Climate objectives now sit at the centre of trade policy. Measures such as the EU's carbon border adjustment mechanism and the US Inflation Reduction Act change who can sell into the largest markets, and on what terms. For Africa, they also open a path to capture more value from the minerals and energy the global transition depends on.
The shift
Environmental objectives increasingly shape trade policy. Standards, carbon prices and subsidies designed to accelerate decarbonisation also determine market access, and the line between legitimate environmental regulation and a disguised trade barrier is not always clear. WTO rules permit measures that protect life, health or exhaustible natural resources, provided they do not discriminate arbitrarily or restrict trade in disguise. Disputes such as Canada (Renewable Energy) and India (Solar Cells) show how contested that line has become.
The measures that matter
EU carbon border adjustment mechanism (CBAM). CBAM places a carbon price on imports of cement, steel, aluminium, fertilisers and electricity, sectors that together account for about 94% of the emissions covered by the EU emissions trading system. Exporters into the EU will need to measure, verify and report the emissions embedded in their products.
US Inflation Reduction Act (IRA). The IRA commits US$369 billion to clean energy and climate measures, with incentives tied to domestic or free-trade-partner supply chains. Countries without a free trade agreement with the United States, South Africa among them, face narrower access for sectors such as automotive, which contributed 4.3% of South Africa's GDP in 2021 and 12.5% of its exports.
Supply chain concentration. China's position across solar, battery and mineral refining value chains means that much of the value in Africa's critical minerals is still captured after export.
The opportunity for Africa
Namibia, the DRC, Zambia and Zimbabwe hold lithium, cobalt and copper that the global transition cannot do without. Several governments are already restricting the export of unprocessed minerals to encourage local beneficiation. Those policies succeed where they are paired with investment, technology transfer and credible regulatory frameworks.
What to prepare for
Governments should build emissions measurement and verification capacity, engage early on the recognition of domestic carbon pricing, and use the AfCFTA to develop regional value chains in minerals processing and clean-technology components.
Investors and exporters should start emissions accounting for CBAM-exposed products now, assess beneficiation opportunities in critical minerals, and structure supply chains with free-trade-agreement eligibility in mind.
This brief is adapted from "Green protectionism: a double-edged sword in global trade", first published in Business Day on 24 January 2025.