Navigating Climate Action: Assessing the Economic Impacts and Trade-offs of a Shipping Carbon Tax for African States

The report uses a GTAP-E model to find that a USD 100/t carbon levy would generally reduce GDP and household incomes across Africa, increase global food prices, and reduce the supply of maritime services. It highlights that African importers already face disproportionately high freight rates, which a carbon tax would exacerbate. The authors recommend that the IMO implement a redistribution mechanism based on climate vulnerability and historical emissions, providing direct grants for out-of-sector projects like green hydrogen and resilient agriculture.

• A simulated carbon levy of USD 100 per metric tonne of carbon is projected to reduce the supply of maritime shipping services among African countries by up to 7%.
• The levy is expected to have a negative impact on GDP for most African countries, with Equatorial Guinea forecast to be the worst affected with a reduction of 0.121%.
• Global prices for processed food and agriculture commodities are projected to increase by 0.013% and 0.011% respectively, threatening food security in African nations that rely heavily on food imports.
• Household incomes in Africa are forecast to fall disproportionately compared to other regions; for instance, Ghana's projected reduction of 0.101% is ten times higher than that forecast for European households.
• African importers already face structural freight imbalances; for example, the freight rate per nautical mile from Rotterdam to West Africa (USD 0.33) is nearly double that of the route to Canada (USD 0.17).
• The EU Emissions Trading System (EU-ETS) already imposes a punitive effect on African trade, with emissions surcharges per nautical mile for Europe-West Africa trade being approximately 10 times higher than for Europe-Canada trade.
• The report argues that in-sector revenue distribution is inequitable because Africa accounts for less than 2% of global fleet beneficial ownership, meaning funds would not significantly help the continent modernize its fleet.
• To ensure equity, the report recommends that the IMO redistribute revenues as direct transfers (grants) rather than loans, based on criteria including climate vulnerability, national income, and historical contribution to emissions.
• The transition to green shipping presents an opportunity for Africa to become a major green hydrogen producer, potentially reducing continental emissions by 40% and producing 5,000 Mt of hydrogen annually.
• There is a high risk of stranded assets for the African fleet, which consists largely of old tankers that are too expensive to retrofit and may become obsolete under stringent GHG standards.

APA

Ogbugo, M. (2024). Navigating Climate Action: Assessing the Economic Impacts and Trade-offs of a Shipping Carbon Tax for African States. Africa Policy Research Institute. https://afripoli.org/navigating-climate-action-assessing-the-economic-impacts-and-trade-offs-of-a-shipping-carbon-tax-for-african-states

Chicago

Ogbugo, Maria. Navigating Climate Action: Assessing the Economic Impacts and Trade-offs of a Shipping Carbon Tax for African States. Africa Policy Research Institute, 2024. https://afripoli.org/navigating-climate-action-assessing-the-economic-impacts-and-trade-offs-of-a-shipping-carbon-tax-for-african-states.

Wikipedia

{{cite report |last1=Ogbugo |first1=Maria |title=Navigating Climate Action: Assessing the Economic Impacts and Trade-offs of a Shipping Carbon Tax for African States |publisher=Africa Policy Research Institute |date=9 October 2024 |url=https://afripoli.org/navigating-climate-action-assessing-the-economic-impacts-and-trade-offs-of-a-shipping-carbon-tax-for-african-states |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ogbugo2024navigating, author = {Ogbugo, Maria}, title = {{Navigating Climate Action: Assessing the Economic Impacts and Trade-offs of a Shipping Carbon Tax for African States}}, institution = {Africa Policy Research Institute}, year = {2024}, month = oct, url = {https://afripoli.org/navigating-climate-action-assessing-the-economic-impacts-and-trade-offs-of-a-shipping-carbon-tax-for-african-states}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }