Implications of the EU CBAM on Namibia’s Economy
The European Union’s Carbon Border Adjustment Mechanism (CBAM), set for implementation in 2026, aims to prevent carbon leakage by imposing tariffs on imports from countries with weaker climate policies. While this policy presents challenges for carbon-intensive exporters, Namibia has a unique opportunity to strengthen its economy and deepen trade ties with the EU by capitalizing on its emerging green hydrogen sector.
CBAM applies to industries such as iron and steel, cement, aluminium, fertilizers, hydrogen, and electricity, encouraging global sustainability. As the EU enforces stricter climate policies, countries exporting to Europe must align with sustainability standards or risk trade disruptions. Given that the EU accounts for 26% of Africa’s exports, including Namibia’s €404 million (N$20 billion) worth of fish, copper, and minerals in 2023, compliance is crucial for maintaining market access. Fortunately, Namibia’s industries have a lower carbon footprint than other developing economies, making CBAM compliance less burdensome. However, proactive strategies are essential to maintain export competitiveness.
Namibia enjoys duty-free and quota-free access to the EU under the Economic Partnership Agreements (EU-EPAs). Preserving this advantage requires integrating renewable energy into production processes and ensuring new industries are low-carbon. The potential economic impact of CBAM extends beyond Namibia’s borders, as many Southern African Development Community (SADC) and African Continental Free Trade Area (AfCFTA) members rely on Namibia’s ports and trade corridors for exporting carbon-intensive goods. If these goods are subject to CBAM tariffs, Namibia could experience indirect economic effects. To mitigate this, it must assess the carbon footprint of regional trade flows while leveraging its green hydrogen sector to sustain economic growth.
With vast solar and wind energy resources, Namibia is well-positioned to become a global leader in green hydrogen. Its ability to produce and export clean energy and its derivatives—such as green ammonia, Direct Reduced Iron (DRI), and e-fuels—can reduce CBAM liabilities for European industries. Expanding production and securing export agreements will solidify Namibia’s role as a preferred supplier of low-carbon products to the EU.
To maximize CBAM’s opportunities, Namibia must accelerate renewable energy projects, establish carbon pricing mechanisms, and engage with the EU for trade agreements recognizing its green energy potential. By embracing sustainability, Namibia can transform CBAM into a catalyst for economic growth and global trade leadership.
CBAM applies to industries such as iron and steel, cement, aluminium, fertilizers, hydrogen, and electricity, encouraging global sustainability. As the EU enforces stricter climate policies, countries exporting to Europe must align with sustainability standards or risk trade disruptions. Given that the EU accounts for 26% of Africa’s exports, including Namibia’s €404 million (N$20 billion) worth of fish, copper, and minerals in 2023, compliance is crucial for maintaining market access. Fortunately, Namibia’s industries have a lower carbon footprint than other developing economies, making CBAM compliance less burdensome. However, proactive strategies are essential to maintain export competitiveness.
Namibia enjoys duty-free and quota-free access to the EU under the Economic Partnership Agreements (EU-EPAs). Preserving this advantage requires integrating renewable energy into production processes and ensuring new industries are low-carbon. The potential economic impact of CBAM extends beyond Namibia’s borders, as many Southern African Development Community (SADC) and African Continental Free Trade Area (AfCFTA) members rely on Namibia’s ports and trade corridors for exporting carbon-intensive goods. If these goods are subject to CBAM tariffs, Namibia could experience indirect economic effects. To mitigate this, it must assess the carbon footprint of regional trade flows while leveraging its green hydrogen sector to sustain economic growth.
With vast solar and wind energy resources, Namibia is well-positioned to become a global leader in green hydrogen. Its ability to produce and export clean energy and its derivatives—such as green ammonia, Direct Reduced Iron (DRI), and e-fuels—can reduce CBAM liabilities for European industries. Expanding production and securing export agreements will solidify Namibia’s role as a preferred supplier of low-carbon products to the EU.
To maximize CBAM’s opportunities, Namibia must accelerate renewable energy projects, establish carbon pricing mechanisms, and engage with the EU for trade agreements recognizing its green energy potential. By embracing sustainability, Namibia can transform CBAM into a catalyst for economic growth and global trade leadership.
