EU’s carbon border adjustment mechanism presents major economic opportunity for Namibia, says GH2 commissioner

The European Union’s (EU) carbon border adjustment mechanism (CBAM) presents a huge opportunity for Namibia’s development, says green hydrogen commissioner James Mnyupe.

He said this during a panel discussion at the Namibia-EU Trade and Sustainability Conference at Droombos Vineyard in Windhoek on Thursday.

“For Namibia, this is one of the most fundamental economic opportunities of all time,” he said.

CBAM requires European importers of certain goods to pay premiums on their imports to reduce the impact of the European emission trading scheme (ETS) and ensure global competitiveness of European products.

Ana Beatriz Martins, the EU’s ambassador to Namibia, explained in her keynote address that “the objective of CBAM is to level the playing field between EU producers, who face stringent carbon reduction regulations, and foreign producers, who may not face the same climate rules in their home countries”.

For non-EU producers aiming to export to the EU this will only add costs to the monitoring of emissions in production.

Since Namibia has excellent conditions for the set-up of low or zero carbon industries, Namibian exports to the EU have the potential to be highly competitive under the CBAM regime, she said.

“This is exactly where Namibia can leverage EU climate regulations to its advantage . . . by gaining a competitive advantage in exporting to the EU,” Martins said.

CBAM premiums must be paid on certain products in the following sectors: aluminium, cement, electricity, fertiliser, hydrogen, as well as iron and steel.

CBAM is already in effect, although only in its transitional phase.

European importers will have to pay premiums on 2.5% of the carbon embedded in their imports, starting in 2026.

This figure will be raised every year until reaching 100% in 2034.

The cost per tonne of carbon is based on market prices determined by the ETS.