The global economy is undergoing rapid transformation. From January 1, 2026, exports of selected carbon-intensive goods into the European Union will be subject to a carbon price under the Carbon Border Adjustment Mechanism (CBAM).
Officially framed as a climate instrument designed to prevent carbon leakage, CBAM in practice represents a profound reordering of global trade governance one with far-reaching implications for Africa’s industrial future.
At its core, CBAM redefines how competitiveness is determined in global markets. Competitiveness is no longer shaped primarily by productivity, cost efficiency, or technological capability. Instead, it is increasingly governed by regulatory carbon-intensity benchmarks designed, calibrated, and enforced in Europe.
For African economies – many still in early or incomplete stages of industrialisation – this shift risks entrenching structural asymmetries rather than enabling a fair and development-aligned low-carbon transition. Decarbonisation is both necessary and unavoidable. The critical question, however, is how it is governed, who bears its costs, and whose development trajectories are constrained in the process. CBAM answers these questions in ways that expose the political economy of unequal decarbonisation.
Power, Governance, and Cost Shifting
CBAM operates by imposing a carbon price on imports equivalent to what European producers face under the EU Emissions Trading System. In theory, this is intended to “level the playing field.” In practice, it transfers the burden of adjustment onto exporting countries that neither designed the rules nor possess comparable fiscal, technological, or institutional capacity to comply with them.
For Africa, this is not a technical trade issue. It is a political economy problem concerning who governs decarbonisation and who pays for it. African exports of steel, aluminium, cement, fertilisers, electricity, and other energy-intensive products increasingly face non-tariff barriers rooted in emissions accounting, reporting, and verification systems that are costly to establish and maintain.
These compliance costs are rarely passed on to buyers in competitive markets. Instead, they are absorbed through price compression, declining margins, and reduced reinvestment capacity – directly undermining industrial competitiveness.
The asymmetry is structural. European industries have benefited from decades of industrial subsidies, infrastructure investment, and fossil-fuel-driven growth. African industries operate under conditions of constrained finance, infrastructure deficits, high energy costs, and limited access to clean technologies. Yet CBAM treats emissions intensity as a present-day technical attribute, stripped of its historical and developmental origins.
CBAM as a Disciplinary Trade Regime
Although presented as a climate measure, CBAM increasingly functions as a disciplinary trade instrument. Over time, its scope has expanded, reporting requirements have tightened, and verification demands have intensified. Proposals to extend CBAM to additional sectors and strengthen anti-circumvention rules further increase compliance pressures on exporters from the Global South. Crucially, this technical tightening has unfolded alongside political accommodations for European industry.
Debates on simplification, exemptions, and transitional relief have focused primarily on safeguarding internal competitiveness rather than easing the adjustment burden on external partners. This dual logic – rigour for outsiders, flexibility for insiders – reinforces perceptions of CBAM as a form of carbonised protectionism.
From a political economy perspective, CBAM allows Europe to advance its decarbonisation agenda while externalising a significant share of its transition costs. It internalises industrial benefits while shifting adjustment pressures onto economies with weaker bargaining power and negligible historical responsibility for climate change.
Africa’s Developmental Baseline of Low Emissions, High Vulnerability
Africa contributes less than 4 per cent of global greenhouse gas emissions, despite accounting for nearly 18 per cent of the world’s population. Average per-capita emissions remain below 1 tonne of CO₂ per year, compared to 7–8 tonnes in the EU and over 14 tonnes in the United States.
Yet Africa experiences disproportionate climate impacts, with climate-related shocks projected to reduce GDP growth in vulnerable economies by 2–5 per cent annually by mid-century. This mismatch between responsibility and vulnerability reflects not climate virtue, but under-industrialisation. Manufacturing accounts for roughly 11 per cent of Africa’s GDP, compared to over 20 per cent in East Asia, while Africa’s share of global manufacturing value added remains below 3 per cent – a figure that has stagnated for decades.
CBAM intervenes precisely as African countries seek to expand industrial capacity to absorb labour, diversify exports, and reduce commodity dependence. In this context, it risks constraining the very development pathways required for long-term resilience and climate ambition.
Unequal Trade Structures and Africa’s Peripheral Position
Africa’s integration into global trade remains structurally unequal. The continent accounts for approximately 3 per cent of global merchandise trade, exporting primarily raw materials and semi-processed goods while importing higher-value manufactured products. In Africa–EU trade, exports are heavily concentrated in energy, minerals, metals, and basic manufactures – sectors now directly exposed to CBAM.
