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The Carbon Border Adjustment Mechanism CBAM is the world’s first planned carbon tax on imported goods, aimed at curtailing the flow of “dirty commodities” into the European market and its proposed implementation could significantly impact Namibia’s export-dependent economy.
The Carbon Border Adjustment Mechanism CBAM is the world’s first planned carbon tax on imported goods, aimed at curtailing the flow of “dirty commodities” into the European market and its proposed implementation could significantly impact Namibia’s export-dependent economy.
This move, driven by environmental concerns, could have far-reaching consequences for Namibia, where European nations account for an average of 20% of imports. The impending CBAM could hit two critical sectors of Namibia’s economy – fishing and mining – and see a marked GDP decrease.
Namibia’s strong mining sector and foreign interest in the sector promise the country positive results. As the world moves into a just energy transition, the rare earth metals potential in Namibia can offer the country a higher expected export bill. The country, however, still faces the challenge of a lack of manufacturers.
Namibia’s export basket to Europe has been steadily growing, increasing from N$8.5 billion in 2015 to N$12.5 billion in 2023, with the highest peak in 2022 at N$19.4 billion. Namibia’s exports to the European market represent a substantial portion of its total export revenue, constituting approximately 20% of our overall export portfolio. YTD figures for 2023 show this share has slightly increased to 21%. It is imperative to recognize that this export dependency introduces vulnerabilities, particularly for the fishing and mining industries. Namibia’s export to Europe, minerals constitutes 44% share, while fish products account for 25% of the total exports to this region.
In the case of the fishing industry, the reliance on fuel is paramount. Fishing vessels, as well as the transportation and supporting equipment within this sector, depend heavily on fuel consumption. The necessity to maintain a cold chain during the transportation of fish further exacerbates this reliance on fuel, making the entire process of fishing, preservation, and delivery susceptible to the ‘dirty’ label.
Similarly, the mining sector mirrors this vulnerability due to its substantial fuel dependence.The extraction processes involved in mining, as well as the subsequent transportation of mined materials, rely extensively on fuel usage. Consequently, both the fishing and mining sectors face exposure to potential adverse consequences if the Eurozone proceeds with the ban on ‘dirty commodities’.
Read Also:
https://trendsnafrica.com/namibian-exports-to-spain-all-time-high/
https://trendsnafrica.com/namibian-fish-exports-clocked-n1-1-billion-an-all-time-high-in-may/
https://trendsnafrica.com/namibia-firm-on-value-addition-stance/
The CBAM regulation would require importers of certain energy-intensive goods to pay a levy in respect of their imports that corresponds to the price of emissions allowances under the EU Emissions Trading System. Reporting obligations under the CBAM will apply starting from October 1, 2023, while the obligation for importers to pay a levy will kick in as of 2026.
