climate leadership, deepen mistrust between the bloc and countries in the south and sabotage efforts to meet the 1.5C or even 2C targets. ‘Paris Agreement. “

Alex Clark, a researcher at the University of Oxford and one of the authors of the ECFR report, said CBAM was “a good idea”, but the EU needed to complement it with measures to help African states to secure investments for the green transition.

He said Africa was “still mostly treated as a matter of charity” when it comes to the EU’s approach to climate policy towards the continent. “It’s still really just the recipient of the adaptation money rather than a real effort at economic transformation. If Africa’s place in the future global economy is not limited to damage limitation and allows it to seize some of the obvious opportunities of the green transition, the EU will need to complement the CBAM with serious, thoughtful and broad measures. investment based.

A “poorly managed CBAM” could lead African producers to sell in other markets with lower standards, while slowing political progress on the global climate effort, Clark said.

Recent attempts by European Commission President Ursula von der Leyen to improve relations with the African Union had not gone beyond rhetoric, he argued. “There is a huge confidence gap in bilateral relations between the EU and African states, between EU member states and African states. Perhaps most obviously between the EU and the AU.

Despite concerns over the border tax, the report says the EU has the potential to play a leading role in the global path to net zero emissions. “The EU is a powerful market economy and export market, a major donor, a regulatory superpower and a vital source of intellectual property and infrastructure expertise that can help other powers to develop. the green transition is working, ”write the authors.

The EU’s role in helping to maintain a “fragile global consensus” on reducing emissions could be even more important if another US president hostile to climate action enters the White House after the 2024 election, suggests the EU. report. He also says the EU should compete to balance China’s influence in Africa and Latin America, so that developing countries have other paths to carbon neutrality.

The authors praise Germany for its attempt to help South Africa phase out coal, saying the EU and other member states should take a similar approach, sharing funding and expertise to help the transition green in other African countries.

The European Commission did not respond to a request for comment.

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