Beyond the just energy transition narrative: How South Africa can support the AfCFTA to advance climate resilient development

ABSTRACT

This article argues that South Africa’s climate change policy and engagement should go beyond advancing its transition to a low carbon economy, and should include adaptation, green industrialisation, and resilience. In this context the article argues that South Africa and other African countries should go beyond the narrow limits of the just energy transition framework and adopt the more holistic concept of climate resilient development. It is proposed that South Africa should support the African Continental Free Trade Area (AfCFTA) and the African Union (AU) to strengthen renewable energy infrastructure, green industrial value chains, adaptation and resilience – thus adopting a climate resilient developmental regionalism approach. The EU carbon border adjustment measure is critically discussed. The AfCFTA and the AU are urged to build more coherent approaches between their negotiating positions in the WTO and the United Nations Framework Convention on Climate Change.

KEYWORDS:

• Climate Change
• Africa
• AfCFTA
• multilateral negotiations
• UNFCCC
• CBAM

Introduction

The Intergovernmental Panel on Climate Change (IPCC) has been warning the world since its first report in 1990 that climate change is likely to increase the frequency and magnitude of many extreme events and will certainly increase the risk of slow-onset events such as sea level rise and drought. The IPCC Sixth Assessment report states that sub-Saharan Africa has seen increased incidences in heat waves, heavy rainfall, fires and droughts which will continue to affect livelihoods, agriculture, water systems and ecosystems requiring rapid adaptation and transformational change.¹ These trends led the IPCC to state that; ‘Africa has contributed among the least to greenhouse gas emissions, yet key development sectors have already experienced widespread loss and damage attributable to anthropogenic climate change, including biodiversity loss, water shortages, reduced food production, loss of lives and reduced economic growth’.²

There is evidence that extreme weather events in South Africa are increasing, with heat wave conditions found to be more likely, dry spell durations lengthening slightly and rainfall intensity increasing. The storm in South Africa’s Kwa-Zulu Natal province in April 2022, which delivered close to an entire year’s usual rainfall in 48 hours, took meteorologists by surprise and has been blamed by experts on climate change.³ The resultant floods that swept Durban and other coastal parts of the province left more than 440 people dead and more than 40 000 displaced; 630 schools were damaged along with 23 hospitals and 34 clinics.⁴

According to some researchers, South Africa has been ‘lauded globally as one of the few countries that have conducted nation-level, ongoing social dialogue to develop a vision for a just transition’ in its climate policy.⁵ A recent collection of research papers on the just transition in South Africa has brought much of this important work to the fore.⁶ The conceptual framework utilised by most of the analysts is based on the ‘just energy transition’ (JET) narrative. The JET can be traced to the debates by the union movement in the 1990s when North American workers began to tie a just transition to the job losses faced by workers due to environmental protection.⁷ The concept was broadened by the ILO to include plans for ‘socially and environmentally sustainable jobs, sectors and economies’.⁸ Other academic scholars such as Xinxin Wang and Kevin Lo have reviewed the literature on the use of the concept of just transition by different interest groups concerned with ‘environmental justice’, ‘climate justice’ and ‘energy justice’.⁹ They point out, however, that most of these writers are based in the United States and Europe and their work does not deal adequately with issues of political economy or unequal ‘power relations’ within the local, national or global levels that impact on transitional justice.

The concept of JET as applied in South African policy discussions certainly recognises the importance of a wider discourse beyond a narrow energy transition from fossil fuel to a low carbon economy that requires investment in renewables. Some researchers of the JET include the need for inclusiveness and equity,¹⁰ while others recognise the need for norms and values that includes social justice and the need to include ‘not just impacted workers but all vulnerable stakeholders who may be directly or indirectly impacted’.¹¹ Najma Mohamed and Gaylor Montmasson-Clair recognise that South Africa’s approach to climate change through its ‘just energy transition’ policy framework has been relatively far-reaching and inclusive, yet observe that ‘climate action still rests largely on mitigation’ and does not include adaptation.¹² The authors also offer a profound insight that ‘South Africa’s JET does not yet address the roots of vulnerabilities and resultant inequalities’.

This article suggests that part of the reason for this gap is the limitations of the conceptual framework offered by the JET, in which the starting point and end point is the transition from a high carbon to a low carbon economy. The JET framework does not include critical areas such as adaptation and resilience. More importantly, it does not address the issue of mainstreaming climate change in the national development strategies of developing countries. This article argues that the JET approach by both academic observers and policy makers may suffer from being too narrow if the ‘just energy transition’ is adopted exclusively to respond to climate change. This limitation is indeed recognised by several of the authors of the compilation discussed above.¹³ The South African Presidential Climate Commission, launched in 2019, has embarked on a broader campaign to listen to different stakeholders and has already emerged with a range of policy proposals that go beyond the JET and could build towards a strategy of climate resilient development (CRD), as discussed comprehensively in the IPCC Fifth Report¹⁴ and later utilised in the IPCC Sixth Assessment Report.¹⁵ Such an approach would mainstream climate change in South Africa’s national development plan and in its efforts to reach the UN’s sustainable development goals (SDGs).

Specifically, this article argues that South Africa’s climate change policy and engagement should go beyond advancing its transition to a low carbon economy, and should include adaptation, green industrialisation, and resilience in its goals. This would include South Africa employing a wider frame in its climate policy discussions and playing a leadership role on the African continent, including within the African Continental Free Trade Area (AfCFTA), in view of the need to build cooperation and regional strategies to strengthen renewable energy infrastructure and green industrial value chains, adaptation and resilience.

This article is structured as follows. Following a brief discussion of the theoretical framework underlying the analysis, discussion focuses on the call to mainstream climate resilient development in national development strategies, and considers South Africa’s response. The next section considers the potential role of the AfCFTA in promoting climate resilient developmental regionalism, and discusses how South Africa may have a leadership role in that regard. Pretoria is encouraged to do so by supporting cooperation in renewable energy infrastructure and green industrialisation and regional value chains. Looking more widely, the next section focuses on how South Africa might work with the African Union and through its membership of AfCFTA to develop a positive multilateral trade and environment agenda in the World Trade Organization (WTO) and the UN Framework Convention on Climate Change (UNFCCC), engaging the EU to move away from unilateral measures such as carbon border adjustment measures (CBAM) and instead support inclusivity and climate resilient development.

Theoretical framework: A different approach to trade liberalisation

A group of eminent scholars from the United States and China concerned with de-escalating the US-Sino trade war have argued against a polarised view of the world that sees the only options as that of hyper-globalisation or protectionism.¹⁶ Instead, they have called for an alternative approach to globalisation that is based on peaceful coexistence and tolerance for different economic paths and systems. This view is consistent with the arguments advanced by development economists that have warned against a self-serving mercantilist view of trade liberalisation.¹⁷ Instead these writers have called for more balanced approaches to trade liberalisation that recognise different paths to development and a norms or value-based approach that advances the principles of equity, social justice and development.¹⁸

Mainstreaming climate resilient development in South Africa’s national development strategy

The IPCC Sixth Assessment Report defines climate resilient development as ‘a process of implementing greenhouse gas mitigation and adaptation measures to support sustainable development for all’.¹⁹ In this report, both climate change adaptation and resilience are added to the concept of sustainable development. In this way climate change responses are mainstreamed into sustainable development through the concept of CRD.²⁰ The report argues that climate resilient pathways will generally require transformations – beyond incremental approaches – in order to ensure sustainable development. Incremental responses to climate change address immediate and anticipated threats based on current practices, management approaches, or technical strategies. Transformative responses, in contrast, involve innovations that contribute to systemic changes by challenging some of the assumptions that underlie business-as-usual approaches.²¹ Thus climate resilient development requires development programmes to go beyond incremental changes and to explicitly advance more transformational or systemic change.

This definition of CRD thus requires the integration or mainstreaming of climate change responses (mitigation, adaptation and resilience) into national development strategies. This approach will ensure that nationally determined contributions (NDCs) of developing countries will be integrated into their development strategies in a manner that supports transformation of their economic and social systems.²² CRD requires an all-of-government approach that builds institutional coordination and integration through inclusive processes of governance. This approach will integrate development objectives and climate change responses (mitigation, adaptation and resilience). Citizen led climate interventions and private sector participation should also be incorporated into national governance frameworks for decision making and implementation of CRD.

In South Africa, since the Paris Climate Agreement the National Committee on Climate Change, the Intergovernmental Committee on Climate Change and the Presidential Climate Change Commission have been established to enhance intergovernmental and multisectoral coordination on climate action. The South African Cabinet approved its climate bill in early 2022 and has submitted it for debate and approval in its national Parliament. The bill provides for ‘a coordinated and integrated response by the economy and society to climate change and its impacts in accordance with the principles of cooperative governance’.²³ This has taken place in the context of an energy crisis, as well as the post-COVID economic challenges facing the country, which must be factored into any considerations about progress since the establishment of these governance structures. In the section below, the article proceeds to discuss the concept of renewable energy, the just transition and green industrialisation in the context of regional integration in Africa, especially in the context of the AfCFTA, and considers South Africa’s role in leading transformation on the continent.

The AfCFTA and climate resilient developmental regionalism

Energy infrastructure is an essential prerequisite for industrialisation and inclusive growth, yet many African countries lack such infrastructure and thus suffer severe energy poverty. The continent is home to 60% of the global population without access to electricity. The IPCC Sixth Report argues that increasing Africa’s renewable energy infrastructure would reduce reliance on wood fuel and charcoal, especially in urban areas, with co-benefits including reduced deforestation, desertification and fire risk, as well as improved indoor air quality, local development and agricultural yield.²⁴

It is true that Africa’s access to electricity, while on average very low at 40%, varies widely, ranging from as low as 11% in countries such as Malawi to Mauritius and Seychelles that have attained 100% access. In the Southern African Develoment Community (SADC), about 210 million out of a regional population of around 400 million people have no access to clean and modern and affordable energy services.²⁵ The lack of modern energy services drives overdependence on biomass fuels – mainly firewood and charcoal for cooking – which drives deforestation and environmental degradation, particularly indoor air pollution with adverse health impacts, especially for women and young children.²⁶ However, the African continent has vast resources that could provide renewable energy, including geothermal, hydropower, solar and wind power.²⁷ Carlos Lopes and Dirk te Velde argue that as latecomers to industrialisation, African countries can leapfrog over the stage of infrastructure development based on fossil fuel technologies to focus those based on more sustainable energy technologies; this would avoid a potential fossil-fuel lock-in for Africa, and enable the continent to play a leading role in global action to shape a sustainable energy future.²⁸

At the national level, what is required are effective industrialisation policies. These would provide a set of incentives and rules, resources for business incubation initiatives, supplier-development programmes, support measures for small and medium enterprises, and promotion of industrial clusters that bundle innovation. Together, such policies can create the structural underpinnings for viable local supply chains. This will, of necessity, require infrastructure spending (for basic public goods such as electricity, roads, and telecommunications), as well as programmes to bolster local firms’ access to finance and information and to upgrade the value they add along the value chain. Finely tuned local content incentives and requirements (to facilitate spill-over effects and support local value creation) are also called for. Industrial policy design must be based on better data and empirical analysis of each country’s economic structures. The first step is to understand how existing capabilities can be leveraged and enhanced. In the longer term, the objective would shift to creating new capabilities in industries related to renewable energy with the help of well-crafted technology transfer policies, aligned with education and training strategies.²⁹

There are also some cases where trade barriers can be justified, at least for a time, such as where governments are aiming to protect local production of components that can soon be competitively produced locally. A good example of this is the production of heavy or bulky components such as towers for wind energy for which minimising transport distances provides a cost advantage. In these cases, there is the need for judgement regarding the likelihood of achieving competitive production along with the balance between increased project cost and the economic value of local production.³⁰

Individually, most African countries lack the financial, technical and human capacities needed to fully implement a green energy transition.³¹ This calls for a collective commitment and greater regional collaboration and policy coordination across the continent to strengthen the speed and effectiveness of such a strategic shift to increase energy access and enhance contributions to climate change mitigation among African countries. There are hopeful signs. In 2019, 20% of the total installed electricity generation capacity on the continent was from renewable sources, indicating a 4.3% increase over the previous year.³² At the national level, many African countries – particularly Morocco, Senegal, Egypt, South Africa and Kenya – are demonstrating encouraging trends in terms of adding new renewable energy capacity. South Africa leads the continent in terms of installed renewable capacity, with 19 000 MW.³³ In relative terms, however, the Central African region has the highest share of renewables installed, meeting 72% of energy needs, mainly from hydropower.³⁴

Overall, however, Africa, in terms of its size and population, is well behind the rest of the world with regard to renewable energy deployment. For instance, in 2019, two-thirds of the new electricity generation capacity added globally was renewable; a mere 2% of this new generating capacity was in Africa.³⁵ Few African countries have managed to successfully integrate the high-value-added segments of renewable energy value chains and generate associated employment.³⁶ As a result, many African countries remain consumers rather than producers of low-carbon technologies, limiting the creation of jobs and other socio-economic benefits relating to construction, operations and maintenance in the renewables sector.

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) was started around 2010 in South Africa, with the key objective of attracting private sector investment in infrastructure development in the renewable energy sector. A Norwegian company, SCATEC, has obtained a contract under REIPPPP to build a solar, wind and battery storage project in South Africa which, when completed, will be one of the largest photovoltaic and battery plants in the world. SCATEC has plans to share this experience with other countries of the African continent.³⁷ This is in line with the South African Renewable Energy Masterplan (SAREM), which aims to identify opportunities that will develop industrial capabilities in this sector, acting as an implementation plan for driving industrialisation through the renewable energy sector and its value chain.³⁸ In another example, this initiative has identified significant opportunities for developing the lithium-ion battery (LIB) value chain in South Africa.³⁹ Numerous firms have developed intellectual property (IP) in this sector, including patents and expertise in the manufacturing of specific components, parts and systems, as well as in the assembly of battery packs. An industrial strategy to manufacture lithium-ion technology batteries will require cooperation among mineral resource-rich countries such as the Democratic Republic of Congo (which has cobalt) and Zimbabwe (which has lithium) and South Africa (which has nickel). Partnerships across the continent are therefore essential to developing regional value chains that ensure the gains are shared across the continent.

It is proposed here that such a regional approach to drive the strategic shift to renewable energy can be best undertaken by the AfCFTA, and specifically by the AfCFTA Secretariat.⁴⁰ Already, African countries have been managing power generation and distribution through regional power pools.⁴¹ Kudakwashe Ndhlukula, the executive director of the SADC Centre for Renewable Energy and Energy Efficiency (SACREEE) has stated that as of 2019, these power pools had a combined installed capacity of 33.8 GW, 28% of which is produced through renewable energy technologies (primarily hydropower). In one example, twelve countries make up the Southern African Power Pool (SAPP), in which the national electricity companies of Southern Africa cooperate with regard to power generation under the auspices of SADC. In another example, the Africa Clean Energy Corridor (ACEC) is a regional initiative of the International Renewable Energy Agency (IRENA) to accelerate the development of renewable energy potential and cross-border trade of renewable power within the SAPP as well as in the Eastern Africa Power Pool (EAPP).

Maria Nkhonjera of the Africa Climate Foundation notes that this Pan-African perspective is shared by the African Union’s New Partnership for Africa’s Development, which is developing an African power systems masterplan for generation and transmission.⁴² The continental masterplan, according to Nkhonjera ‘aligns with the AfCFTA aspirations to create a single electricity market that integrates all five power pools to create one of the world’s largest continent-wide energy networks’.⁴³ The AfCFTA, by consolidating African economies, many of which are small and not well integrated, into one strong market, could change the dynamics in terms of access to funding, human capital, and technology for the green energy sector. The AfCFTA, thus holds substantial promise for addressing Africa’s twin energy challenges of poor energy access and fossil fuel-dependent energy systems.

AfCFTA’s potential to advance the JET and climate resilient developmental regionalism

To summarise, the ‘just energy transition’ project discussed above requires efforts that go beyond a mere transition from fossil-fuel to renewable energy and requires efforts that include programmes to address the negative impact of the transition to a low carbon economy on workers and communities. However, these efforts, it is argued here, are not sufficient. African policy makers need to go beyond a project-by-project approach that ushers in incremental reforms and instead should take advantage of the opportunities to develop programmes for longer-term transformative industrialisation.⁴⁴

Thus this section has argued that African countries have a significant opportunity to reduce the large deficit in electricity access by taking advantage of the availability of accessible technologies together with Africa’s resources in wind, solar, hydro, geothermal and green hydrogen. Second, the potential for African countries to industrialise by building regional value chains, using their existing comparative advantages in metals that are vital for the new technologies, especially batteries – including nickel, cobalt, lithium and copper – is very significant. Third, the utilisation of existing regional power pools to build a continental power pool for the distribution of energy across the continent could provide the continent with powerful regional integration infrastructure for both energy distribution and regional industrialisation.

On each of these strategic programmes the AfCFTA could play a vital role – facilitating the negotiations between the member states and assisting them to cooperate on building cross-border continental regional energy transmission and distribution channels. A research and dialogue programme with governments, the private sector investors and regulatory bodies at the national and regional level will be required to advance this process, with the AfCFTA Secretariat playing a critical coordinating role.

African countries could implement the AfCFTA in a manner that ensures that regional integration supports the transformative industrialisation of Africa and facilitates a transition to a low carbon world economy. African countries should adopt a ‘developmental regionalism’ approach to the AfCFTA that advances their climate resilient development pathways, viz, climate resilient developmental regionalism.⁴⁵

A developmental regionalism approach requires that they advance at least four strategic objectives simultaneously.

• First, the smaller economies in Africa – 34 ‘least developed countries’, 6 small island developing states, and 16 landlocked countries – should be provided with ‘special and differential treatment’ in their liberalisation commitments, allowing them more time to adjust to renewable energy.

• Second, African countries should maintain the momentum on advancing an ambitious process of building regional value chains in priority sectors, including identifying components in the renewable energy technologies and infrastructure that could be manufactured in Africa. Other priority sectors include: (i) cotton, textiles and apparel; (ii) agriculture and agro-processing; (iii) vaccines and pharmaceuticals products, (iv) automotive vehicle assembly and components; and (v) the digital economy. In each of these areas African countries should leapfrog into new sustainable technologies required by the new trends towards a ‘sustainability shift’ that is driving consumption patterns in the main markets of the Global North, such as the EU and the US, and embark upon green industrialisation. For example, EU and US consumers are shifting towards sustainable cotton and natural fibres in apparel, and in the automotive sector most of the original equipment manufacturers have signalled that they will stop importing cars with internal combustion engines as from 2035. Africa has the opportunity to develop its own green industries and to leapfrog and become a producer of environmental goods rather than just a consumer of products produced elsewhere.⁴⁶

• Third, African countries should collaborate in building regional climate resilient infrastructure, in energy, climate smart agriculture, and water resources, to facilitate adaptation of African countries to climate change. A ‘just transition’ to renewables, particularly for those countries, such as South Africa that require to shift away from coal and other fossil fuel-based energy, would need to provide adjustment support for workers and communities.

• Fourth, African countries will need to stem the tide of backsliding from constitutional democracies and build greater resilience of their democratic institutions, including enabling civil society institutions to create the dynamism required for democracy to flourish. This approach to regional integration of integrating climate resilience within all four pillars of the ‘developmental regionalism’ approach to the AfCFTA can be referred to as climate resilient developmental regionalism.⁴⁷

Africa and the EU Carbon Border Adjustment Mechanism (CBAM)

Although action on climate change will require cooperation on trade, there is no regular high-level process or institutional anchor for intergovernmental dialogue, coordination and action on trade and climate linkages. There is no official ‘climate and trade’ agenda at either the WTO or the UN Framework Convention on Climate Change (UNFCCC).⁴⁸ While it has been recognised that ‘the multilateral trade system offers a wide range of entry points for members to address issues at the intersection between trade and climate change mitigation and adaptation’ the specific trade measures adopted by members to advance climate change are controversial.⁴⁹ Climate relevant trade negotiations in the WTO are mostly addressed through discussions around the liberalisation of environmental goods and services. In addition, the trade and climate change debate in the WTO has received renewed impetus in the form of a series of member-led initiatives bringing together a subset of like-minded members interested in a particular topic. These initiatives have been operating through issuing joint statements in areas such as fossil fuel subsidy reform or environmental sustainability.⁵⁰ However, both the above initiatives have failed to build consensus in the WTO.

The European Commission (EC) published its ‘Fit for 55%’ package (ie, 55% reduction in carbon emissions by 2030, and net zero emissions by 2050), which includes its proposal for a carbon border adjustment mechanism (CBAM). The CBAM, a high political priority for the EC under the ‘European Green Deal’,⁵¹ is a climate measure that aims to prevent the risk of ‘carbon leakage’ and to support the EU’s increased ambition on climate mitigation. ‘Carbon leakage’ occurs when industries relocate to jurisdictions with weaker environmental standards or stay in their domestic market and lose domestic and foreign market share due to increased carbon prices. The measure aims to reduce the risk of ‘carbon leakage’ by requiring exporters of carbon intensive products to the EU to pay a carbon price at the EU border equivalent to that faced by EU producers under the EU Emissions Trading Scheme (ETS). The ETS is a greenhouse gas (GHG) cap and trade scheme that contributes towards emissions reduction targets by setting a cap on the maximum level of emissions for a number of sectors, and allows the trading of emission permits at a market-generated price.⁵² The EU has until now granted allowances under the EU ETS to energy-intensive industries in the EU, thus delaying the full implementation of the carbon tax.⁵³

The CBAM will have a transitional period between 2023 and 2026. During the transitional period, the burden on importers will be administrative rather than financial. Importers will have to declare the emissions generated in production of the goods in question, but will not be required to pay the tax. Once the transitional period is over, importers will have to purchase digital CBAM certificates.⁵⁴ Once the CBAM is implemented, free allowances will be phased out progressively by 2035.⁵⁵ The European Parliament has passed legislation in April 2023 to enact the CBAM measure into EU law.⁵⁶

The CBAM as designed by the European Commission covers imported goods from at least five different industries: cement, electricity, fertilisers, iron and steel, and aluminium.⁵⁷ Its current scope covers only direct emissions, ie, emissions arising from production processes. Countries in Africa that will be directly affected include: Mozambique (aluminium and steel); Ghana (aluminium); Cameroon (aluminium); Zimbabwe (steel); Zambia (steel); Nigeria (steel); Algeria (fertilisers); Libya (fertilisers); Egypt (fertilisers); Tunisia (fertilisers); Morocco (electricity); and South Africa (steel, aluminium).⁵⁸

The measure is seen by EU CBAM advocates as important for preventing ‘carbon leakage’, for maintaining domestic support for strengthened EU climate action over the next decade and for encouraging de-carbonisation in global supply chains.⁵⁹ Some writers have explained that the CBAM ‘can potentially strengthen climate action in several ways, such as: by limiting emissions leakage from the relocation of production and investment to non-EU countries with less restrictive carbon constraints, which may then supply the EU and global markets with higher carbon-content products.⁶⁰ They also argue that one of the motivations for the CBAM was to alleviate the concerns of affected companies about losing market share to foreign competitors, and the concerns of citizens who worry about offshoring of jobs.⁶¹

The CBAM is criticised, however, for a number of reasons by developing countries. Their critique has focused on at least two issues: (1) the inconsistency of the measures with the principles of multilateralism as well as other principles that underly the UNFCCC and the WTO, and; (2) the negative impact of CBAM on production and employment in developing countries, leading to increased inequality. These reactions include casting the measure as ‘green trade protectionism’ and pointing out the inconsistency of the CBAM with the UNFCCC principle of ‘common but differentiated responsibilities and respective capabilities’ (CBDR). The CBDR principle requires the EU to take into account the different levels of development and capability of developing countries in applying any trade and environment standard or measure. Jannick Leuker argues that the EU policy violates the UNFCCC principles by establishing an incentive to enact carbon prices equivalent to the ones paid in the EU, a region which is among the most affluent and historically most responsible for climate change.⁶² Aaron Cosbey et al, from another angle, consider the legal compatibility of CBAM with the WTO rules, pointing out that ‘restrictions on imports based on the carbon intensity of products may violate provisions on non-discrimination, and policy relief or exemptions for European producers could be seen as a prohibited subsidy under the WTO’s Agreement on Subsidies and Countervailing Measures’.⁶³

Several studies undertaken on the potential impact of the EU CBAM conclude that these measures will undermine the competitiveness of developing country producers, reducing economic development, causing job losses, and thereby increasing poverty and inequality. Leuker offered insightful findings from his study in 2022 on how the EU CBAM could influence inequalities in South Africa.⁶⁴ He concluded that, as his ‘thesis found likely adverse effects on distributional outcomes in South Africa, a country with very high existing inequalities, it is doubtful whether the CBAM is compatible with distributive justice concerns’. Leuker further posited that there are ‘two routes through which adverse effects result: (i) by reducing exports in targeted sectors leading to lay-offs, and; (ii) by motivating higher domestic carbon prices which may be regressive’.

Another academic study in 2021 argued that ‘research on decarbonisation processes indicate that Global South countries may be unable to “go green” at the pace required to remain competitive in global markets’ and that ‘most countries at relatively high risk of being negatively impacted are located in Africa’.⁶⁵ The inequity of CBAM with respect to developing countries, especially in Africa, underlines the findings of researchers that global warming is already exerting a disproportionate impact on poorer countries. Noah Diffenbaugh and Marshall Burke find that:⁶⁶

for most poor countries there is >90% likelihood that per capita GDP is lower today than if global warming had not occurred. Thus, our results show that, in addition to not sharing equally in the direct benefits of fossil fuel use, many poor countries have been significantly harmed by the warming arising from wealthy countries’ energy consumption.

Countering CBAM to work toward CRD

CBAM is a unilateral instrument, designed to protect the competitiveness of the EU carbon emitters while undermining the competitiveness of developing country producers exporting to the EU. Moreover, since the carbon taxes collected by the EU at the border are intended to be added to the coffers of the EU, they increase the fiscal space for the EU to subsidise carbon emitters at the expense of developing country producers. CBAM is therefore a defeat for multilateral approaches to climate change responses, and is likely to encourage other major economies in the North and the South to pursue their own carbon reduction and mitigation strategies regardless of the negative impacts this causes on the development of other countries. It will certainly lead to increased scepticism by developing countries of the intentions of the Global North to make genuine efforts to advance a just energy transition through climate resilient development.

Instead, the AU and the AfCFTA should call upon the EU to initiate a genuine multilateral discussion on how to develop a fair and balanced instrument to prevent ‘leakage’ by domestic companies and the potential competitive advantage being passed on to foreign producers. The EU could initiate such a discussion at the UNFCCC and seek the support of all relevant UN agencies such as UNCTAD, UNIDO, UNEP and the WTO. This discussion on reduction of carbon must include a commitment by the major producers of climate friendly technologies to transfer this knowledge to developing countries to enable their just transition to a low carbon economy and to advance their climate resilient development strategies. The EU, together with other OECD countries and emerging economies with the means to do so, must seriously consider how to increase the funding available to support climate resilient development of developing countries so that all countries could move together and ‘no one is left behind’.

On the relationship between trade and climate change there are several existing instruments where the WTO can provide developing countries with flexibilities to support their climate resilient development strategies. This can be achieved by, first, recognising the principle of special and differential treatment (S&DT) and common but differentiated responsibilities and respective capacities (CBDR-RC) as agreed in various WTO agreements and UNFCCC conferences; second, allowing for selective tariff protection for components in the production of renewable energy where technologies in developing countries to support their industrialisation and localisation strategies are lagging behind; third, creating flexibilities for subsidisation of local production including local content requirements, possibly with a sunset clause to develop competitiveness; fourth, allowing for developing countries to utilise export restrictions or other measures aimed at fostering transformation of minerals, and; fifth, expanding existing flexibilities on IP protection and mechanisms to foster transfer of technology.⁶⁷

The AfCFTA, climate change and global governance

This section builds on the discussion above, setting out a series of proposals on how African countries can assert their own agency in seeking climate resilient development, in particular by engaging actively in the WTO to advance the reform agenda to promote development and inclusivity and by negotiating in the UNFCCC to advance climate resilient development.

Reforming the World Trade Organization

There is a consensus among academic writers and experts that the WTO is in its worst crisis of legitimacy since the formation of the General Agreement on Tariffs and Trade (GATT) in 1947.⁶⁸ At the time of its formation, developing countries were critical of the GATT principles of reciprocity and non-discrimination – referred to as the most-favoured-nation (MFN) treatment – as this did not take into account their development status. It took almost two decades of complaints by developing countries for their development situation to be recognised, after which Annexure 4 was added to the GATT recognising the principle of special and differential treatment (S&DT) for developing countries. This principle provided least developed countries and ‘lesser-developed’ countries, as they were referred to at the time, some flexibilities in their tariff liberalisation commitments and promises of development assistance to support their implementation obligations. However, there was a great deal of frustration by developing countries as these obligations by the developed countries were not fulfilled, and the developed countries tended to increase their protection on goods that developing countries exported to the OECD countries, such as agricultural goods and textiles. The rules of the WTO were thus regarded by the developing countries as asymmetrical; indeed, the WTO Intellectual Property Rights Agreement and the WTO Subsidies Agreement reduced the policy space for developing countries to advance their development strategies. Thus, the Doha Round of trade negotiations launched at the end of 2001 promised to address these deficits with a ‘development agenda’ that would address the concerns of developing countries. However, by 2008/9 the Doha Round collapsed; due to domestic political constraints in the wake of the global financial crisis, the US and EU were no longer able to make significant reforms in their agriculture policy. In addition, the US, frightened by the rise of China, called for ‘emerging countries’ to be removed from the list of those eligible for ‘special and development treatment’ as provided in the GATT/WTO, and thus for the reform of the WTO.⁶⁹

In the lead up to the 12th WTO ministerial conference (MC12) held in Geneva in 2021, the US, under the Biden Administration, continued to call for an aggressive agenda of reform, as had the Trump Administration in the previous ministerial meeting in Buenos Aires (MC11). The Biden Administration has pursued this reform through a more collaborative step-by-step (‘agreement-by-agreement’) process, however, rather than the adoption of a full package of reforms as pushed for by the Trump Administration.⁷⁰ The WTO MC12 Ministerial Declaration called for the WTO members to ‘work towards necessary reform of the WTO. While reaffirming the foundational principles of the WTO, we envision reforms to improve all its functions’.⁷¹ A 2022 statement by the Africa Group, Cuba and India entitled ‘Strengthening the WTO to Promote Development and Inclusivity’ argues that the Uruguay Round, resulted in ‘many imbalances’ in the multilateral trading system, and that these had become worse during the COVID-19 crisis.⁷² The submission further cites the Uruguay Round declaration, asserting that trade is not an end in itself, but a means to ‘raising living standards and ensuring full employment’, arguing that reform should address asymmetries and bring greater balance to WTO rules: ‘WTO reform does not mean either accepting inherited inequalities or new proposals that would worsen imbalances’.⁷³ Thus developing countries are actively challenging the proposals being advanced by the developed countries to reform the WTO in a manner that will increase the existing imbalances and asymmetries of the WTO. The Africa Group in the WTO should increase its coherence in the approaches being taken by African negotiators in the UNFCCC with that of negotiating positions being advanced in the WTO. The AfCFTA and the AU can contribute significantly to building this coherence and basing their approaches on the concept of climate resilient development.

