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Tag: Bill and Melinda Gates Foundation

  • Air Miles 2.0? How to ensure Africa is not penalised by net-zero policy spillovers

    Air Miles 2.0? How to ensure Africa is not penalised by net-zero policy spillovers

    Despite Africa’s extremely limited emissions contribution to climate change, its producers and exporters are now at risk of adverse effects to their businesses owing to the interpretation of net-zero by large European retailers.

    African producers and exporters are facing a more complex trading landscape, despite contributing very little to the climate emergency. Government policies on ‘net-zero’ in Europe are resulting in ‘green knee-jerk reactions’ which are increasingly demonizing imported agricultural produce. Consumers and retailers are seeking quick, clear, and marketable cuts in their emissions, which puts imported produce at risk.

    There is a widespread perception among consumers that produce grown close to their homes is associated with lower emissions. However, the scientific evidence from lifecycle assessments shows this is not the case across food groups and seasons. The lack of internationally agreed common accounting frameworks exacerbates the risks of retailers adopting sourcing strategies that undermine development and climate goals.

    This is imposing an ‘unjust green squeeze’ on African producers as retailer supply chains react to new policies and public perceptions, and seek to limit their exposure to imported produce. This process is not conducive to the advancement of sustainable development, nor the Sustainable Development Goals, which include reference to responsible consumption and production.

    Indeed, it risks imposing a ‘double green whammy’ on African producers of agrifoods who will lose economic opportunities overseas, which will limit the expansion of formal employment opportunities within more resilient and technologically sophisticated sectors: an imperative for climate change adaptation strategies.

    Net-zero policies are accelerating the integration of corporate sustainability due diligence, but unless carefully managed, they will raise both compliance costs and the perceived risks of sourcing from African countries that lack the appropriate institutional support to adapt. The corporate trend towards environmental and social governance reporting likewise risks marginalising producers from the Global South.

    The international transportation sector is progressing differently, with the aviation industry adopting internal carbon markets to reduce emissions. The international maritime sector is likely to impose levies, as called for in the Paris Pact and for which support is to be further harnessed at the Africa Climate Summit.

    There remains some uncertainty regarding UK policy on initiatives like carbon border measures, whilst the EU’s system is being implemented now. At the international level, the rule book on carbon markets remains to be completed – with progress needed at COP28 including on the interoperability of carbon markets as well as overarching governance to ensure environmental integrity.

    The expansion of formal employment opportunities in the agricultural sector for many countries in sub-Saharan Africa (SSA) has been underpinned by the success of high-value exports, including those destined for UK consumers. The integration of producers in SSA into UK supermarket value chains has been instrumental in keeping consumer prices low and expanding the range of products available throughout the year. At the same time, the success of the industry for African exporters to the UK and EU has fostered outward investments within Africa, expanding jobs and economic opportunities. Furthermore, these agricultural sectors have benefitted from landscape-level improvements to agricultural systems, including higher standards in production and cold chain, technology transfer, higher skills, improved food security, and a stronger, larger, more diversified sector.

    The Africa Climate Summit is being convened within the context of the known policy spillovers from climate change mitigation policies on international trade, but the international policy discourse is silent on what measures are being taken to address their repercussions. This needs to change. Whilst trade and investment policies do not feature within the agenda, they intersect each of the agenda items, especially adaptation. There is an urgent need to ensure that African producers are not penalised by net-zero policy spillovers on international trade and investment – we remain hopeful that the Nairobi declaration can make progress on this front.

    Views expressed in this article do not reflect the position of Kenya Broadcasting Corporation (KBC)

    James MacGregor is an (Independent Consultant) and Jodie Keane (Senior Research Fellow, ODI, the global affairs think tank)

    This op-ed is part of a thought-provoking series of ideas and pieces, developed by ODI, the global affairs think tank, and supported by the Bill and Melinda Gates Foundation. It aims to illustrate the synergy between development and climate goals.

  • The African Climate Summit: securing new trade and investment opportunities

    The African Climate Summit: securing new trade and investment opportunities

     

    The United States and European Union can do better to support Africa’s green trade potential

    As Africa embarks on its industrialisation drive, supported by the African Continental Free Trade Area (AfCFTA), the realities of climate change are becoming more visible and acutely felt across the world. The continent faces an industrialisation journey unlike any other – it must lift millions out of poverty whilst adapting to climate change. The pathways to industrialisation will also be influenced by the transmitted effects of policies enacted elsewhere to mitigate climate change.

    The promotion of intra-African value chains is at the heart of Africa’s industrialisation strategy, aiming to develop deep local and regional links to secure greater value addition. The AfCFTA framework and its protocols seek to transform productive structures. Whilst the major players rethink their value chain structures in terms of economic security, for African producers these are being recrafted to reduce economic and environmental vulnerability.

    As highlighted by the  African Climate Summit (ACS)  in Nairobi, there are major new economic opportunities for Africa in view of the green transition: it supplies many of the critical raw materials inputs into required technologies. On the other hand, there is a need for greater understanding of the transmitted effects coming from mitigation policies in end markets, which, when combined, may induce a‘green squeeze’ unless African producers and exporters have greater capacity to adapt to changing norms and standards.

    For example, the European Union (EU), Africa’s largest trade partner, has implemented several measures as part of its Green Deal. These include a carbon border adjustment measure (CBAM), new rules for mandatory supply-chain due diligence, and a ban on imports of certain deforestation-linked products. Complying with these to access EU markets will require African producers to invest in compliance processes, traceability systems and greener production methods. Understanding what support producers require to adapt is needed to reduce risks of exclusion from existing value chains.

    With regard to entering new value chains, demand for critical raw material inputs into new technologies is rapidly increasing.However, the extent to which the continent can benefit economically from this situation depends on how much of the value addition in creating the final green technology products physically takes place on the continent.

    Notably, one provision of the US Inflation Reduction Act is a tax credit available to consumers who purchase an electric vehicle whose batteries contain a certain percentage of critical minerals extracted in the US or countries with Free Trade Agreements (FTAs) with the US. Concerns have been raised that Africa’s potential to benefit from the US energy transition may be limited since currently only Morocco has an FTA with the US.

    The policy is also seemingly at odds with recent initiatives such as the Memorandum of Understanding (MoU) between the US and the Democratic Republic of Congo (DRC) and Zambia –major suppliers of copper and cobalt, the two key input commodities for lithium-ion batteries. The MoU aims to develop “an integrated value chain for the production of electric vehicle (EV) batteries in the DRC and Zambia, ranging from raw material extraction, to processing, manufacturing, and assembly”.

    As a tool for supporting industrial development in the sector, the DRC and Zambia are working towards establishing cross-border Special Economic Zones (SEZs) to produce battery precursors, batteries, and electric vehicles. The broader continent’s drive to harness opportunities from the global transition towards green energy is also reflected in its ambitions to develop a regional battery and electric vehicle value chain.

    The AfCFTA Secretariat has identified the lithium-ion battery and electric vehicle value chain as one of the high-potential value chains to be targeted for promotion in their work programme.

    The effective implementation of the AfCFTA, which seeks to reduce intra-African trade costs and tackle barriers to investment and competitiveness, offers an opportunity to promote a regional approach to value-addition in the booming green technology sector.  To underpin Africa’s industrialisation, the AfCFTA must be responsive to the challenges posed by climate change and the interventions that Africa’s trading partners are introducing to combat it.

    Efforts to harmonise the continent’s trade and climate objectives could be pursued by adding a Protocol on Trade and Climate in future rounds of AfCFTA negotiations. A more immediate approach is to focus on the current AfCFTA’s domestication process and ensure greater integration of the trade-related aspects of national adaptation and mitigation plans with the implementation of the AfCFTA protocols.

    The African Climate Summit is unique in that, building on the Paris Summit, it is calling for a more integrated approach to addressing the climate emergency. It is also continuing the advocacy for changes in how development partners work. There are several continental action plans, initiatives, and conventions geared towards climate change action and environmental protection.

    However, within these documents, links between trade and the environment are often not well-established. Similarly, interventions amongst development partners are not always well coordinated and need to be more in sync with trade policy developments.

    Gita Briel is a Trade Policy Analyst at tralac (Trade Law Centre). Her research interests include the trade-environment nexus, applied development economics, and global environmental governance.

    Jodie Keane is a Senior Research Fellow with the International Economic Development Group at the ODI, the global affairs think tank. She is an experienced trade economist and project manager who has worked with multiple governments across the developing world to secure their trade policy outcomes.

    This op-ed is part of a thought-provoking series of ideas and pieces, developed by ODI and supported by the Bill and Melinda Gates Foundation. It showcases expert authors from the Global South and aims to illustrate the synergy between development and climate goals.