Shifting tidewinds: The implication of CBAM in SA and Kenya

Abstract

African enterprises are accustomed to complexity, volatility and the challenges of doing business on the continent. Yet for many, the Carbon Border Adjustment Mechanism (CBAM) – a European Union (EU) policy aiming to prevent carbon leakage, with the intention to mitigate climate change, feels like a bridge too far. Following several interviews in Kenya and South Africa, this whitepaper briefly explains CBAM, before exploring the implications of the policy for African countries and businesses. Examining the potential effects of CBAM in South Africa and Kenya – and for the continent more broadly - raises several issues. Questions of hypocrisy, power, responsibility and whether the ultimate aim of reduced carbon emissions will be effectively accomplished, are explored. Finally, the paper also considers the opportunities for new trade and manufacturing relationships across the continent and with non-EU countries, and positions the policy in the context of the ‘just transition.