hide
Free keywords:
Carbon pricing, Carbon border adjustment, Competitiveness, Africa
Abstract:
The European Union (EU) is gradually phasing in the Carbon Border Adjustment Mechanism (CBAM). The CBAM will eventually apply the carbon price prevailing in the EU on emissions that were released to produce imports of certain carbon-intensive industries. This chapter uses Multi-Regional Input-Output data to discuss to what extent five selected African countries, namely Cameroon, Ethiopia, Mozambique, Nigeria and Tunisia, might be affected by the EU CBAM. It then analyses how the CBAM could pose an incentive for carbon pricing in these five countries. This would reduce the amount that exporters need to pay to the EU and instead channel the revenues to their domestic budgets. We also demonstrate how different degrees of exposure to the CBAM may matter for the choice of emission coverage for a domestic carbon pricing scheme.
