As the African Union (AU) and European Union (EU) convene in Luanda, the summit is already unfolding as a decisive arena where trade policy intersects with climate action. Leaders from both continents are engaging in real-time negotiations to align economic growth with environmental stewardship. Central to these discussions are the EU Deforestation Free Regulation (EUDR) and the Carbon Border Adjustment Mechanism (CBAM), which aim to ensure African economies can access green markets while meeting Europe’s evolving sustainability standards, a balancing act with profound implications for global trade, climate commitments, and the trajectory of Africa’s export-driven development.
The EU’s deforestation regulation aims to ensure that commodities imported into Europe, including cocoa, coffee, timber, and soy, do not contribute to forest loss in supplier countries. By targeting deforestation-linked supply chains, the regulation is expected to cut approximately 32 million tonnes of CO₂ annually. Alongside this, the CBAM, scheduled for full implementation in January 2026, imposes a carbon price on imports of energy-intensive goods such as steel, cement, aluminium, fertilisers, electricity, and hydrogen. The carbon levy, estimated at €65–85 per tonne of CO₂, is designed to level the playing field with European producers already under the EU Emissions Trading System.
READ ALSO: 7th AU-EU Summit: Turning Continental Ties into Global Impact
While the CBAM could impose $27 billion in potential annual costs on key exports such as steel, aluminium, and fertilisers, it also creates a framework for African nations to pivot toward higher-value, green industrial production. Countries that strategically align production to meet EU green standards can leverage the global demand for low-carbon goods, unlocking new revenue streams and technological partnerships.
However, the regulatory complexity poses challenges. Compliance requires sophisticated monitoring, reporting, and verification systems, which may be costly and administratively demanding. The Pan African Parliament has already flagged potential inequities, stressing that African participation in shaping CBAM implementation is critical to ensure fair outcomes.
Beyond Raw Materials
According to the Society for Planet and Prosperity, Africa’s green industrial future depends on moving beyond a purely extractive model. Exporting raw materials, such as green hydrogen, must be paired with domestic value addition, including the production of green steel, hot briquetted iron (HBI), and green fertilisers. These initiatives serve dual purposes: meeting European demand for low-carbon intermediates and strengthening Africa’s own industrial base to reduce reliance on imports, particularly in sectors like food security and energy.
Investment viability hinges on global competitiveness, predictable off-take agreements, and access to low-cost, renewable energy. When structured effectively, these strategies can create inclusive growth, generate thousands of jobs, and transform Africa into a hub of sustainable manufacturing.
The African Green Industrialisation Initiative (AGII) has gained momentum, with financial pledges exceeding US$100 billion from institutions including the African Development Bank and Afreximbank. The African Continental Free Trade Area (AfCFTA) provides the scale necessary to integrate regional clusters, such as the Southern Africa EV metals corridor, encompassing mining, refining, and component manufacturing. By aligning global investment with these African-led initiatives, the continent can build competitive green industrial corridors capable of generating both domestic and export value.
Overcoming Trade Barriers Through Innovative Partnerships
The summit also spotlights innovative partnership frameworks, including the Sustainable Investment Facilitation Agreement (SIFA) between the EU and Angola, and the EU Clean Trade and Investment Partnership (CTIP) with South Africa. These agreements aim to streamline investment procedures while incentivising sustainable industrial development in sectors like electric vehicles, batteries, green hydrogen, and sustainable aviation fuels. Tailored rules of origin for EVs exemplify how trade policy can encourage local production and investment while maintaining preferential access to European markets.
The summit unfolds against a complex geopolitical backdrop: global supply chains are under pressure, the race for green industrial leadership is intensifying, and both continents face urgent climate imperatives. Aligning AU–EU trade and investment policies sets a precedent that could shape global norms, influencing how other major economies implement carbon-adjusted trade. Successful alignment strengthens Africa’s industrial sovereignty and contributes to Europe’s green transition, creating a model for sustainable, mutually beneficial trade partnerships worldwide.
Turning Policy into Tangible Progress
As discussions continue in Luanda, the AU–EU Summit represents more than a ceremonial gathering; it is a turning point in shaping how trade and climate intersect. With coordinated investment, capacity-building, and regulatory alignment, African economies can leverage green trade as a lever for sustainable development. The success of this summit will be measured not only by commitments signed but by the realisation of industrial transformation that benefits both continents while meeting global climate objectives. Luanda must mark a pivotal moment where trade tools are converted into engines of green growth, forging a pathway toward equitable, sustainable prosperity.
