(Business in Cameroon) - The 2024 Finance Act could see Cameroon introduce a carbon tax, a first  in its history. In his August 30, 2023, circular relating to the preparation of the 2024 State Budget, President Paul Biya prescribed "the continued strengthening of environmental taxation, in line with Cameroon's international commitments." "[...] The scope of the special tax on petroleum products (TSPP) on certain fuels such as liquefied natural gas could be reviewed, and the introduction of a carbon tax could be considered," the circular read.  

Carbon tax —an environmental tax based on the quantities of carbon dioxide, which accelerates global warming when emitted into the atmosphere – is levied on companies whose activities greatly affect the environment. According to the South African think tank ISS Africa, hydrocarbon and cement companies are the ones with the highest carbon tax liabilities in Cameroon.

In its report on the economic outlook for Africa, published in September 2022, the think tank forecasted that Cameroon would quadruple its carbon emissions to 15.1 million tons by 2043, due to cement and hydrocarbon companies.

 "Carbon emissions increased from 0.5 million tons of carbon in 1991 to about 3.1 million tons in 2019, an increase of 520% over the past 29 years. On the Current Path, carbon emissions are projected to increase further such that by 2043 the total amount of carbon emitted by Cameroon will more than quadruple to 15.1 million tons," the report explained.  In that context, the introduction of a carbon tax will help boost fiscal revenues in Cameroon. 

Carbon market 

The tax could also compel polluters to lower their carbon emissions to  avoid paying more taxes, thus enabling the country to meet its international commitments in this area. While ISS Africa is forecasting a huge rise in greenhouse gas emissions by 2043 in Cameroon, the country has committed to reducing its carbon emissions by 32% by 2035. It stated that ambition at the COP21 in Paris (in 2015).  

Reducing greenhouse gas emissions through the introduction of the carbon tax should also better position Cameroon on the international carbon market.  In his circular, President Paul Biya even prescribes the exploration of ways to capture green financing from the said market. 

On October 25, 2022, in Yaoundé, Finance Minister Louis Paul Motazé chaired a workshop to raise public sector stakeholders’ awareness of the carbon market to improve its contribution to the State budget.  "The aim is to carry out a situational analysis and suggest measures or solutions to address the deficiencies and shortcomings in our country’s process to access the carbon market,” explained Minister Motaze. 

The carbon market is a funding mechanism that enables trades in carbon emissions the same way financial securities are traded. The least polluting countries or companies can therefore sell their emission rights to the most polluting ones. However, we learned at the workshop on October 25, 2022, that for Cameroon to make its claim on the carbon market, certain prerequisites must be met. The most urgent of these is the completion of the country's carbon balance, which will show how much carbon the country has stored as a result of its various actions to combat climate change. For the time being, we learn, carbon assessment, which is a prerequisite for access to green financing, is only available for two of the country's five agro-ecological zones.

Brice R. Mbodiam