UN Climate Change High-level Champion for Egypt, Mahmoud Mohieldin, has reportedly advised heavy industries and hard-to-abate sectors to acquire a financing scheme that would pull funds from Western donors to help them shift to cleaner power generation.
He said a Just Energy Transition Partnership (JETP) structure would be ideal for sectors like aluminium, steel, cement and fertilisers. Just Energy Transition Partnership is among the most high-profile financing mechanisms designed to draw on money from wealthy economies to aid industries to wean off fossil fuels.
This kind of funding scheme will aid exporters in investing in technologies to reduce the carbon footprint of their products, which otherwise will have to face CBAM tariffs introduced by the European Union.
The progress of JETP programmes and how to mobilise more climate finance will be one of the prime topics of discussion at the COP28 UN climate change summit in Dubai beginning on November 30.
Mahmoud Mohieldin said the European Union’s Carbon Border Adjustment Mechanism (CBAM) would seriously affect countries exporting products with high carbon emissions. CBAM is the first-of-its-kind CO2 emissions tariff on imported iron and steel, aluminium, cement, electricity, fertilisers and hydrogen.
“I’m checking countries including mine, and we see the significance of those four sectors including fertilisers during the last couple of years, they constitute a very significant share of trade of exports actually to the EU.”
Mohieldin said exporters to the European Union in hard-to-abate sectors could fight CBAM through the World Trade Organisation or negotiate exemptions, but in the meantime, there is a chance to use investment and technology to decarbonise and avoid CBAM tariff.
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