NAVIGATING CLIMATE ACTION: Assessing the economic impacts and trade-offs of a shipping carbon tax for African states

This report by the African Future Policies Hub, APRI, and LSE assesses the economic impacts of a proposed global shipping carbon tax on African states. Using a CGE model and a case study of Ghana, the authors find that while GDP impacts are limited, a shipping levy would increase commodity prices, reduce household incomes, and exacerbate existing freight cost imbalances for African nations. The report recommends that the International Maritime Organization (IMO) adopt measures that allow for the redistribution of revenues as direct grants to climate-vulnerable countries for out-of-sector mitigation and resilience projects.

• A global shipping levy of USD 100 per tonne of carbon is projected to reduce the supply of maritime shipping services among African countries by up to 7%.
• The economic impact on GDP for most individual African countries is forecast to be negative but limited, with Equatorial Guinea identified as the worst affected country with a reduction of 0.121%.
• The levy is expected to increase global prices for processed food commodities by 0.013% and agricultural commodities by 0.011%, which may threaten food security in African countries that rely heavily on food imports.
• Household incomes are forecast to fall in most African countries, with Ghana expected to see a 0.101% reduction, which is 10 times the reduction forecast for European households.
• African trade routes already suffer from structural imbalances; for example, freight rates per nautical mile from Rotterdam to Tema (West Africa) are approximately USD 0.33, compared to USD 0.17 for Rotterdam to Vancouver (Canada).
• The EU-ETS carbon tax has a disproportionately punitive effect on African cargo; the emissions surcharge per nautical mile for Europe-West Africa trade is nearly 10 times that of Europe-Canada trade.
• African states are highly vulnerable to the risk of a 'stranded fleet' because their fleets consist largely of old tankers that are expensive to retrofit and may lose cargo as fossil fuels are phased out.
• The report argues that revenue redistribution must be based on a Multidimensional Vulnerability Index (MVI) rather than just Gross National Income per capita, as countries like Ghana may be excluded from aid despite having similar climate vulnerabilities to Least Developed Countries (LDCs).
• To ensure an equitable transition, the report recommends that the IMO redistribute revenues as direct transfers (grants) rather than loans, following the 'polluter pays' principle.
• The report suggests that redistributed revenues should fund out-of-sector projects, such as green hydrogen production, which could allow Africa to produce 5,000 Mt of hydrogen per year at less than USD 2 per kg.

APA

African Future Policies Hub (2024). NAVIGATING CLIMATE ACTION: Assessing the economic impacts and trade-offs of a shipping carbon tax for African states. https://img1.wsimg.com/blobby/go/b2d05cc3-7b8c-4f0d-a62a-66af7434f28f/downloads/039f561d-45a6-4c4b-a3e3-5c88f2878645/Navigating%20the%20Impacts%20of%20Climate%20Change.pdf?ver=1780902966163

Chicago

African Future Policies Hub. NAVIGATING CLIMATE ACTION: Assessing the economic impacts and trade-offs of a shipping carbon tax for African states. 2024. https://img1.wsimg.com/blobby/go/b2d05cc3-7b8c-4f0d-a62a-66af7434f28f/downloads/039f561d-45a6-4c4b-a3e3-5c88f2878645/Navigating%20the%20Impacts%20of%20Climate%20Change.pdf?ver=1780902966163.

Wikipedia

{{cite report |author=African Future Policies Hub |title=NAVIGATING CLIMATE ACTION: Assessing the economic impacts and trade-offs of a shipping carbon tax for African states |date=2024 |url=https://img1.wsimg.com/blobby/go/b2d05cc3-7b8c-4f0d-a62a-66af7434f28f/downloads/039f561d-45a6-4c4b-a3e3-5c88f2878645/Navigating%20the%20Impacts%20of%20Climate%20Change.pdf?ver=1780902966163 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{africanfuturepolicieshub2024navigating, author = {{African Future Policies Hub}}, title = {{NAVIGATING CLIMATE ACTION: Assessing the economic impacts and trade-offs of a shipping carbon tax for African states}}, institution = {African Future Policies Hub}, year = {2024}, url = {https://img1.wsimg.com/blobby/go/b2d05cc3-7b8c-4f0d-a62a-66af7434f28f/downloads/039f561d-45a6-4c4b-a3e3-5c88f2878645/Navigating%20the%20Impacts%20of%20Climate%20Change.pdf?ver=1780902966163}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }