Can and should African Article 6 Credits be CBAM eligible?

This report by the African Future Policies Hub analyzes whether carbon credits generated under Article 6 of the Paris Agreement should be eligible for deduction from liabilities under the European Union's Carbon Border Adjustment Mechanism (CBAM). It argues that allowing such credits would mitigate the negative economic impact of the CBAM on African exporters, retain climate finance within African borders, and provide policy flexibility to host governments, while proposing specific design measures to prevent carbon leakage and ensure credit integrity.

• The EU's Carbon Border Adjustment Mechanism (CBAM) is expected to have a significant negative economic impact on Africa, potentially reducing continental GDP by -0.91%, which is equivalent to a $25-billion reduction based on 2021 levels.
• Under current regulations, the CBAM only allows deductions for carbon prices that are 'effectively paid' in the country of origin, defined strictly as taxes, levies, or fees from an Emissions Trading Scheme (ETS). This excludes international carbon credits, including those from Article 6 of the Paris Agreement.
• African countries face unique challenges in implementing the domestic carbon pricing systems required to reduce CBAM liability, including emissions profiles dominated by land use and agriculture which are difficult to price, immature revenue collection systems, and a high risk of regressive impacts on ultra-poor populations.
• The report argues that permitting Article 6 credits under the CBAM would be an 'imperative on equity grounds,' as it would allow African governments to retain revenue domestically and provide 'breathing room' for hard-to-abate sectors.
• In South Africa, the current CBAM design may actually undermine domestic climate policy; exporters may avoid using the national carbon tax's offset allowance (which supports local carbon markets) to instead pay a higher carbon tax that can be more fully deducted from their CBAM liability.
• While the EU Commission has indicated it may use Article 6 credits to meet its own 2040 emission reduction targets, it has explicitly stated these credits will not be used in the EU ETS compliance market, implying they will remain ineligible for the CBAM.
• To address concerns regarding integrity and leakage, the report recommends that any inclusion of credits be limited to high-integrity standards like the Article 6.4 Paris Agreement Crediting Mechanism (PACM) and that deductions be linked to the actual price paid for the credit rather than the volume of GHGs offset.
• The report suggests that the EU could further promote equity by limiting eligible CBAM credits to those originating from Africa and Least Developed Countries (LDCs), which would support nature-based solutions as these represent 52% of LDC-sourced credits.

APA

African Future Policies Hub (2025). Can and should African Article 6 Credits be CBAM eligible? https://img1.wsimg.com/blobby/go/b2d05cc3-7b8c-4f0d-a62a-66af7434f28f/downloads/e6b3b06f-22bf-4841-adcc-bb697153d2b2/AFPH%20Article%206%20and%20the%20CBAM%20-%20report%20v2.2.pdf?ver=1780902965923

Chicago

African Future Policies Hub. Can and should African Article 6 Credits be CBAM eligible? 2025. https://img1.wsimg.com/blobby/go/b2d05cc3-7b8c-4f0d-a62a-66af7434f28f/downloads/e6b3b06f-22bf-4841-adcc-bb697153d2b2/AFPH%20Article%206%20and%20the%20CBAM%20-%20report%20v2.2.pdf?ver=1780902965923.

Wikipedia

{{cite report |author=African Future Policies Hub |title=Can and should African Article 6 Credits be CBAM eligible? |date=August 2025 |url=https://img1.wsimg.com/blobby/go/b2d05cc3-7b8c-4f0d-a62a-66af7434f28f/downloads/e6b3b06f-22bf-4841-adcc-bb697153d2b2/AFPH%20Article%206%20and%20the%20CBAM%20-%20report%20v2.2.pdf?ver=1780902965923 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{africanfuturepolicieshub2025can, author = {{African Future Policies Hub}}, title = {{Can and should African Article 6 Credits be CBAM eligible?}}, institution = {African Future Policies Hub}, year = {2025}, month = aug, url = {https://img1.wsimg.com/blobby/go/b2d05cc3-7b8c-4f0d-a62a-66af7434f28f/downloads/e6b3b06f-22bf-4841-adcc-bb697153d2b2/AFPH%20Article%206%20and%20the%20CBAM%20-%20report%20v2.2.pdf?ver=1780902965923}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }