An Appraisal of Carbon Taxes for Alignment to Socio-Economic Realities of Africa

Abstract

Weather fluctuations are negatively impacting global growth; hence, continued calls for global carbon mitigation are being made. Research, especially in the European Union (EU), reveals that carbon pricing and emission trading systems are innovative and flexible enough to address market failures caused by externalities linked to carbon emissions. However, these countries lack proxies in Africa, and there is a research gap on how such taxes could be designed to align with Africa’s socio-economic realities. Through a literature review of open-source, but recent, studies on the subject, this paper seeks to fill this research gap, while creating a foundation for next-generation research in this area. The paper argues that, despite Africa’s low carbon footprint, economic realities and prospects, the implementation of the Carbon Border Adjustment Mechanism (CBAM) by the EU (one of Africa’s major trading partners) has rendered such taxes inevitable in Africa; hence, implementable policy alternatives aligned with the region’s socio-economic realities are needed.