According to a 2023 ACF/LSE study, African aluminum exports to Europe could decline by nearly 14% — a modeled projection, not a loss of competitiveness measured since January 1, 2026. Steel follows at -8.2% using the same logic. And according to UNCTAD, the instrument supposedly designed to protect the climate would reduce global emissions by only 0.1% — but at a hypothetical price of $44/t CO₂ retained in a 2021 study, well below the actual CBAM price in 2026. These three figures are sufficient to pose the problem: the European Union’s Carbon Border Adjustment Mechanism, CBAM, is economically coherent and climatically anecdotal. But it strikes first those who lack the means to defend themselves.

This is not a lawsuit against European climate policy. It is an observation on how a good instrument can produce bad effects when deployed unilaterally, without compensation mechanisms, in a world where industrial capacities are unequally distributed.

The Essentials

  • Since January 1, 2026, African exporters of steel and aluminum to the EU pay a tax on carbon embedded in their products, under the European CBAM. The first official price of CBAM certificates for Q1 2026 is €75.36/t CO₂ (~$83-90/t), roughly double the $44/t figure used in several reference studies.
  • Projections for reduction in African exports to the EU are estimated at -13.9% for aluminum and -8.2% for steel (2023 ACF/LSE study, modeled at a carbon price of $44/t CO₂), with a projected macroeconomic impact of -0.5% of African GDP according to the World Bank and the Center for Global Development. The real impact could be more pronounced at current CBAM prices.
  • At a hypothetical price of $44/t CO₂, UNCTAD estimated that CBAM would reduce global emissions by only 0.1% — a result calculated in 2021, at a price well below the actual price of the mechanism in 2026 (~€75.36/t CO₂).
  • Discussions on an EU-Africa Carbon Partnership Fund are progressing slowly, while African exporters are already absorbing the costs of the mechanism.

A Solid Principle, One-Eyed Implementation

The reasoning behind CBAM is unassailable on economic grounds. If European industry pays for its emissions through the carbon market, but its foreign competitors produce without similar constraints, European decarbonization generates a competitiveness distortion: European companies lose market share, and emissions are displaced outside Europe without disappearing. This is what is called “carbon leakage.”

The logical solution: tax imports based on their carbon content. This is what CBAM does, entering its operational phase on January 1, 2026 after two years of transitional period. The targeted sectors are steel, aluminum, cement, fertilizers, electricity and hydrogen. A European importer of Pakistani steel sheet or Mozambican aluminum ingots must now acquire CBAM certificates corresponding to emissions embedded in these products, calculated according to their carbon intensity and the European carbon price.

Where the reasoning fractures is in the implicit assumption underlying the entire mechanism: that exporting countries are able to decarbonize their production to avoid the tax. This assumption is reasonable for China, Brazil or India, which have the capital, institutions and technical capacity to launch industrial decarbonization programs. It is false for the majority of African countries.

Why Africa Is Hit First

The African continent accounts for less than 4% of global CO₂ emissions. Its extractive and manufacturing industries often operate with obsolete equipment, powered by unstable electrical grids, in economies that lack budget margins to finance the transition. Mozambique exports molten aluminum from Mozal, a facility dependent on the regional electrical grid. Zimbabwe exports steel from its Redcliff foundry. Egypt sells aluminum, steel and fertilizers to Europe. These are not economies able to decarbonize within two or three years — even if governments wanted to, infrastructure would not allow it.

The World Bank and the Center for Global Development modeled African economies’ exposure to CBAM. The result is unambiguous: for the most exposed countries, loss of competitiveness in European markets is immediate and significant. The ACF/LSE study projects a reduction in African aluminum exports to the EU of up to 13.9%, and 8.2% for steel — projections modeled at a reference carbon price of $44/t CO₂, lower than the actual current CBAM price (~€75.36/t CO₂ or ~$83-90/t). Cumulated across the entire economy, the projected macroeconomic effect is a contraction of African GDP on the order of 0.5%. This is modest in absolute terms, but it is concentrated on economies that have no safety net.

