TRADE AND CLIMATE SUSTAINABILITY BRIEFS 2025

The report examines the intersection of trade and climate sustainability from an African perspective, focusing on the economic impacts of energy transitions, the risks and opportunities of voluntary carbon markets, and the challenges of transition mineral value chains. It critically analyzes the role of the WTO in green trade and provides specific policy recommendations to ensure that climate-related trade measures, such as Carbon Border Adjustment Mechanisms (CBAM), do not disproportionately harm developing nations.

• CGE modelling of South Africa’s Just Energy Transition Investment Plan (SAJETIP) indicates a 0.41% decline in real GDP, a 2.3% increase in the consumer price index, and a 1.7% decline in exports due to lost competitiveness from higher production costs.
• The SAJETIP has regressive welfare effects, with middle-class households (deciles 6–10) experiencing the most significant negative impact at -1.26%, while low-income households (deciles 1–5) see an average decline of -1.07%.
• Africa's potential for carbon credit sales is significantly underutilized, currently tapping into only 2% of its maximum potential, with the possibility to increase annual sales to over $5 billion.
• Voluntary carbon markets face structural integrity challenges, including 'additionality' (projects that would have happened anyway) and 'permanence' (risk of re-emission), which can lead to a 'race to the bottom' in credit quality.
• China dominates Africa's transition mineral exports, accounting for 56% of the total in 2022, which limits Africa's ability to add value to these minerals domestically.
• Green industrial policies in trading partners, such as the US Inflation Reduction Act's local content requirements, risk distorting supply chains and excluding African countries from subsidies, potentially costing Sub-Saharan Africa 4% of its GDP due to geoeconomic fragmentation.
• Processing transition minerals within Africa could reduce global emissions by avoiding the shipping of raw materials to China for processing and then re-shipping them to final destinations.
• The African Group at the WTO is advocating for the reform of the Agreement on Subsidies and Countervailing Measures (ASCM) and the Trade-Related Investment Measures (TRIMs) Agreement to increase policy space for green industrialization.
• The 13th WTO Ministerial Conference (MC13) failed to produce concrete outcomes on sustainable trade, with the final declaration omitting mentions of climate considerations and failing to revitalize the Committee on Trade and Environment.
• The Africa Trade Policy Programme recommends that the UK's proposed Carbon Border Adjustment Mechanism (CBAM) include exemptions for Least Developed Countries (LDCs) and redirect revenues to support decarbonization in low-income countries.

APA

African Climate Foundation (2025). TRADE AND CLIMATE SUSTAINABILITY BRIEFS 2025. https://africanclimatefoundation.org/wp-content/uploads/2025/05/801029-ACF-Trade-and-sustainability-report-03.pdf

Chicago

African Climate Foundation. TRADE AND CLIMATE SUSTAINABILITY BRIEFS 2025. 2025. https://africanclimatefoundation.org/wp-content/uploads/2025/05/801029-ACF-Trade-and-sustainability-report-03.pdf.

Wikipedia

{{cite report |author=African Climate Foundation |title=TRADE AND CLIMATE SUSTAINABILITY BRIEFS 2025 |date=2025 |url=https://africanclimatefoundation.org/wp-content/uploads/2025/05/801029-ACF-Trade-and-sustainability-report-03.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{africanclimatefoundation2025trade, author = {{African Climate Foundation}}, title = {{TRADE AND CLIMATE SUSTAINABILITY BRIEFS 2025}}, institution = {African Climate Foundation}, year = {2025}, url = {https://africanclimatefoundation.org/wp-content/uploads/2025/05/801029-ACF-Trade-and-sustainability-report-03.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }