Carbon Pricing in Growth Markets: The Impact of EU CBAM and Carbon-MRV Platform Solution
Executive Summary
The global implementation of carbon pricing mechanisms presents significant challenges for exporters from Africa and Central Asia, highlighting the need for measures that ensure fair competition.
The European Union’s Carbon Border Adjustment Mechanism (CBAM) is poised to reshape global trade by imposing carbon-based tariffs on certain imports. Developing economies, especially in regions like Central Asia and Africa, face significant exposure as many rely on exporting carbon-intensive goods to the EU without having domestic carbon pricing or robust emissions tracking systems in place. Early analyses warn that Africa’s exports to the EU could decline by around 5.7%, translating to about a 1.1% drop in continental GDP under a €87/ton CO₂ price. Key sectors such as aluminum and steel are particularly vulnerable, with exports of African aluminum to Europe potentially falling nearly 14% and steel by 8.2%. For example, Mozambique's aluminium exports could be taxed between EUR 50 - 350 million per year under the proposed CBAM, depending on the methods used to estimate carbon intensity.
Central Asian exporters face similar pressures; officials caution that CBAM-related cost increases could “close some markets” to the region’s metals and aluminum good. The most urgent challenge underlying these risks is the lack of Measurement, Reporting, and Verification (MRV) systems for carbon emissions. Without reliable emissions data, exporters must either pay the CBAM levy at punitive EU default values or risk losing market access due to non-compliant.
This white paper, intended for entrepreneurs, innovators, and policymakers in growth markets, argues that addressing the MRV gap is a strategic priority. It discusses how a digital Carbon-MRV platform could enable exporters to accurately measure emissions, verify reductions (for example, using AI and blockchain), and even finance transition to a low-carbon economy through emissions credit trading. Such a solution offers a pathway to not only surviving CBAM, but to catalyze sustainable trade by aligning developing country exporters with the world’s low-carbon future.