What aggravates the equation is the administrative mechanics of CBAM itself. To benefit from a reduced rate, an exporter must demonstrate that they have already paid a carbon price in their country of origin. But the vast majority of African states have no domestic carbon market, nor a national carbon tax recognized by Brussels. They therefore pay the full rate, without possibility of deduction. Add to this compliance costs: calculating the carbon intensity of industrial production requires measurement, reporting and verification systems that most African SMEs do not possess. CBAM thus creates an administrative barrier that penalizes small exporters regardless of their actual carbon footprint.

0.1% Reduction in Global Emissions: The Arithmetic of the Global Problem

The climate question is this: is all this worth it? If CBAM made it possible to substantially reduce global emissions, the cost imposed on African exporters could be justified in a global calculation, even if it would require compensation mechanisms. But UNCTAD’s figures are severe: in its 2021 analysis, conducted at a hypothetical price of $44/t CO₂, UNCTAD estimated that the mechanism would reduce global emissions by only 0.1% — a projection established at a price well below the ~€75.36/t CO₂ effectively applied in 2026.

The explanation is structural. CBAM covers only a fraction of global trade in carbonized products. It affects neither finished products incorporating steel or aluminum sold outside the EU, nor emissions from uncovered sectors. Above all, it does not change the behavior of major industrial emitters, China foremost, whose markets of destination are not limited to Europe. A Chinese steelmaker who loses European market share because of CBAM redirects its production toward Southeast Asia, Africa or Latin America. Emissions do not disappear: they reorient.

This is the central paradox of the instrument. CBAM is effective at protecting the competitiveness of European industry. It is much less effective at reducing global emissions, because it acts only on a partial segment of global trade and does not incentivize major polluters to decarbonize their complete production chains. The LSE and the African Climate Foundation have produced convergent analyses on this point: the net climate effect of the mechanism is marginal at the global level, while negative economic effects are concentrated on the most vulnerable countries.

What Europe Can Correct Without Renouncing Its Instrument

Criticizing CBAM is not advocating for its abandonment. The instrument responds to a real problem and its basic architecture is defensible. The question is that of its deployment: how to make the mechanism compatible with development equity without draining the climate logic?

Three paths are the subject of serious discussions in Brussels and in international climate finance circles. The first is the creation of an EU-Africa Carbon Partnership Fund, funded by part of CBAM revenues, to finance industrial decarbonization in the most exposed countries. The revenues from the transitional mechanism are significant: according to European Commission estimates, they could reach several billion euros per year at full maturity. Directing part of these revenues toward economies struck by the mechanism is a logical proposition, championed notably by the African Union and several EU member states during COP negotiations.

The second path is the recognition of nascent African carbon pricing systems. Several African countries are working to establish carbon markets or domestic carbon taxes: Kenya, South Africa, Senegal, Rwanda. If the EU recognized these mechanisms as equivalent, even at lower price levels, exporters from these countries could deduct the carbon price already paid and reduce their CBAM burden. This would create a direct incentive for African governments to accelerate the implementation of domestic carbon prices, which is precisely the long-term objective.

The third path is temporal differentiation: granting least developed countries a period of exemption or progressive phase-in, giving them time to develop the necessary administrative and technical capacities. This is what the WTO regime allows for developing economies in other areas. The principle is not new; its application to CBAM is discussed but not yet formalized.

Africa’s energy transition is not played out solely on trade rules. It also depends on massive investments in infrastructure, as illustrated by the challenge of electrical grids that conditions everything else. Without clean and reliable electricity, an African industry cannot decarbonize, regardless of tariff pressure exerted from Brussels.

South Africa Shows the Boundary Case

South Africa is the most instructive case, because it is the only African country already having a national carbon tax, in place since 2019. The nominal rate of this tax is R236/t CO₂ (~$13.75/t) in 2025, and is scheduled to rise to R308/t in 2026. This figure remains nonetheless misleading: during Phase 1 (2019-2025), exemptions were massive — most companies paid the tax on only a fraction of their emissions, leading to an effective rate of only R6 to R47/t (~$0.30 to $2.60/t). The CBAM logic provides that South African exporters deduct the carbon price already paid domestically from their CBAM obligation — a mechanism provided for in Article 9 of the CBAM regulation, and which works in theory.

