Djibouti's Carbon Levy: A Model for Climate Action in Africa

In response to a severe drought in the Tadjourah region, Djibouti's authorities turned to the newly established Sovereign Carbon Agency (SCA) for assistance. This agency, created in 2023, manages funds from a pioneering carbon emissions levy aimed at addressing climate challenges in the small nation. The levy, which charges visiting ships $17 per tonne of carbon dioxide emitted, has enabled the SCA to fund various projects, including water delivery and solar-powered desalination units, thereby averting large-scale displacement among nomadic populations.

The Independent

The carbon levy primarily targets Djibouti's port, one of Africa's largest, which services around 95% of Ethiopia's trade. The funds collected, although less than $10 million over two and a half years, are significant for a country with a GDP of approximately $3.7 billion. The SCA collaborates with local NGOs and government ministries to ensure that projects funded align with community needs and ethical guidelines. This approach has garnered interest from international humanitarian groups, especially following cuts to overseas aid from the United States under former President Donald Trump.

The Independent

The carbon levy initiative emerged from discussions at the Cop27 UN climate conference in 2022, where African nations expressed frustration over their minimal contribution to global emissions yet disproportionate suffering from climate impacts. Djibouti's President Ismail Guelleh advocated for a local solution, leading to the development of the carbon pricing system tailored to the country's specific needs, contrasting with other African schemes that often benefit larger emitters in the Global North.

The Independent

Djibouti's model has the potential to inspire other African nations, particularly those with limited industrialization. The Africa Sovereign Carbon Registry (ASCR) is promoting this model, with countries like Gabon and Liberia already establishing their own carbon tax initiatives. Experts suggest that with a higher carbon price, African nations could collectively generate billions for climate projects, addressing both local needs and global climate goals.

The Independent

While Djibouti's carbon pricing scheme has received praise, some experts caution that the current levy may not sufficiently incentivize shipping companies to reduce emissions. Jenny Helle from Carbon Market Watch emphasizes the need for a higher carbon price to effectively encourage emission reductions. Additionally, concerns exist regarding the potential fragmentation of global shipping regulations if countries unilaterally impose carbon taxes.

The Independent

Bruno Pardigon, director of the SCA, stated, “We will never replace the UN, and we will never replace aid, but we can react quickly to events.” He highlighted the importance of local knowledge in addressing crises. Agathe Peigney from Transport and Environment noted, “Carbon pricing can provide sovereign revenues for countries like Djibouti. These revenues are very valuable, unlike aid, which is often conditional and irregular.”

The Independent

• “We will never replace the UN, and we will never replace aid, but we can react quickly to events, we have a lot of local knowledge, and we can really make a difference in crises,” — Bruno Pardigon, Director, Djibouti Sovereign Carbon Agency

The Independent

• “Carbon pricing can provide sovereign revenues for countries like Djibouti. These revenues are very valuable, unlike aid, which is often conditional and irregular,” — Agathe Peigney, Transport and Environment

The Independent

• “Djibouti has one of the lowest carbon footprints in the world and is among the countries least responsible for the climate crisis,” — Jenny Helle, Carbon Market Watch

The Independent

Djibouti's innovative approach to carbon emissions management not only addresses immediate local needs but also sets a precedent for sustainable climate action across Africa.

The Independent