What role can the AfCFTA play to advance climate resilient development in Africa and advance the interests of Africa in the UNFCCC? It is to this question that discussion now turns.

South Africa, the AfCFTA, and the CRD agenda

South African President Cyril Ramaphosa, in his address to the Committee of African Heads of State and Government on Climate Change on 6 February 2022, stated that climate change impacts are costing African economies between 3% and 5% of their GDPs, noting that, although African countries are not responsible for causing climate change, they bear the brunt of its impacts. He called for African countries to unite and speak with one voice in climate change negotiations by building a common African position to present at the 27th UNFCCC Congress of the Parties (COP27), to be held later that year in Sharm El-Sheikh, Egypt, in November 2022. He called for the principle of common but differentiated responsibilities and respective capabilities and Africa’s special needs and circumstances to be recognised.⁷⁴ Ramaphosa argued that it is the right of all developing countries, including those in Africa, to obtain support in the form of finance, technology and capacity building for their transition to a low carbon economy and society.⁷⁵

Climate negotiators at the Bonn UNFCCC negotiations held in June 2022 in preparation for November’s COP27 summit in Egypt, reported that progress towards meeting developing country concerns were very much on the back-burner. The UN Ambassador of Caribbean nations of Antigua and Barbuda, Condod Hunte, who is the lead negotiator for the Alliance of Small Island States, reported that the group of 39 members had not received assurances that ‘climate finance will be delivered on scale or speed’.⁷⁶ Climate negotiators from vulnerable developing countries have been frustrated at the slow pace of the negotiations on their concerns. A report by the Vulnerable Group of 55 economies (including Kenya and South Sudan) hit most severely by climate change points out that they had lost about 20% of their wealth on average (about $525 billion) over the past two decades due to the impact of climate change.⁷⁷

The outcomes of COP27 were hailed as very significant and successful for the so-called ‘African COP’, as it was held in African soil. The most important outcome was the decision to create the ‘loss and damage fund’ – a demand that developing countries had been making for over 30 years – and a sign of greater attention to Barbados Prime Minister Mia Mottley’s Bridgetown Agenda, which called for the reform of the global financial architecture and to address the debt burden of developing countries.⁷⁸ However, there was no further clarity on the need to increase the target of climate finance above $100 billion or to set a target for climate finance for adaptation. The goals of COP28 will thus be to operationalise the ‘loss and damage fund’ and to set clearer targets on climate finance for adaptation.⁷⁹ African countries, with the support and leadership of the AU and the AfCFTA should advance these negotiations at COP28.

Conclusion

This article has argued that the approach adopted by African countries to the UNFCCC negotiations should go beyond calling for a just energy transition that is often narrowly defined to focus on the energy transition and the plight of workers and communities. Instead, the article calls for a broader approach that also includes the need to address ‘loss and damage’ to countries caused by climate change and the need to address the challenges of adaptation and resilience. In this regard the article argues that African countries should mainstream climate resilient development into their national development strategies, and the AU and the AfCFTA should adopt an approach of climate resilient development regionalism. The article also argues that African countries should play an active role in the negotiations in the UNFCCC and in the WTO to advance this broader agenda. Within the UNFCCC African countries have contributed to the successful outcome of COP27 to reach agreement on the need to create a ‘loss and damage fund’ and for significant reforms of the financial architecture to address the need for climate finance for adaptation and to address the debt burden of developing countries. This will need to be taken further in COP28 that is to be held in Dubai in December 2023. Similarly, the article calls for African countries to play an active role in the negotiations in the WTO on trade and climate change and the reform of the WTO. In this regard the EU is urged to adopt a multilateral approach to its carbon border adjustment mechanism rather than the unilateral approach that it has adopted. African countries are urged to call for greater coherence in the negotiations taking place in the UNFCCC and in the WTO. This article argues that the AfCFTA is well placed to build greater coherence in African countries’ approaches to the ongoing negotiations in the UNFCCC and in the WTO, and urges the AfCFTA to play this leadership role.

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Additional information

Notes on contributors

Faizel Ismail

Faizel Ismail is the Director of the Nelson Mandela School of Public Governance. He has served as the Ambassador of South Africa to the World Trade Organization (2010–2014). He teaches international trade and global governance at the University of Cape Town Nelson Mandela School of Public Governance and in the Graduate School of Business. He has a PhD in Politics from the University of Manchester, an MPhil in Development Studies from Sussex (IDS), and BA and LLB degrees from UKZN (Pietermaritzburg). He is the author of three books on the WTO and a recent book on the African Continental Free Trade Area. He has published over 50 journal articles, book chapters and working papers on trade and economic development.

Notes

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