But in practice, the recognition process is administratively complex, carbon intensity calculation rules are not fully aligned between Pretoria and Brussels, and the gap between the South African carbon price and the European carbon price remains considerable. A South African steel exporter, whose nominal carbon tax rate is approximately $13.75/t in 2025, should pay the difference with the actual CBAM price, or ~€75.36/t CO₂ (~$83-90/t), not counting benchmark adjustments. This is a substantial additional charge for a steel industry operating in a context of chronic load shedding and high logistics costs.

South Africa thus illustrates the boundary case of the instrument: even with a functional domestic carbon mechanism, alignment with the European CBAM generates friction and significant residual costs. For countries without any carbon pricing mechanism, the situation is structurally more difficult.

The Precedent That Matters for Years to Come

What is at stake with CBAM goes beyond the African question. It is a precedent for global climate governance. The European Union is the first major power to have deployed a carbon border adjustment mechanism on the scale of a market of 450 million consumers. Others will follow: the United Kingdom announced its own mechanism for 2027, Canada is studying similar options, and the question is on the table in the United States depending on political configurations.

If the European model is exported without being corrected on the equity dimension, the risk is creating a system where climate rules are written by the rich and applied to the poor. This is not only a moral question: it is also a question of effectiveness. International climate cooperation depends on the sense of legitimacy of the rules of the game. If African countries perceive CBAM as a protectionist mechanism disguised as a climate instrument, their engagement in multilateral agreements suffers.

The parallel with other North-South trade tensions is not unprecedented. The dependence of emerging economies on rules set by major blocs is a structural problem that crosses sectors. CBAM is a new illustration of this in the climate domain.

The World Bank published in 2025 a tool for measuring CBAM exposure for developing economies, precisely to help these countries negotiate with full knowledge of the facts. This is a useful leverage point. But data alone is not enough: there must be concrete adjustment mechanisms, financial transfers, and European political will to treat African partners as interlocutors to compensate rather than as externalities to manage.

The question that remains open is this: will the CBAM revenues, which will increase as the mechanism matures, be partly returned to the economies it penalizes, or will they remain entirely in European budgets? The answer to this question will say much about the true nature of the instrument, and about the prospects for a climate policy that is both effective and acceptable worldwide.

Sources

  1. World Bank — CBAM exposure tool for developing countries: https://blogs.worldbank.org/en/trade/how-developing-countries-can-measure-exposure-to-the-eu-s-carbon
  2. UNCTAD — Analysis of commercial and climate impact of CBAM, 2026
  3. Center for Global Development — Modeling of African exposure to CBAM: https://www.cgdev.org/blog/eus-carbon-border-tax-how-can-developing-countries-respond
  4. LSE / African Climate Foundation — Assessment of the climate effectiveness of the European carbon adjustment mechanism: https://africanclimatefoundation.org/wp-content/uploads/2023/05/800756-AFC-Implications-for-Africa-of-a-CBAM-in-the-EU-06A-FINAL.pdf
  5. European Commission — CBAM Regulation (EU) 2023/956
  6. European Commission — CBAM entry into force on January 1, 2026: https://taxation-customs.ec.europa.eu/news/cbam-successfully-entered-force-1-january-2026-2026-01-14_en
  7. S&P Global / CLECAT — First CBAM price Q1 2026: €75.36/t CO₂: https://www.spglobal.com/energy/en/news-research/latest-news/energy-transition/040726-brussels-confirms-first-cbam-certificate-price-for-q1-2026-at-eur7536mtco2e
  8. UNCTAD — Implications of CBAM for developing countries (2021): https://unctad.org/news/eu-should-consider-trade-impacts-new-climate-change-mechanism
  9. Carbon Knowledge Hub (Bloomberg) — South Africa carbon tax: https://www.carbonknowledgehub.com/factsheets/south-africa-carbon-tax