The adoption of carbon border adjustment mechanisms (CBAMs) has considerable implications for developing countries. Research by our team, comprising Paul Baker, David Vanzetti, Zahraa Boodhoo Beeharry, and Ria Roy sheds light on the potential challenges and impacts of these measures for Africa.
While CBAMs aim to prevent carbon leakage and reduce CO2 emissions, they can also harm African exports due to the continent’s emission-heavy industries. Our forthcoming research finds that a hypothetical $100 carbon tax imposed by the US and Western European countries would result in a substantial decrease in government funds for welfare across the continent, surpassing $1.9 billion. South Africa would be hit hardest, with an estimated welfare impact of nearly $1.6 billion. Interestingly, such a carbon tax is also expected to reduce South Africa’s carbon emissions by approximately 2.2%. While CBAMs can be seen as transformative in addressing global emissions, it is essential to find a fair and just solution that acknowledges the specific circumstances and vulnerabilities of developing countries.
Read the full article on the ‘Africa at LSE’ blog to gain deeper insights into the challenges and implications of CBAMs for Africa.