This pattern reflects Africa’s peripheral insertion into the global economy: resource- and carbon-intensive production at the margins, with value addition, technology, and standard-setting power concentrated in the Global North. CBAM does not disrupt this structure. It reinforces it by penalising carbon intensity without addressing why carbon-intensive production dominates African exports in the first place.
Preliminary assessments suggest that CBAM could raise the effective cost of certain African exports to Europe by 10–30 per cent, depending on sector and emissions intensity. In already unequal markets, such shocks weaken industrial viability and risk locking Africa further into low-value, carbon-penalised trade roles.
Carbon Pricing as a Development-Blind Trade Policy
CBAM assumes that producers can respond to carbon prices by investing in cleaner technologies. This assumption collapses under African realities. Industrial decarbonisation requires reliable clean energy, long-term capital, and technological upgrading. Yet across Africa over 600 million people still lack access to electricity. Industrial borrowing costs commonly exceed 10–15 per cent, compared to near-zero real rates in Europe during much of the past decade. Unfortunately, clean industrial technologies are protected by intellectual property regimes that restrict diffusion.
Carbon intensity in African industry is therefore structural, not behavioural. It reflects energy systems shaped by colonial infrastructure, post-colonial underinvestment, and chronic fiscal constraints. CBAM nonetheless treats emissions intensity as a firm-level choice, transforming carbon pricing into a disciplinary mechanism that compels adjustment without enabling transition.
Africa’s Necessary Pathway
Africa’s response to CBAM cannot be limited to compliance. It must be developmental. The continent’s long-term climate and economic interests lie in green industrialisation—building manufacturing capacity aligned with low-carbon energy systems, regional value chains, and domestic demand. Green industrialisation is essential for job creation in a continent expected to add over 400 million people to its working-age population by 2050.
It will act as an avenue for export diversification beyond raw commodities. This will reduce exposure to climate-related trade shocks while also achieving mitigation without sacrificing development. This pathway is consistent with the Paris Agreement, which recognises that mitigation must occur in the context of sustainable development and poverty eradication.
The Agreement assumes differentiated transitions supported by finance, technology transfer, and capacity building—not uniform decarbonisation imposed through trade enforcement. However, CBAM, as currently designed, bypasses this logic. It accelerates decarbonisation where capacity already exists while constraining the industrial upgrading Africa requires to transition sustainably.
Finance, Technology, and the Equity Gap
A central weakness of CBAM is the absence of binding mechanisms to support industrial decarbonisation in exporting countries. There is no guarantee that revenues collected at Europe’s borders will be recycled into concessional finance for African industry. Without redistribution, CBAM becomes a one-way fiscal and regulatory transfer. This contradicts long-standing climate finance commitments.
Developed countries have consistently failed to mobilise the promised $100 billion annually for climate action. Finance for industrial decarbonisation particularly in hard-to-abate sectors remains scarce, fragmented, and skewed toward middle-income markets. Expecting African firms to decarbonise under these conditions is not climate ambition. It is cost shifting.
Implications for the Paris Agreement
If CBAM proliferates without equity safeguards, it risks undermining the Paris Agreement itself. Climate action enforced through unilateral trade measures erodes trust, fragments cooperation, and reintroduces coercion into what was designed as a cooperative regime. For Africa, the danger is clear: decarbonisation without industrialisation, compliance without competitiveness, and mitigation without development gains. Such outcomes are incompatible with a just transition and inconsistent with the spirit of Paris. An equitable climate regime must allow Africa to industrialise green not penalise it for not having done so already.
Contesting Carbonised Trade
CBAM crystallises a broader transformation: the carbonisation of global trade rules. Whether this transformation deepens inequality or enables shared transition depends on political choices still being made. For Africa, responding to CBAM requires more than technical adjustment. It demands collective political engagement, insistence on finance and technology as integral to trade-linked climate measures, and a continental strategy centred on green industrialisation. Absent these conditions, CBAM risks entrenching Africa’s peripheral status governing decarbonisation at the border while foreclosing development at the centre. That is not climate leadership. It is unequal decarbonisation.
By Sadiq Austine Igomu Okoh, PhD